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Housing Management Implications of
the Localism Bill
Evonne Hudson
Assistant Director Housing
July 2011
The Localism Bill
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In its Localism Bill, published in December 2010, the
Government sets out its proposals for future social housing
policy to be enacted into legislation during 2011.
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These proposals include the establishment of a new social
housing tenure – Affordable Tenancies, which is closely linked
to proposals to significantly change the funding for housing
development to be substantially funded through increased
rents (as set out in the Affordable Homes Programme 20112015 prospectus) and reform of the welfare benefit system
which will impact on social housing tenants’ ability to pay rent.
What Is Affordable Rent?
 New Tenure introduced by Localism Bill Dec’ 2010
 Fixed term > 2years
 The HCA allows rents to be charged at “up to” 80% of market
rents. However, the HCA prospectus clearly expects rents
calculated at 80% market rent (inclusive of service charge) to
be the norm rather than the exception.
 The maximum rent levels that can be charged are the lesser
of 80% market rent, Housing Benefit caps and Local Housing
Allowances (30th percentile). Local Housing Allowances are
not included as a cap on rents in the guidance although in
practice LHA’s limit Housing Benefit levels in local areas to
this limit.
 Target rents represent the floor for acceptable rent levels
and where used will require justification on affordability or
other grounds.
 The Universal Benefit cap has not been amended or revised
presenting an upper level for total benefit receipt of £18,200
(£350 per week) for single people and £26,000 (£500 per week)
for couples or families.
 Conversion of existing homes to Affordable Rent is only
available to landlords signing up to the development framework
agreement.
 The prospectus allows for rents to increase by PRI + 0.5% similar to the current rent-setting regime for social rent
tenancies. At the end of the tenancy period, a re-assessment of
80% of market rent will be determined and the new tenancy realigned at the new valuation. Target Rent is lowest Affordable
Rent
 The Universal Benefit cap may limit families’ ability to pay rent
for larger properties and in high value areas. In assessing what
rent levels might be affordable to people in these circumstances,
Origin has had regard to the benefit allowance that will apply to
the typical occupation of different-sized properties, as follows:
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£400 for a couple (no children) – i.e 1-bed home
£310 for couple with 1 child – i.e 2-bed home
£265 for couple with 2 children - i.e at least 2-bed home
£207 for couple with 3 children - i.e at least 3-bed home
£150 for couple with 4 children – i.e 4-bed home
£290 for single person – i.e 1-bed home
Organisational considerations
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One of the main concerns is that rents of up to 80% market
rent, in high value areas, would result in very high rents (of up
to £650 per week for a family home).
This is not conducive to Origin’s core purpose to provide
affordable housing, would be beyond the means of many
people in housing need, and may act as a deterrent for tenants
to get back into work if they are dependent upon Housing
Benefit to pay the rent.
 Want to be part of the development programme
 Limit the level of affordable rents that they will charge, so that
properties can be afforded by individuals and families that may
be affected by the proposed Universal Benefit Cap
 Will it apply to new build or existing stock
 Which properties will be relet at the affordable rent – all voids
and relets, a percentage, continue to let some homes at target
rent. Eg Origin – based on previous years turnover this would
represent 30-35 % of our social lettings and would mainly be 12 bed properties
 How long would the tenancy be for, what rights does it carry,
what obligations does it bring
Housing Management Implications
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Developing another form of tenure – Assured Shorthold
Tenancies with a standard 5 year Term. In some
circumstances the affordable tenancy will be for a minimum
period of 2 years
What is the implication for security of tenure, sustainability, void
loss, will tenants commit to the community if 2 year tenancy,
will they choose to go to another landlord, will they pay their
rent, will they look after their homes.
More intensive housing management
Set out the processes for ‘matching’ prospective tenants to
Affordable, or Assured Tenancies, by undertaking a more
comprehensive assessment of need, household income and
expenditure, and benefit entitlement in advance of letting.
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The review period for these tenancies = tenancy audits
With they be offered another type of tenancy or a renewal of
the affordable tenancy
Impact on current arrears, FTA’s and debt/benefits advice
Implications for choice based letting schemes, nominations,
transfer agreements
Development of new tenancy agreements, policies processes
Revision of a wide range of housing management policies,
procedures and practises to accommodate affordable
tenancies
Undertake more detailed market research to have robust
analysis of market rents on a localised basis and ensure that
we have a reasonable categorisation of our properties to
housing markets of broadly similar values.
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 Develop a set of processes and policies for collecting,
keeping and using information about employment status
and income levels of our existing and new social rent
tenants.
Undertake further analysis of benefits, incomes and
affordability, using different means of calculations, to ‘test’ that
policy approaches are working as intended, particularly when
the impact of the benefit changes become clearer
Develop a cost-effective Rent Revaluation process
Develop more coherent processes for undertaking tenancy
audits and reviews across the range of tenure types, to
address concerns about affordability, changes in financial
circumstances, changes in support or service requirements,
sub-letting, tenancy fraud, over-crowding and underoccupation.
Review Housing Management Policies
& Procedures
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Application and Allocation
Arrears Management
Rent-Setting, Increases
Transfers and Exchanges
Tenancy Termination, Renewal
Succession, Assignment, Mutual exchanges
Tenancy Reviews, Audits
Tenancy Forms, Records
Information Management
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New Tenure Type
Business Streams: SUN
Mixed Tenure; Flexibility
Different Rent Structure, Increases
Fixed Terms and Renewals
Reporting Requirements: TSA, HCA, KPIs
Automated Processes
To conclude
 There are also numerous policy details which will require further
analysis, as Government policy and guidance becomes clearer,
and in light of 2010/11 outturns, which will mean that
organisations will need to refine their outline policy in advance of
implementation.
 There is significant work to be undertaken to prepare for
implementation for Affordable Rents, and adequate resources
with suitable skills need to be dedicated to achieve this, subject
to decisions on timescales.