Housing for Dummies 2 (‘Affordable Rent’ cost)

Continuing the Housing for Dummies series (and yes this particular one is aimed at Grant Shapps) I look at his so-called ‘Affordable Rent’ model of social housing.  This he claims will cost less.

In simple terms AR sees new homes with a rent at up to 80% of the gross market rent and Shapps claim is that it will cost the public purse no more in Housing Benefit as existing private tenants who receive the Local Housing Allowance form of HB will transfer to the new ‘affordable’ home.  In late 2011 in the Coalitions Housing Strategy Shapps revealed that average ‘affordable rent; in London was just 65% of the gross market rent – the amount private landlord charge.

Chart 1 – Affordable Rent (additional cost over private rent benefit or LHA)

Note LHA is zero in this chart, ‘Affordable Rent’ at 80% is in blue (AR80) and Affordable Rent at 65% is in red.  Hence anything above the zero is an added cost.


1.  The figures for LHA, and gross market rent (GMR) are taken from Shapps own release in the rent inflation projections that accompanied the revised Right-To-Buy’ consultation paper issued in December 2011.

2.  The figures for 80% affordable rent figure (AR80) and for 65% of it (AR65) are simple figures based on the GMR figures Shapps paper provided.

3.  The figures and costs all assume no new additional HB claimants or no less claimants.

4. The figures also assume no more than the planned 170,000 Affordable Rent properties are developed and brough online

5.  Affordable rent costs far more and is NOT affordable

6.  Previous post on this entitled “Affordable Rent is a Con” is here and this contains more detail and related detail.




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