MPs question value for money for affordable housing scheme

The Coalition government announced a new scheme to tackle the social housing shortage in 2010.  Under the plans, the government will build 80,000 new affordable housing units by 2015.

The Commons Committee argued that, as the government has negotiated a smaller public grant with social housing providers, the rent for these housing units would be higher than usual.

To those who are unemployed, the higher rent could act as an incentive to not to seek work. Even if they are in full time work, they might end up with little to no disposable income.

This unintended consequence could undermine the coalition government’s flagship programme to “make work pay” the cross party MPs have warned.

In addition, the MPs fear that most people who are already working would not wish to rent these homes and those who do will simply claim higher housing benefits.  In that case, the taxpayers will not get value for money.

Margaret Hodge MP, the Labour Chair of the Committee criticised the way the programme has been shifted around from one department to the other. “The programme shifts costs from one government department to another, and it is unclear whether this will provide better value for money in the long term,” she said. “Where higher rents are paid through increased housing benefit, tenants may find it even harder to find work that pays enough to be worthwhile, undermining the Government’s objective of ensuring that the benefit system makes work pay.”

“The Department must do more to understand the full impact of higher rent levels on tenants and ensure that resources are targeted where need is most acute,”  she added.

However, Mark Prisk, the Housing Minister claims the “report to recognise the flexibility that the new system of Affordable Rent offers landlords, giving them the option to set rents to ensure a fit with local circumstances.”

"In many areas landlords are opting to charge affordable rents at less than 80 per cent of local market rates - with the average set at nearer 65 per cent in London,” he added. "And anyone eligible for full housing benefit will have their Affordable Rent paid in full.”