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New Report Calls for Living Rents to Save Housing Benefit Bill

June 19, 2015

house moneyA new report by housing consultants Savills says that the introduction of a ‘living rent’ would make social housing more affordable and cut billions off the housing benefits bill. The research which was commissioned by the National Housing Federation, and the Joseph Rowntree Foundation also calls for a £3 billion annual investment by the government to deliver 80,000 new homes a year.

The concept of a ‘living rent’ is based on local earnings as opposed to the current system, which sees social landlords offer affordable rents at up to 80% of the open market rate. Rents would start at 28% of net pay for a person in the lowest 25% of earners locally; the figure would then be adjusted according to the size of the property concerned. Example figures suggest a ‘living rent’ in Cornwall would be £55 per week, £27 less than the current affordable figure, while a one-bedroom rent in Tower Hamlets would work out £60 a week cheaper.

Helen Collins, director at Savills and co-author of the research, sees the ‘living rent’ model as a way of addressing the current trend which has seen the link between open market rents and those charged in the social sector pushing up costs for both tenants and the government. “Living rent is an innovative way of increasing the supply of affordable rented homes, helping reduce poverty and improving access to work,” she said. “A stable and affordable rented home is crucial in ensuring people can build a life for themselves and their families. With private rented housing in limited supply and high rents in some areas acting as barriers to low-income households, more genuinely affordable rented homes are needed for those unable to access home ownership.”