Multiple headwinds - including the removal of rent convergence - have reduced housing associations’ capacity to build resulting in the collapse of affordable homebuilding, especially in London and the South East. So we were pleased to see government acknowledge the need to stabilise housing association rents, which underpins our ability to build new homes and maintain existing stock, and launch a consultation on how to implement rent convergence.
The key recommendations made in our response are that:
• Rent convergence should be at £3 per week
• Convergence should begin as soon as possible
• Convergence should be applied until target rents are met.
Government asked if the uplift on below-target homes should be £1 or £2 per week, but along with the sector, we've highlighted the impact a £3 a week convergence policy would have. It's essential to enable us to invest in both new and existing homes. Costs are rising with the implementation of new regulatory requirements like the Decent Homes Standard. Rent convergence will give us some breathing room. It'll also reassure lenders, as rents are our largest source of income.
We also made the point that the impact on the public purse may be lower than government estimated in its impact assessment - at least in the case of Southern Housing. The Government’s impact assessment states that they are working on the basis that only around one third of social rented sector households are not in receipt of Housing Benefit or the housing element of Universal Credit (HB/UCHE) to help pay their rent. In response to this consultation, we undertook analysis to understand if this assumption is correct for our homes below target rent and found that for the homes where convergence would be applied, fewer were in receipt of these benefits.
With our views now submitted, we look forward to government's response.