Housing association says grant could go twice as far, as funding reduction looms

Plans for a new cut-price form of affordable housing designed to combat swingeing post-election funding cuts, look set to be rolled out whatever the result on 6 May.

The Labour party last week committed itself to developing “intermediate” housing for low-paid working families, which could mean that twice as many homes are built per pound of public funding.

Similar plans are being worked up by large housing associations, the Homes and Communities Agency and Boris Johnson, the mayor of London. Sources say the idea is likely to be adopted regardless of which party wins the upcoming election.

Montague: Intermediate rents would mean two for the price of one
Montague: Intermediate rents would mean two for the price of one

If the plans are implemented, the homes will be offered for rent that is more expensive than that charged by councils, but less than the level set by private landlords.

They are designed to allow more homes to be built for less government grant than traditional social housing, because of the higher rents involved.

London & Quadrant housing association has piloted a 500-home intermediate scheme, and has published research on the model in conjunction with the Chartered Institute of Housing.

David Montague, L&Q’s chief executive, said: “Our modelling suggests you could build twice as many homes for the [same] level of grant.”

The London housing board, chaired by Johnson, is looking to pilot the new form of tenure within 12 months, and has commissioned further research.

The move is seen as vital in staving off a fall in housing output, as the sector prepares for a reduction in government spending after the general election of up to a fifth from the £8bn allocated between 2008 and 2011.

Montague said: “We’re in part responding to a future with less public investment.”

Last week the Labour party said the new form of affordable housing would “focus on enabling working people to rent an affordable home at below market rates”.