New tenants may have to pay ‘Alice in Wonderland’ rents in London

New tenants may soon have to pay “Alice in Wonderland” rents for social housing in London because of cuts in Government grants.

That’s the prediction by housing organisations which are now faced with lower grants from Whitehall while still having to find the cash to build more homes to rent out, according to a London Assembly investigation.

Reduced subsidies means hyping rents for new tenants—which depends on whether they can afford them, the Assembly’s planning and housing report out today (Friday) reveals.

New tenants could end up paying more for a one-bedroom flat than existing tenants pay for a four-bed home—a situation Catalyst Housing Group’s chief Rod Cahill described as an “Alice in Wonderland rent setting” to a planning and housing hearing on March 29.

The new Whitehall ‘rent model’ may reduce the number of ‘affordable’ homes being built, the report predicts, especially family-sized homes which are more expensive to build and would be less ‘affordable’ when benefits are capped.

“Rents and housing need are already so much higher than the rest of the country,” the Assembly’s deputy chair of planning and housing Nicky Gavron points out. “That’s why social rent is so important in London.

“London presents a unique and complex set of circumstances for affordable rents, with housing associations believing they won’t be able to build as many homes as in previous years.”

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Housing organisations are going to have to draw heavily on private investment if they are to follow the new ‘affordable rent’ model with reduced grants, the report indicates. But they are cautious about their appeal to investors if social rents are hyped to a level that new tenants can’t afford.

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