Tenants in new affordable housing developments will be offered living rents or social rents after the Mayor of Tower Hamlets John Biggs approved new rent guidance for newly built affordable homes.
The new rent levels will mean that in the future new rented affordable housing should be split between Tower Hamlets Living Rents and London Affordable Rent which is similar to social rents.
Under the previous Mayor and the then Cabinet Member for Housing Cllr Rabina Khan, the average rents for new council developments were £239.08 a week for a two bed property. Under Mayor Biggs' new policy, rents will be based on a combination of London Affordable Rent at £152.73 and the new Tower Hamlets Living Rent at £223.14 a week, both of which are significantly lower than rents under the previous administration.
The change means, compared to the previous Mayor's rent levels, a family living in a new three bed property will be up to £5,791 better off as a result of Mayor Biggs' changes. The new Tower Hamlets Living Rent is targeted at working households with the rent based on a third of average incomes.
The decision follows the conclusions of the Tower Hamlets Affordability Commission, which was set up by Mayor Biggs last year. It found that Framework rents in the borough were increasingly unaffordable for residents as they were linked to percentages of market rents which have consistently risen faster than wages.
Whilst the council cannot apply the new rent levels to previously built homes, Mayor Biggs has pledged to build 1,000 new council homes over the coming years as well as encouraging other social housing providers to adopt the new lower rents for their sites.
Mayor John Biggs said:
"I am committed to tackling the housing crisis in our borough. That means building 1,000 new council homes and making sure rents for new affordable properties are genuinely affordable for local people. Our affordability commission found that many of the rents charged on new council homes under the previous administration were too high for local people to afford - often because of the expensive PFI deals the previous Mayor signed up to.
"Our new rent levels will make new affordable homes far more affordable to those on low incomes, saving residents up to £6,000 a year. There is still more to do to make housing more affordable, including encouraging other social landlords to adopt these lower rents, but this is definitely a big step in the right direction."
Deputy Mayor for Housing, Cllr Sirajul Islam said:
"Under the previous Mayor many council rents were too high for low income families to afford. We have put that right by ensuring that all of our new council homes will have rents which are genuinely affordable to local people. I strongly urge other social landlords to take our lead and introduce these new lower rents on their sites."
Cllr Rachel Blake, Cabinet Member for Strategic Development said:
“At my surgery, I regularly meet overcrowded households who could never afford to move into the private rented sector in Tower Hamlets. Our new plans for rents in Tower Hamlets increase the options for households looking for new homes – we still have a long way to go to solve the affordability crisis in London but these rents should help.”
Yasmin Aktar, the Citizens UK Organiser in Tower Hamlets said:
“We are excited that Tower Hamlets Council have shown leadership in implementing the Living Rent to ensure that families can afford to live in the borough. We hope that other local authorities can follow this example to make London a genuinely affordable city to live in.”