Families priced out of affordable rent

Families hit by the reduced benefit cap will no longer be able to pay affordable rents in swathes of southern England, with most market rents in the country now out of reach.

This is the conclusion of analysis by consultancy Savills, seen by Inside Housing, which suggests that three-bedroom affordable rented homes will be too expensive for those hit by the lower benefit cap across south east and parts of south west England.

In the private rented sector, which houses 1.5m benefit claimants, a three-bedroom house in every region south of the midlands and the majority of the north will now be unaffordable to tenants hit by the cap.

In last week’s Budget, George Osborne announced that the benefit cap would be reduced from £26,000 to £23,000 in London and £20,000 outside the capital.

Savills’ analysis assumes that families would be able to spend up to 35% of benefits on housing costs. Under the £26,000 cap, a family living in a three-bedroom affordable rent property in Bournemouth which cost an average of £159.66 a week would be able to afford the rent. However, under the new £20,000 cap, this family will face a shortfall of £25 a week.

Since 2011, the government has limited grant funding to affordable rentals, which are up to 80% market rent.

Mervyn Jones, director of Savills housing consultancy, said housing associations would have to be ‘a lot more careful about who they house’ in affordable rent properties, with council nomination agreements ‘suddenly becoming very important’.

Brendan Sarsfield, chair of the G15 group, said: ‘We can’t just let to people who can’t afford to pay, but we’ve got to find a way through this because where else are [tenants] going to go?’