Affordable Rent Could Add £1bn to Benefit Bill

The government’s plans for a new ‘affordable rent’ tenure could add over £1 billion to the housing benefit bill. In a report to MPs, the Building and Social Housing Foundation warns that the new model, where housing associations charge rents of up to 80 per cent of the market value, will cause the welfare bill to grow at a time when ministers are trying to cut it. The report, submitted as written evidence to the Work and Pensions select committee, said the BSHF’s own modelling suggested additional demand for housing benefit from tenants in affordable rent properties could cumulatively add £390 million to housing benefit spending each year. By the end of the spending review period, this could amount to an increase of £1.56 billion per year. The report said: ‘The government should urgently clarify the relationship between proposals for affordable rent and welfare reform.’ The government plans to save £2.25 billion from the housing benefit bill in 2014/15. Read more on Inside Housing.