The Impact of Cost Rental Housing: Security, Affordability and Place

Abstract

Overall Cost Rental is extremely successful in creating secure homes and a sense of belonging and ownership among residents. Survey data shows that 80% of residents feel very secure, and 73% say they ‘never’ or ‘rarely’ worry about eviction. Qualitative data underlines this, with many residents describing their housing as a ‘forever home’. • Qualitative interview data reveals that perceptions of Cost Rental as providing a secure home were based on three pillars. First, tenancy arrangements ensure long-term, secure tenancies and allow tenants to furnish and make changes to their dwelling, giving them control and autonomy. Second, the high- quality nature of Cost Rental dwellings, as well as the fact that they are brand new, enhanced feelings of ownership, pride and general satisfaction. Third, the professionalism of the AHBs and the positive nature of the landlord/tenant relationship underpins perceptions of security for residents. It should be noted that many of the above points contrast with residents’ previous experiences in the private rental sector. The research also identifies three sets of challenges in relation to issues of security and ‘home’. First, for some research participants tenancy arrangements were somewhat unclear, and this impacts perceptions of security. Second, for some participants fears around loss of income undermined perceptions of security, a finding which should be seen in the context of the data on affordability referred to below and in Chapter 4. Third, despite the fact that residents view Cost Rental as providing a secure long-term home, a majority of research participants still expressed a preference for homeownership. The main motivations expressed for this include having a ‘house and garden’ and not paying rent in later life. This raises the question of the extent to which Cost Rental is being perceived as a genuine alternative to homeownership.The Impact of Cost Rental Housing Drawing on administrative data provided by the AHB project partners (see Chapter 4), the research found that on average rent represents 34.5% of household net income for Cost Rental residents. To further assess affordability, the research applied one of the most widely used measures, which examines the proportion of households who spend 30% or more of their disposable income on housing costs. Only 25.2% of households pay rent that is less than, or equal to, 30% of their net income. The research also employed the more robust 30/40 measure of affordability, which allows us to identify the proportion of households who fall within the bottom 40% of the income distribution and are paying more than 30% of their net income on rent. Using this measure, just 33.1% of households pay more than 30% of their net income on rent and are in the bottom 40% of the income distribution. There are therefore a significant number of residents who do not meet some of the most widely used benchmarks for affordable housing. This potentially poses a risk for both landlords and residents, and hence to the sector as a whole. Affordability is complex and it appears that more consideration needs to be given to clarify what constitutes success in terms of Cost Rental’s objectives with regard to affordability. The research also finds that half of respondents are currently paying more rent in Cost Rental than in their previous housing. Excluding outliers, cost rents are on average 1.10 times the rent paid by tenants in their previous private rental accommodation, i.e. slightly higher. It should be noted that for some research participants their Cost Rental home was significantly larger than their previous accommodation, and therefore this is not a like-for-like comparison. Interviews show that when considering the affordability of their cost rents, participants take into account that Cost Rental offers a lot more than their previous accommodation, both in terms of the quality of the dwelling and security of tenure. The survey found that 83% of respondents describe their rent as ‘very’ or ‘fairly’ affordable. Qualitative data supports this, with participants typically describing rent as ‘fair’ and ‘not a burden’. Moreover, during interviews participants often compared cost rents to rents for private rental properties currently on the market, which are typically significantly higher than cost rents. At the time of data collection, no research participants were in receipt of HAP and research participants were not aware of the role of HAP or other rent subsidies in Cost Rental housing. Cost Rental appears to be supporting the development of vibrant and diverse communities. Almost 80% of survey respondents were ‘very’ or ‘somewhat’ positive about their neighbourhood, with 70% feeling ‘very’ or ‘somewhat’ part of a community. The research found no evidence of stigma associated with Cost Rental. The research found that location did not emerge as a major factor in tenants’ decision to apply for Cost Rental. Indeed, survey data shows that average commuting lengths increased somewhat, when compared to previous accommodation. Moreover, some residents identified a lack of services and infrastructure, and the issue of car dependency. During interviews, residents described a nuanced picture of their decision to apply for Cost Rental housing and their experiences in it, which involved weighing up affordability, dwelling size and standard, location and lifestyle factors