Affordable rents, which constitute the bulk of new supply, are set in relation to the market. But, in many areas, rents are growing faster than both incomes and housing benefit allowances.
Indeed, our focus groups felt that the housing crisis is closely linked to a wage crisis. That can mean new homes are unaffordable to the types of vulnerable or low income households most in need.
This is generally less of an issue for northern landlords, where a single block of properties could comprise social, affordable and market rental tenancies all at similar levels. Elsewhere, differentials in rents within the sector can result in a range of distortions and inefficiencies in matching demand and supply.
One focus group participant explained that their organisation is looking to limit delivery of larger, family-sized homes at affordable rent despite local need, as few households could afford them.
In London, a landlord might be charging a low social rent to a long-time (secure) tenant now on a good income, while their less well-off neighbour is charged an affordable rent that is significantly higher.
In some circumstances this is already changing the approach taken by providers. For example, Peabody announced it will stop charging affordable rents, focusing more on delivering social rented homes and treating existing tenants of similar properties more fairly. For now, that is the exception rather than the norm.
Efforts to remove these inefficiencies have had mixed success. The Pay to Stay policy proposed in 2015 (essentially means-testing ongoing sub-market rents) was dropped after many in the sector criticised it as unworkable.
While our focus groups agree this policy was flawed for a variety of reasons, they feel the general concept of more closely linking rents to actual incomes was laudable.