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The 2010 Coalition Government announced an intention to introduce a new “intermediate rent” tenure as part of the October 2010 Spending Review. Under this model housing associations can offer tenancies at rents of up to 80% of market rent levels within the local area.  The additional finance raised is available for reinvestment in the development of new social housing. 

Essentially, this model replaces capital grant supply subsidy for social housing with a revenue subsidy. The scheme was expected to contribute to the delivery of 150,000 new affordable homes over 2011-15. After a successful initial bidding process the Government increased this estimate to 170,000 new homes (of which it was expected that 80,000 would be affordable rent and affordable home ownership properties) utilising almost  £1.8 billion in grant funding. It is expected that the programme will exceed planned output by around 8,000 homes. The increase in the supply of new homes at affordable rents has been accompanied by a significant reduction in the output of units at social rents.

The 2011-15 Affordable Homes Programme (AHP) has generated around 38 per cent of the annual output achieved by its predecessor, the National Affordable Housing Programme (NAHP), but with only ‘about one-sixth of the annual public subsidy in grant.’ 

The emphasis on building at affordable rents remains central to the 2015-18 AHP announced in July 2013 (subsequently extended to 2020 as part of the 2014 Autumn Statement).  The initial bidding process for the programme did not result in the allocation of the expected level of funding; a continuous bidding process is now in place.

Local authorities have been able to build using this scheme since the introduction of self-financing in April 2012.

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