Rent outstrips mortgage costs in many areas

Renting an "affordable" home from a housing association is more expensive than buying one of your own in 13 areas of the country, according to new official figures.

In some cases, the weekly cost of a mortgage is almost ?20 cheaper than renting from a housing association.

The statistics are buried in rent tables slipped out on the Housing Corporation's website last week. They underline why many housing associations are still struggling to attract tenants in many northern areas, despite a house price boom in the region.

The research by Cambridge University's specialist housing analyst service, Dataspring, compared average weekly housing association rents in the last financial year with the lowest 25% of mortgage costs in every local authority district in the country.

In the vast majority of areas mortgage costs far outstripped housing association rents. But in 13 areas in the north and Midlands housing associations were on average charging more than it costs to buy a home.

The areas were: Stoke-on-Trent; Kingston upon Hull; Easington; Sedgefield; Hartlepool; Middlesbrough; Blackburn with Darwen; Oldham; Salford; Burnley; Hyndburn; Pendle; and Barrow-in-Furness.

In many other districts buying a home was only a few pounds a week more expensive than renting. These areas included: Liverpool, Barnsley, North-east Lincolnshire, Wear Valley, Rochdale and Bolton.

The biggest saving from owning compared to renting was recorded in Hyndburn in Lancashire where buying a home cost ?42.43 a week, ?19.41 cheaper than renting a new home from a housing association.

This contrasted with Kensington and Chelsea where renting from a housing association is ?298.22 cheaper than buying a home.

The figures will make awkward reading for housing associations, particularly those working in the 13 areas, but they actually represent an improvement in the affordability of housing association homes.

In 2001, Dataspring conducted a similar survey which revealed that social renting was more expensive than buying in 55 areas.

However, that survey was conducted when interest rates were lower and before the most recent boom in prices.

Since 2001, housing associations have also been changing the way they set rents under a 10-year government programme to achieve affordable rents.

Part of the aim of the programme is to ensure that the rents better reflect their true value. But the new figures suggest that affordable rents will still be outstripping mortgage costs even after the completion of the rent restructuring programme, according to Professor Christine Whitehead, who supervised the Dataspring project.

"Rent restructuring is costing a vast amount of money to create even more anomalies. It is based on a system which does not relate rent to the market," she said.

Professor Whitehead added the figures showed the term "affordable housing" should be dropped because it had no meaning in many areas.

However, she did point out that housing association homes were more expensive because they represented better quality, and offered tenants management and repairs services that they would not get as owner occupiers.