Affordable rent housing plans 'to hit London families'

The planned cap on benefits would limit each family to about £500 of payments each week from 2013

Families will struggle to afford multi-bedroom homes in London if government proposals for a new "affordable rent" tariff are introduced, a report by the London Assembly has said.

Social housing tenants would be charged 80% of the market rent under the plans.

But this is generally higher than the current level and may make payments tricky for families, the assembly's planning and housing committee said.

And the proposed cap on benefits could make things even worse, it added.

The coalition plans a maximum annual limit from 2013 on the amount of benefits which a family can claim.

This is expected to be about £26,000 per year, or £500 each week.

'Rise of 300%'

The committee's report said the "greatest challenge" for housing associations was to find rents which would be affordable to those who need them, but would also generate enough cash to build more properties.

"The new rent levels could potentially see new clients having to pay significantly more for their accommodation than existing clients, or alternatively existing clients could be squeezed out of the sector," it said.

The committee cited the north-east London borough of Haringey, where a housing association charged £85 a week on a one-bedroom flat and £126 for a four-bedroom home.

These figures would rise to £168 and £390 if 80% of the market rate was charged instead, it said.

"In this example, new clients could therefore be facing rents that are higher by nearly 100% for a one-bedroom flat and over 300% for a four-bedroom property."

This week the government said the changes to housing benefits were about "fairness" and were needed to reduce a bill "which has spiralled to £21bn a year under Labour".

But Labour criticised the coalition after it emerged a senior civil servant had warned 20,000 people could be left homeless by the cap on benefits.