Social housing tenants were heading for rent rises of more than 10 per cent under current rules. Image: Dimitri dF / Flickr
Social housing tenants have been told to withhold rent to protest the government’s cost of living support offer, which campaigners say doesn’t go far enough.
Ministers have launched a consultation on plans to cap social housing rents from April next year, limiting rises to 3, 5 or 7 per cent.
The government regulates how much rents can increase year and usually sets the rate at one per cent above inflation. But with inflation currently sitting at 10.1 per cent and forecasted to rise further, social housing tenants face double-digit rent increases to cover alongside rising energy bills.
Ministers said the proposed cap could save households up to £300 per year.
“We must protect the most vulnerable households in these exceptional circumstances during the year ahead. Putting a cap on rent increases for social tenants offers security and stability to families across England,” said housing secretary Greg Clark.
“We know many people are worried about the months ahead. We want to hear from landlords and social tenants on how we can make this work and support the people that need it most.”
But campaigners Social Housing Action Campaign (SHAC) have called for rents and service charges to be frozen – and told tenants to go on a rent strike in protest if they are not. SHAC’s Suz Muna argued housing associations should receive target support or use reserves to stave off financial difficulties.
“SHAC is still firmly of the view that a cap even set at 3 per cent would be too high for housing association tenants and residents, based on the considerable numbers who are already overstretched financially.” she said.
“It would mean people taking on more debt or cutting back further on essentials. It would have catastrophic consequences for their physical and mental health, and would destabilise people on the edge. We are likely to see a rise in evictions, a rise in homelessness, and increases in all the social problems that accompany the creation of a mass of impoverished, desperate people.
“We argue that government should set the rent cap at zero and extend this to service charges and shared owner rents. If rents and service charges are increased next year, SHAC and partners are supporting non-payment of the increases.”
The rate of social housing rent rises is usually announced in November based on inflation in September. That resulted in social housing tenants seeing rents increase by 4.1 per cent in April after two years without a rise.
But the economic turmoil has forced the government to step in this year as ministers face increased pressure to bolster cost of living measures beyond the £150 council tax rebate and a £400 energy bill discount.
The consultation proposes a rent cap from April 1 2023 to March 31 2024 and asks for views on whether to set a limit for 2024/25 in recognition of forecasts that inflation and energy bills could remain high for some time to come.
The government has also committed to reviewing the social rent policy beyond 2025 as part of a separate consultation due to be launched next year.
Geeta Nanda, chair of the G15 group of London’s largest housing associations and chief executive of Metropolitan Thames Valley Housing, said increasing costs of maintaining properties and building new ones means rents must increase.
Housing associations have seen maintenance costs leap up to 17 per cent and the cost of construction has leapt by more than 11 per cent, the G15 chair said.
“We are deeply concerned by the impact cost of living pressures are having on the people we provide homes to,” said Nanda. “G15 members have increased support for residents, including providing additional funding for vital crisis support, on top of the work we are doing to bring down people’s energy bills by improving the energy performance of the homes we provide.
“All G15 members recognise the current high rates of inflation and are considering the impact of this on residents and the essential work we do carefully. To maintain and improve existing residents’ homes, as well as continuing to build much needed new affordable homes, significant investment each year is essential. Rental income is critical to supporting this work.
“In getting the balance right on rent setting, we are committed to maintaining affordability for residents. We welcome the government’s consultation and the opportunity to discuss these important issues further.”
Labour’s shadow housing minister Matthew Pennycook warned the consultation misses out support for people living in shared ownership properties and added that housing associations would need extra funding to cover the rent shortfall.
“Below-inflation increases will inevitably see social landlords forced to choose between reducing essential services, cutting spending on repairs and maintenance, delaying retrofit work and building fewer new social homes,” said Pennycook.
“If a lower cap is introduced, the government must either provide additional funding directly to plug the gap or look to other ways to protect the ability of social landlords to manage, maintain, retrofit and build more social homes as part of a new long-term rent settlement.”
Cllr James Jamieson, chair of the Local Government Association and Kate Henderson, chief executive of the National Housing Federation, echoed Pennycook’s view.
“Decisions on the level of rent increases for tenants need to be made by housing providers within the existing government rent policy commitment, ensuring that there is a careful balance between affordability for tenants and investment in the homes that they live in,” the pair said in a joint-statement.
“If the government does take forward a lower cap, then it should provide additional funding for 2023/24 and for future years so that housing providers can continue to safeguard services and meet the country’s future housing needs.”
However, SHAC’s Muna also called on the government to bring in controls to cap service charges as part of cost of living measures, warning that “the cap on rent will be useless” without it.
Muna added that rent rises could see the taxpayer picking up the bill in housing benefit. If the government put through the current CPI plus one per cent rise the bill would be £1bn, she claimed. Muna added: “Even a third of this would be an obscene amount of additional drain on the public purse.”