Informed reports in the housing and mainstream media suggest that Chancellor Rachel Reeves is set to announce higher social housing rents, set for 10 years.
In her October Budget she is forecast to introduce a 10 year formula allowing local authorities and housing associations, and social housing sector tenants, to anticipate rents between 2025 and 2034.
The FT, acting on what would appear to be sources close to the government, says the formulas will be a rise in line with the Consumer Price Index (currently 2.2%) plus 1% per year.
The FT says: “The move is aimed at encouraging the building of more affordable homes by providing certainty over cash flows to housing associations and councils — which are grappling with heavy debt burdens and large maintenance backlogs. In recent years local authorities have almost stopped building homes, leaving housing associations — not-for-profit organisations — to build most new social housing in the UK. The government sets rent levels in subsidised social housing using a national formula.
“Guaranteeing higher rents will delight housing associations but could worsen the cost of living for millions of tenants and could land the government with a much higher benefits bill.”
A 10 year funding formula is not new to the sector – one existed under former-Chancellor George Osborne but it was scrapped in 2015. More recently a five-year settlement of CPI+1% was announced in 2020 but rent rises were later capped at 7% after inflation surged in 2022.
Deputy Prime Minister Angela Rayner, who is also Housing Secretary, has pledged “rent stability” to help deliver the “biggest increase in affordable house building in a generation”.
The Labour-led Local Government Association has recently called for an above-inflation 10 year settlement to allow councils and housing associations to plan for growth.
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Author: Landlord Today
