Rent rises for millions of people living in social housing will be capped next year, the government has announced, but tenants are calling for a full freeze and threatening not to pay increases.
Citing the cost of living crisis, Greg Clark, the housing secretary, said social landlords would be limited to an annual increase of between 3% and 7%, with the exact figure to be set after a consultation, which will also ask if the temporary cap should be in place for one or two years.
At present, social housing landlords can increase rents by consumer price inflation plus 1% which meant tenants were facing the possibility of an 11% jump in rent bills. Such a rise would have also hit the taxpayer as the majority of social housing tenants use benefits to meet their rent.
“We must protect the most vulnerable households in these exceptional circumstances during the year ahead,” said Clarke. “Putting a cap on rent increases for social tenants offers security and stability to families across England. 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 tenants warned the cap was inadequate, in part because it would not apply to rises in service charges, and called instead for a complete freeze.
“Between 3% and 7% is not enough,” said Suzanne Muna, the secretary of the Social Housing Action Campaign, who stressed tenants were also facing rising food, fuel and other costs. “This would still be a huge problem for tenants who can’t absorb 3%.”
The campaign said that even before the Covid pandemic and the cost of living crisis, rent arrears among housing association tenants and residents were building at a steady rate of about 10% annually. Between March 2018 and March 2021, rent arrears grew from £591m to £704m. It is calling on tenants to refuse to pay any increases in rent.
Private landlords have been increasing rents at 4.7% a year overall and at 8.3% on new lets, according to annual data to July from Hamptons, the estate agency.
Social landlords said the cap would mean tens of billions of pounds less would now be invested in social housing stock at a time of rising public concern about safety and conditions in some estates. The cost of building new homes rose 12% in the year to June and repair costs are up 14%, they said.
The National Housing Federation and the Local Government Association said: “We are very concerned that a new cap on social housing rent increases will significantly impact on housing providers’ ability to provide critical services for residents and invest in new and existing homes.”
They said if rent rises are capped further government should provide funding to mitigate losses.
“To maintain and improve existing residents’ homes, as well as continuing to build much needed new affordable homes, significant investment each year is essential,” said Geeta Nanda, the chief executive of the Metropolitan Thames Valley housing association and chair of the G15 group of social landlords.
“Rental income is critical to supporting this work. Housing associations have already seen costs for critical materials to deliver repairs and maintenance increase by as much as 16.8% this year, and the cost of constructing new homes has grown by more than 11% as well.”