Government announces plans to rein in social housing rent rises

The government has announced plans to rein in social housing rent rises next year to protect tenants from the impact of rising inflation.

Since 2019, councils and housing associations have been limited to increasing rents by 1% above the CPI rate of inflation each year – known as CPI+1.

But today the Department for Levelling Up, Housing and Communities launched a consultation on capping social housing rent rises below inflation in 2023/24.

The Department’s consultation document said: ‘When the current rent policy was set in 2019, inflation was forecast to be around 2% in 2022 and 2023. CPI was 10.1% in July 2022. If CPI remains at or above this level in September, this would permit social housing rent increases from 1 April 2023 to 31 March 2024 of 11.1% or more. This much higher than expected rate of inflation is already placing considerable pressure on many households, including those living in social housing. We know that Registered Providers of social housing (‘Registered Providers’) will also be concerned about these pressures on their residents and will be carefully considering how to respond.

‘In the face of these exceptional challenges, we think there is a strong case for making a temporary amendment to the CPI+1% policy next year in order to provide a backstop of protection for social housing tenants from significant nominal-terms rent increases.’

The Department is consulting on whether to cap social housing rent rises at 3%, 5% or 7%, and invited other suggestions from respondents.

Social housing landlords would be limited to increasing rent by CPI+1 in the unlikely event this was lower than the new cap introduced for 2023/24.

The consultation document added: ‘We also recognise that, compared to rents increasing by CPI+1%, imposing a ceiling on rent increases would (depending on the actual CPI rate in September) leave Registered Providers with less money to invest in providing new social housing, improving the quality and energy performance of their existing homes and providing services to tenants. These are important outcomes to government as well as to Registered Providers, so any decision to restrict rent increases inevitably involves tough choices.’

The new cap will not be introduced for sectors such as supported housing, with the Department saying that, ‘due to their operating margins or business models,’ these sectors may ‘be less resilient to financial pressures.’ 

Responding to the announcement, housing charity Shelter said: ‘Putting a cap on rent increases for social tenants can’t come soon enough, but unless the government scraps punitive policies like the bedroom tax, too many social tenants will still struggle to pay.

‘And of course, England’s 11 million private renters have been offered no extra help at all, despite private rents hitting record highs. These are extraordinary times that require extraordinary measures. Instead of dragging its heels, the government has to help people pay their rent now, or deal with tens of thousands of people losing their homes this winter.’ The consultation will close on October 12

Photo by Chromatograph