Social housing rent increases to be capped at 7% next year, Government announces
The Government has said it will impose a 7% rent ceiling to social housing rent increases in the 2023-24 financial year as a temporary measure amid the cost of living crisis.
Detailing the plans in a response to a consultation it conducted on the policy, the Government said it believes the limit on rent increases "strikes an appropriate balance" between protecting social tenants from high rent increases and ensuring that Registered Providers of social housing are able to continue to invest in new and existing social housing and provide decent homes and services to tenants.
Current policy allows landlords to raise rent by consumer price inflation (CPI) + 1 percentage point each year, meaning that without intervention, social housing rents could rise by up to 11.1% in 2023-24.
Under the 7% rent ceiling, the Government estimates that tenants will pay £200 less per annum than if the full increase had been applied. The 7% rent ceiling was the highest proposed by the consultation. It will apply to the 2023-24 rent year only.
The Government emphasised rent ceiling will in no way relieve landlords of their responsibility to ensure that residents are safe in their homes, including complying with statutory health and safety obligations.
But where a provider is no longer able to meet these requirements, "or where complying with the revised Rent Standard would jeopardise a Registered Provider's financial viability", landlords can still apply for an exemption (or the disapplication of the revised Rent Standard), as per the processes under the current Rent Standard, the Government stated.
Supported housing will be exempted from the 7% rent ceiling due to the tighter operating margins, the Government said.
Responding to the policy, the National Housing Federation (NHF), which represents housing associations that house approximately six million people across England, said the Government's response considered all of the points that the NHF raised in its submission to the consultation.
"For example, the government understood that in most cases, housing associations would not have elected to raise rents by the permitted CPI+1%, even without government action," a NHF spokesperson noted.
The NHF added: "[The Government] is also keenly aware that holding rent increases below CPI+1% will mean housing associations are able to raise less rental income than they otherwise would, impacting their ongoing investment in existing and new homes."
Alongside its response to the consultation, the Government has issued a final direction to the Regulator of Social Housing, requiring the regulator to set the new standard from 1 April 2023.
Adam Carey
