Social housing rent cap considered by government as cost of living squeeze hits

The social housing rent cap is being considered by the government. Credit: PA

A social housing rent cap is being considered by the government to prevent some of the country's poorest tenants facing huge hikes in monthly payments. Ministers are consulting on whether to limit rent rises that housing associations and councils can impose from April 2023 on more than 4 million households. A cap of 3%, 5% or 7% have been put forward as potential options.

The cap would be limited to the social housing sector, as the government comes under pressure to help tenants in renting privately, with average rent prices soaring in many parts of the UK.

London Mayor Sadiq Khan is calling for the government to freeze rents after they increased by 15% on average in the capital in the past year.

ITV News Political Correspondent Daniel Hewitt explains what the social housing rent cap could mean for tenants.

The UK government already limits how much social landlords in England can increase social rent each year. The formula is set at the consumer price index (CPI) inflation plus 1%.

With CPI inflation currently at 10.1%, that would mean an 11.1% increase in social rents under the current rules.

In April this year rents rose by 4.1%, the highest in a decade. Angry and worried families told ITV News they would struggle to afford the extra payments.

Although landlords don't have to increase rent at all if they don't want to, research by ITV News found 89% of councils and the vast majority of housing associations increased it by the maximum amount permitted under the government's formula.

I would expect the same to happen in April next year, in line with whatever ministers decide the cap should be. A capped increase of 5% or 7% in April 2023 would still constitute the biggest rent increase in many years, and would see social housing tenants paying hundreds of pounds more a year just as their energy bills go up again.

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The energy price cap is predicted by Cornwall Insight to increase to £6,616.37 in April next year.

The government estimates a social rent cap could cost tenants £300 a year on average.

“We must protect the most vulnerable households in these exceptional circumstances during the year ahead," Housing Secretary Greg Clark said.

“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.”

The cap would be temporary and run between April 2023 and March 2024, though ministers are consulting on whether it should be extended for two years.

The consultation ends in October and the government will announce the cap later in the year.

Councils and housing associations have expressed serious concerns that a rent cap will effect their ability to fund repairs and other services. In a joint statement, the Local Government Association and the National Housing Federation said the government must provide additional funding to housing providers. “Councils and not-for-profit housing associations are very concerned about the impact rising living costs are having on social housing residents,” said Cllr James Jamieson, Chairman of the Local Government Association and Kate Henderson, Chief Executive of the National Housing Federation. “Housing providers have been carefully considering their approach to next year’s rents and will do all they can to keep increases low where possible. “However, 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. “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. “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.”