The Only Way Is Up

Changes to rent-setting seem poised to cripple some councils’ financial plans. It’s that time of year again for those working in council housing departments across the England, a period dominated by spreadsheets as teams prepare business plans for cabinet members to vote on. Buried within these dense documents are the proposed rents for the next financial year. The news is usually the same: rents will rise in line with a government-set formula which is dictated by the rate of inflation. This year, however, is different because the stakes are much higher than usual. While rents will still go up, for the most part, in line with inflation, every deviation in rents by even the tiniest margin above or below the rate of inflation could have a massive impact on the viability of councils’ 30-year business plans. The reason for this is in July last year the government sprung radical changes to its rent-setting policy on social landlords. It announced plans to replace the current rent-setting formula of the retail price index plus 0.5 per cent, plus up to £2 per week, with the consumer price index plus 1 per cent from 2015/16. Read what the implications for rent convergence and lost revenue are as a result on Inside Housing.