Rent Plan Blows Hole in Council Coffers

Councils are planning inflation-busting rent hikes in an attempt to plug multi-million pound holes in their business plans caused by proposals to change rent-setting rules. Analysis of the business plans of more than 40 English councils reveals that the majority will apply the maximum rent increases allowed in 2014/15. The average increase will be 5.16 per cent. They are doing this to minimise predicted losses of hundreds of millions of pounds over their 30-year business plans as a result of an early end to the government’s policy to align social housing rents. Under government plans, from April 2015 councils will no longer be able to increase rents gradually by £2 until they meet optimum, known as target rent. This means 2014/15 is the last year they can use the formula of the retail price index (3.2 per cent) plus 0.5 per cent, plus up to £2 per week. Instead, for the next 10 years rents will be set using the consumer price index plus1 per cent. Read more on Inside Housing.