LHA To Increase By CPI

Will Quince MP, Minister for Welfare Delivery, has announced that from April 2020, Local Housing Allowance (LHA) rates will be increased in line with the Consumer Price Index (CPI), ending the freeze to the LHA which has been in place since 2016.  The Government says this increase will mean the majority of people in receipt of housing support in the Private Rented Sector will see their housing support increase, on average benefiting by around £10 per month. The latest CPI rate for November 2019 was 1.5 percent.  The Government also confirmed their September 2019 commitment to an additional £40 million in Discretionary Housing Payments (DHPs) for 2020/21. Read more on the NLA website.

https://landlords.org.uk/news-campaigns/news/lha-increase-cpi-april-year

Private Rents Falling In Real Terms

New figures showing rents have dropped, when set against inflation, prove the market is working, says the RLA. Private rental prices paid by tenants in the UK rose by 1.3% in the 12 months to July 2019, unchanged since May 2019.Inflation over the same period was:

·         2% as measured by CPI(H) which includes owner occupiers’ housing costs.

·         2.1% as measured by CPI.

·         2.8% as measured by RPI.

This means a real term fall in private rents. More can be found in the Index of Private Housing Rental Prices.

https://www.housingnet.co.uk/pdf/Index_of_Private_Housing_Rental_Prices,_UK_July_2019_(1).pdf

Rent Controls Would Leave Tenants ‘Worse Off’

The ONS’ rent index shows private sector rents across Britain increased by 1.1% in the year to January 2018. In London they grew by just 0.2%. This is against a current inflation figures of 2.7% (CPI) and 4% (RPI). The Residential Landlords Association (RLA) argues the figures show that calls by many in the Labour Party and elsewhere for rents to be linked to inflation would leave many tenants worse off. The figures further highlight that social sector rent increases, currently based on CPI plus 1%, are growing proportionally more than those in the private sector. Download the index from the ONS website.

https://www.ons.gov.uk/releases/indexofprivatehousingrentalpricesiphrpingreatbritainjan2018?utm_source=govdelivery&utm_medium=email&utm_campaign=2018-02-013_12:00_govdelivery&utm_content=Prices-Day

Warning Over Benefits Tempers Rent Settlement Optimism

Welfare reforms could leave some tenants struggling to pay higher rents once they begin rising in 2020, experts have warned, tempering some of the optimism about the recent rent deal. The announcement that social landlords will be able to raise rents by Consumer Price Index plus 1% for five years from 2020 was widely welcomed by the sector as a generous deal. However, some have warned that the forthcoming cap on benefits at Local Housing Allowance (LHA) levels, which is due to be imposed from April 2019, could create a shortfall between housing benefit and rents, leaving tenants having to cover the difference themselves. Read more on Inside Housing.

Government Announces Rent Settlement

The government has announced that social housing rents will rise by the consumer price index plus 1 per cent from 2020 to 2025. The confirmation is a return to the previous rent settlement which was meant to run from 2015 to 2025 but was replaced with the four year rent cut. Government said at the time of the rent cut that it would reinstate the CPI+1% formula after 2020, but there have been fears of a further reduction or change to the agreement.  Read more on the Social Housing website.

PRS Rents Rise 2.3%

Private rents increased by 2.3% across Great Britain over the past year as demand for rented homes outstripped supply, according to the Office for National Statistics (ONS). Official figures published showed rents increased 2.3% on average in the 12 months to September. This is significantly above inflation, with the Consumer Price Index showing general inflation increased by 1% in the year to September. The ONS figures showed average rents increased by 2.5% in England and by 0.1% in Wales. Rents fell slightly in Scotland, by 0.1%. Read more on the ONS website.

Inflation: Housing – Parliamentary Written Answer

Dr Andrew Murrison:  To ask Mr Chancellor of the Exchequer, if he will make it his policy to reflect house prices in the calculation of inflation.

Simon Kirby: Inflation statistics are produced independently of government by the Office for National Statistics (ONS). The current main measure of inflation is CPI. This does not include house prices as these are an asset price and in line with international practice are not included in a consumer price index. However, it does include some costs associated with housing, such as rental prices and the costs of renovating and repair and maintenance of homes. The ONS also produces CPIH, which does include housing costs but is currently undergoing development work after the UK Statistics Authority found faults in its production.

Large Landlords Should Raise Rents To Build

The largest housing associations should be allowed to raise rents in exchange for agreeing to build more homes, an influential thinktank has said. A paper by Policy Exchange said the government should do housing deals with associations that own or manage more than 4,000 homes which would give the greater financial freedom to enable them to build more, particularly properties for sale. The report said the five-year deals could involve an association agreeing to build 3% to 4% more homes including a significant number of shared ownership and market sale properties. In return, the government would permit the housing association to raise its rents by up to the CPI level of inflation or to simply avoid the rent cut. Download the paper from the Policy Exchange website.

Timetable For Introduction Of Pay To Stay

CLG officials have set out the timetable for the introduction of the 'pay to stay' scheme for council tenants with household incomes of over £31,000 (£40,000 in London).  The aim is to introduce the scheme from April 2017. Thresholds will be up-rated annually by inflation (CPI) and tenants in receipt of Housing Benefit or Universal Credit will be exempted from the policy. However, all other tenants will be required to declare their total household income to their local council to enable the council to calculate how much additional rent they will be expected to pay.  The additional rent is expected to be 15% of any income over the threshold or the full market rent for the property whichever is lower. Read more on the ARCH website.

Generation Rent Hit By A New Surge In Prices

Private rent prices paid by Generation Rent have continued to soar faster than wages and inflation, new data out today has revealed. Across Britain, tenants paid 2.6 per cent more in the 12 months to January 2016 - a notch up from the 2.5 per cent figure recorded by the Office for National Statistics a month earlier. Wages grew by only 2 per cent in the last three months of last year, while CPI inflation remains at a rock bottom 0.3 per cent. Rents have now risen steadily for five years across Britain, according to the ONS data. Read more on the Daily Mail website.

Housing Minister Signals Return To CPI+1% Rent Formula

Brandon Lewis, Housing Minister, has signalled that social and affordable rents will return to an inflation-linked formula after the four year rent reduction period. Councils and housing associations were told by George Osborne that social and affordable housing rents would be reduced by one per cent per year for four years from April 2016. Powers to compel councils and housing associations to reduce rents are included in the Welfare Reform and Work Bill currently before Parliament.  The reduction over the four years will mean that by 2020/21 stock retained councils will suffer a drop in forecasted rental income of some £2.4billion and a loss of £30billion income over the 30 year business plan period. This will significantly affect the resources available for housing services and planned investment in building new council housing and investment in the existing stock. Read more on the ARCH website.

Renters Pay £30 a Week for Government Housing Failure

Inflation is one of those annoying things that you just have to accept and deal with - the official target is, after all, 2%. But that gives the government no excuse to allow rents to go up the way they have. Since 1998-99, when the government started collecting data on housing costs in the Family Resources Survey, the Consumer Price Index (CPI), the measure they currently use for inflation, has risen by 38%. In the same period, the median weekly rent (according to the FRS) has gone up by 80%. If rents had just matched inflation, renters would be an average of £30 better off a week. That adds up to £1546 a year. Once you take into account the tax and national insurance on earning that extra money, the typical private renter household, which earns £26,052 per annum, could get away with working 8.7% less – 3.3 hours of a 37.5 hour working week. Read more on the Generation Rent website.

Residential Rent Gains Expected To Slow

Mortgage rates are falling, capital values are rising, and in the past five years residential rents have outstripped consumer price inflation by 3.6 per cent. Much of that increase has come in the past year, with rents up by 3.7 per cent, the fastest pace for two years. It's important to remember, though, that this embraces considerable regional variations. Rents in the east of England, for example, grew by an annual 12 per cent, even outstripping London, while rents in the East Midlands actually fell by 0.2 per cent. But a recent survey by Your Move, and letting agents network Reeds Rains, suggests that landlords expect rent inflation to tail off to 1.7 per cent by next year. Read more on the Investors Chronicle website.

Generation Rent Renews Call for Rent Controls

The latest Buy-to-Let Index might bring a smile to investors’ faces but it has prompted Generation Rent to reiterate a call for rent controls and a state-led programme to build more affordable housing.  Rents have risen by 15.2% since 2010 – 3.6% beyond CPI inflation. The average rent across England and Wales has risen from £667 per month in May 2010 to £768 as of March 2015. Furthermore, annual rent rises have accelerated to the fastest pace in two years, with the average rent across England and Wales up 3.7% over the last 12 months.  The average landlord has seen a gross return of £21,078 over the last 12 months, before mortgage payments and maintenance costs have been deducted. Of this, figure rental income makes up £8,259 while the average capital gain amounts to £12,819. Read more on the Housing Excellence website.

Right to Buy Discounts to Rise Again As More Tenants Become Eligible

The government is to further increase the level of right to buy discounts from 6 April. In an announcement made just before the official start of the purdah period, the CLG confirmed discounts will increase from £77,000 to £77,900 outside London and from £102,700 to £103,900 in the capital. The increases are in line with the CPI measure of inflation. Meanwhile, measures in the Deregulation Act have increased the numbers of tenants eligible for the right to buy. Previously, a tenant would have to live in council housing for five years before qualifying; this has been reduced to three years. Read more on 24dash.

Social Housing Rents - Playing the Percentage Game

Inflation is falling and could soon reach a negative figure – but neither tenants nor social landlords should start celebrating when it comes to rents. From April, most tenants face a typical rent rise of 2.2% – more than four times current inflation according to the consumer price index (CPI). It will be even harder in Bolton after Bolton at Home successfully applied for a waiver allowing it to exceed a new government rent formula for up to four years. For the vast majority of landlords that raise rents according to the new formula of CPI (as it stands each September) plus 1%, there is a further issue. If inflation continues falling they must reconcile what, in their eyes, are relatively low rent rises with long-term spending plans. Read more on 24dash.

Debt on the Rise Because Tenants’ Incomes Have Been Squeezed

Above average CPI rises in food, fuel and transport in recent years have effectively reduced tenants’ incomes by one fifth in real terms. To keep their homes going, 1 in 4 rely on payday loan companies, doorstep money lenders, pawnbrokers or shops supplying household goods at ruinous rates of interest. Fifty-five per cent of indebted tenants owe more than £1,000, with 19 per cent owing over £6,000 and 14 per cent more than £10,000.  For one third, debts are unmanageable. One in five tenants always have to go without necessities, such as food and heating, to service debt. And debt is the third largest household expenditure item, after food and heating, taking 18p out of every pound. Read more on the NHF website.

Britain’s Poorest Households Face Higher Rates of Inflation

Britain’s poorest households have suffered higher rates of inflation over the past decade than wealthier households, official research suggests. The bottom 10% of the country in terms of spending faced an average annual price increase of 3.7% since 2003, according to the Office for National Statistics, compared with just 2.3% for the top 10%. By comparison, the consumer price index – the official measure of inflation designed to capture price movement for households overall – has risen by 2.6% each year on average. The ONS said much of the discrepancy was explained by the greater exposure of lower-spending households to changes in the price of food, fuel and energy. Download the report from the ONS website.

Rent Increase Blow to Landlords

Housing experts are warning that landlords face a costs squeeze under the reformed social rent formula as a result of unprecedentedly low inflation rates. The consumer price index (CPI) for September has been set at a five-year low rate of 1.2%, falling from 1.5% the previous month. For 10 years from April 2015 landlords must use a formula of the September rate of CPI plus 1% to set rents, instead of the current formula of the retail price index (RPI), which was set at 2.3%, plus 0.5%. Because of the low CPI rate, landlords next year will only be able to increase rents by up to 2.2%, compared with 2.8% under the RPI-linked system. Experts said that the 0.6% gap between the two rent formulas was higher than most landlords had anticipated, and would force organisations to find efficiencies.  Read more on Inside Housing.

Poorest Households Suffer Highest Inflation

Britain's poorest households are suffering from higher rates of inflation than official statistics suggest, according to new Which? research. These findings originate from the Which? Lived Inflation Index, which is based on the government’s Consumer Price Index (CPI), but takes into account differences in spending patterns between households. The index indicates the poorest households are experiencing higher levels of inflation than the richest households. In the year to July 2014, prices rose 1.8% for the poorest households, compared to 1.5% for the richest households. Those differences mount up over the years. Looking at inflation since 2008, the impact on households suffering high inflation is equivalent to additional costs of £450 a year, compared to households experiencing the lowest inflation rates. Read more on the Which? website.