Consultation On Rent Policy Due “Very, Very Soon”

Secretary of State Sajid Javid is reported as saying that housing associations and councils can expect consultations the government's rent policy post 2020 "very, very soon". The government's previous 10 year social rent policy introduced in May 2014 was scrapped by George Osborne in the Summer Budget of 2015 and there has been a huge reduction in rental income as a result of the 4 years of mandatory year on year 1% rent reductions up to 2020 imposed by the Welfare Reform & Work Act 2016 with ongoing uncertainty about future rent policy. However the government's Housing White Paper promised to set out a rent policy for housing associations and local authorities for the period beyond 2020. Read more on the ARCH website.

Minister Rejects Call For Rent Cut Review

The government has rejected a call from former civil service head Sir Bob Kerslake to commission an independent review of the social housing rent cut. Lord Bob Kerslake, a crossbench peer who also chairs Peabody, was one of three peers to table an amendment to the Welfare Reform and Work Bill, which would require the government to commission an independent evaluation of the four-year 1% rent cut. Lord Kerslake believes the findings are necessary to help ensure the government properly evaluates the impact of the cut when it is deciding on rent-setting after the cut comes to an end in 2020. Read more on Inside Housing.

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.

No Blanket Exemption For Supported Housing

The government has decided against exempting all supported housing from the 1% rent cut, an official document has confirmed. An impact assessment of the policy said “a complete exception for supported accommodation has been considered but is regarded as disproportionate”. Providers of ‘specialised supported’ accommodation are unlikely to have to reduce rents by 1% over four years, as laid out by the Welfare Reform and Work Bill. However, sector figures have said very few properties are classed as ‘specialised supported housing’. Such housing usually has to offer ‘a high level of support’ for residents, receive no or negligible public subsidy, and have been commissioned in line with local health, social services or Supporting People strategies. Download the Impact Assessment from the Parliament website.

Government 'Should Return £6bn To Councils'

The government should give back £6bn to councils in the wake of the 1% social rent cut, stock-owning local authorities have said. In written evidence to parliament on the Welfare Reform and Work Bill, the Association of Retained Council Housing (ARCH) said the policy would end plans for 20,000 new council homes. The group told the Public Bill Committee that if the changes had been anticipated in the self-financing settlement, council housing would have been valued “not at £29bn, but at £6bn less”.  “Councils have a legitimate case to argue that the government should now return this £6bn to them,” the group added. ARCH said the 1% rent reduction would mean that by 2020/21, councils would lose £2.4bn in income, and a further £30bn over the rest of the 30-year business plan period. Social landlords use a system called Existing Use Value Social Housing to value their stock, which is based on future rental income. Read more on the Parliament website.

Social Rented Housing: Rents – Parliamentary Written Answer

Emily Thornberry: To ask the Secretary of State for Communities and Local Government, with reference to Clauses 19 to 22 of the draft Welfare Reform and Work Bill, whether the compulsory one per cent annual reduction of rents in social housing will apply to housing association tenants on affordable rents.

Brandon Lewis: Clause 19 of the draft Welfare Reform and Work Bill requires registered providers of social housing in England to reduce the rents payable by their individual tenants by 1% per annum for four years from 1 April 2016. The reductions will apply to rented social housing, including Affordable Rent properties. Exceptions are set out in clause 20 and in subsequent regulations. We intend to clarify how rents for new tenancies starting after 1 April 2016 will be set, and how the reductions will apply to these tenancies.  

 

Re-Lets At Formula Rent And 1% Rent Reduction

Some authorities who have properties which have not yet reached convergence to "Formula Rent" may have to reduce some property rents in April 2016 by more than one percent.  The current Guidance on Rents for Social Housing, effective from April 2015, was intended to provide long term certainty and stability to council tenants and landlords. It was expected to stay in place for ten years. The announcement of a compulsory one percent reduction over the next four years represents a complete U-turn on the policy. For some properties the rent reduction could be greater than one percent.  Where local authorities have not achieved 100% "rent convergence" to Formula Rent, the Guidance encourages councils to move the rent of any property not yet at Formula Rent up to the formula rent when the property is re-let following vacancy. Within the Welfare Reform and Work Bill, there is a provision that if social landlords increase rents on any properties "in year", they will have to be reduced back down again to the pre-increase rent minus 1% from April 2016. Read more on the ARCH website.