TSA says ‘technical application’ of rent cuts cited as main concern
Landlords ask for rent cut exemption
Three housing associations have asked the Tenant Services Authority to waive their rent cuts amid fears they would not be able to implement them effectively.
In November, the TSA said housing associations could apply for exemption from the 0.9 per cent rent cut if it would place their organisations in financial difficulty. Four landlords originally applied by the deadline of 31 December, but one has since withdrawn its application.
The TSA has refused to name those who applied due to confidentiality. However, a spokesperson said all applications concerned the ‘technical application of the regime and not the viability of the organisations involved’.
Steve Partridge, director of financial policy at Consult CIH, said the number of associations which asked for the exemption was not particularly surprising. He also said the phrase ‘technical application’ suggested they were stock transfers which are keen to ensure they can raise enough cash to carry out promised programmes of improvements but would not become financially unviable without the exemption.
‘We would have expected that some recent stock transfer organisations might have been affected by the rent cut because they have had some rent increases as part of their business plan,’ he said.
The rent cut came about because target rents - the rents associations must move towards under government rent restructuring rules - must drop in line with the retail price index in September if it is more than 0.5 per cent lower than the previous year. RPI dropped to -1.4 per cent in September 2009, causing target rents to fall by 0.9 per cent.
The TSA said it had already agreed a partial exemption from the rent cut for 11 housing associations which had raised money through funding vehicle Housing Association Funding. HAF forbids its borrowers from reducing their rents.
In a statement the regulator said: ‘The TSA is currently working with the organisations involved to assess the potential impact of a rent reduction and the scope for mitigating action.’
A decision on whether the associations can be exempted from the rent cut is expected in mid-February.
Timeline
October 2009
Rent cut of 0.9 per cent announced
November 2009
TSA invites housing associations to apply for exemption if the cut would place them in financial difficulty
December 2009
Four associations apply by end of December deadline but one withdraws
February 2010
Exemption decision due mid-month
Have your say
You must sign in to make a comment