Thursday, 19 January 2017

Rent rise flexibility to remain for supported housing

Supported housing providers will still be able to raise their rents on re-lets by up to 10%, despite the 1% social rent cut, a local government minister has confirmed.

While landlords will still be forced to cut their rents by 1% a year over four years, they will be able to implement a one-off rent rise of up to 10% on supported and sheltered housing re-lets. They will only be able to do this once for each property.

The concession could mitigate some of the effects of the annual rent reduction for supported housing providers, which the National Housing Federation says will cost housing associations £3.9bn over four years. However, it will not offset the problems set to be caused by the decision to cap housing benefit for new social tenants at Local Housing Allowance rates.

Speaking in the House of Lords on Tuesday, Baroness Williams of Trafford, a communities and local government minister, confirmed the government would “allow rent-setting for new tenancies in supported housing at up to 10%”. The decision was initially announced by a junior minister before a parliamentary committee before Christmas.

Supported and sheltered housing providers have been able to raise or lower their rents by up to 10% on re-lets since 2003. However, there was uncertainty over whether this would continue after the 1% rent cut.

Social landlords had also previously been allowed to raise their rents on new general needs lets by 5%, but the government is not allowing this to continue under the 1% rent reduction.

Crucially, providers will only be able to use their 10% flexibility on re-lets once for each property. Inside Housing understands that a number of providers have already used their 10% flexibility since 2003.

Andy Winter, chief executive of Brighton Housing Trust, said the association could use the flexibility on 137 of its properties. He said the association had previously refrained from using the flexibility on these homes to keep its rents low, however the “bleak” financial outlook had forced them to look “at everything”. But he stressed that the government’s cap on housing benefit to local housing allowance starting from 2018 was the “bigger issue”.

UPDATE: At 1.04pm on 18/01/2016

This article was updated to reflect that the government’s rent flexibility applies once to each property.

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