Rent increase for 2011/12
03/11/2011 2:56 am
If I remember rightly, the average rent increase for council housing last year was about 6.3%, with several authorities increasing by over 7%.
This year the RPI is higher, and it looks to me like the average increase will be over 7% if the same formula is used.
Private rents inclreased by 4.3% in the last year according to LSL property services, and considering the pinch everyone is feeling, can we expect the Government to step in like they did a couple of years ago?
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03/11/2011 9:58 am
No. It's a different government. In any case "stepping in" would involve unwinding zillions of calculations around how the new self-financing regime is going to work from April next year, so unless they have a rabbit already built into that particular hat, I fear that disappointment awaits.
03/11/2011 10:18 am
The average council rent last year was in effect a two-year increase as it was frozen the year before as central government gave money to thaat effect to loacl government.
The September 2011 inflation figure (CPI) was 5.2% and (RPI) was 5.6% an the formula used in ((RPI+0.5%) plus or minus £2))
Governmen policy holds two diametrically competing forces. The 'we are all in this together' one and the housing policy of increase rents to pay for more new build at the other scale. So what the overall increase in social housign will be is anyones guess!
In terms of increase last year the HB payments to council tenants increased from £67.86 to £70.99 - a 4.6% increase and for associations from £77.43 to £79.67 (2.89%) and all social tenants from £73.04 to £75.85 - a 3.84% increase using official HB figures from April 2010 to 2011
So while some council tenants may have had a 6 or 7% rise the average figur is considerably less
03/11/2011 11:48 am
My landlord would be screwed if they cut housing benefit, currently they are loaded, the state pays in full and on time, without fail.
He doesn't have to work for a living, and for him to make a living, neither do I.
03/11/2011 3:28 pm
Potentially, the biggest rent increases will be in the conversions to 'Affordable Rent' from barely affordable social rent to totally unaffordable 80% Market Rent.
If these are included in the rent increase figure it is likely to be even higher than the percentage increase in executive pay, or the percentage increase in utility profits, or the increase in rail fares.
03/11/2011 6:15 pm
A three bed PRP house is currently around £93 a week (48 week year, semi-detached, small garden at front and darned big one at back). Terraced P[RP house round the corner, small garden at front and back -- AR at £125 (48 weeks),
Private rent close to the first property, terraced, no gardens -- £650 every 4 weeks.
03/11/2011 7:48 pm
I can hear some saying that the first property must be heavily subsidised by £130pw - but the I know some people are really, unintentionally, ignorant.
Perhaps the questioner should draw from Rick's example what rents will be once 'Affordable' rents take over from Social housing.
03/11/2011 10:29 pm
Derren, putting all the bedwetting to one side for a moment, the most rent will increase by is RPI + 0.5% + £2. All of this depends on where your rent is in relation to 'target rent'. The increase may be less, it won't be more. Ignore the excitement about 'affordable' rent, it doesn't apply to existing tenants.
04/11/2011 8:42 am
In my borough in London they're talking about 8.1% in total
04/11/2011 10:09 am
Rick - what you were just saying I will comment on:
You said above "
A three bed PRP house is currently around £93 a week (48 week year, semi-detached, small garden at front and darned big one at back). Terraced P[RP house round the corner, small garden at front and back -- AR at £125 (48 weeks), Private rent close to the first property, terraced, no gardens -- £650 every 4 weeks.
£93pw on a 48 week cycle is £85.85 on a 52 week cycle and this is needed for comparison.
The £650 every 4 weeks for the smaller private property is £162.50pw or if its a monthly figure £150.01pw.
So if the private rent is £150.01 pw its 74% more than the social home and all will be paid by LHA which is currently £160.38 in CE (Macc) for a 3 bed property.
If its £162.50pw then its an 87% increase of which nearly all (98.7%) will be covered by LHA
04/11/2011 10:57 am
Sancho - are you trying to deny the Government's drive to conversions.
Each bid for HCA grant has been required how many conversions of existing stock to 'Affordable' rent are involved, and bids without conversions may be less favourably recieved.
The expectation is for the majority of relets to be converted.
There will be no new social housing built, other than in exceptional circumstances and even then with the expectation of early conversion.
Yes, so long as a tenant sits tight, does not exchange, or sign a new tenancy agreement, they are safe, but that does not prevent the final removal of social housing by the bleeding drip of tenure conversion to finish what Right-to-buy began.
So not excitement at all but real design - and as for effects on rents, they will be considerably higher, as will averages as a result, so target rents will have to increase effecting what remaining social tenants are left by then as they will be the ones faced with the further rent hikes.
04/11/2011 11:27 am
f451, no, I'm not denying the possibility of conversions. I am just trying to keep things clear. There's still an unfortunate rumour out there that existing tenants on existing tenancies will somehow need to pay 'affordable' rents, which isn't the case. In the context of a thread regarding rent increases on an existing tenancy, I was merely making the point that 'affordable' rent is irrelevant.
I'm not convinced, by the way, that 'affordable' rents will be substantially higher than target rents in the majority of the country. It's an issue in London and other high value areas, but not so much in most places. The bigger debate is around security of tenure.
04/11/2011 11:57 am
If you read the proposals Sancho you will see that the guidance is to maximise rent charges wherever in the country they are. Where existing social rents are higher for instance, affordable rent products will be charged at these levels. Where market rents are higher then affordable rents will be linked to these - it is clearly explained.
If all new rents are therefore aimed as high as possible then the average rent per area will increase. This will have a knock on effect to target rents just via simple mathmetical progression.
Rigging the market to increase rents by all possible means will cause, oddly enough, all rents to rise, so yes, existing tenants do need to take caution from the government's policy. No amount of cotton wool will make the renting future look any better.
04/11/2011 1:26 pm
Sancho you say above that- "I'm not convinced, by the way, that 'affordable' rents will be substantially higher than target rents in the majority of the country"
If that holds then the affordable rent regime wont create the extra funds to develop new social housing, which is after all its remit. Hence if it doesnt then no new developments will materialise and the affordable homes programme will have failed to achieve what it set out to do. Rents will still have risen and so will cost more to the public purse in housing benefit.
The alternate view is that AR rents will be considerably higher than LHA rates (which as a national average ranges between 54 and 69% depending on what figures are used for gross market rent) and this will impact massively in the public purse bill.
Either way and with all the possibilities between these two points rents will increase and so will the public purse bill of housing benefit. AR therefore cannot be irrelevant as its least possible influence will still place upward pressure on rent and be realised
04/11/2011 1:33 pm
Nonny - please detail the nature of that subsidy.
Development cost - subsidy is also paid for home ownership products, so no 'by nature subsidy there.
Rent - current rent income exceeds government payments to Councils, so no subsidy there
Housing benefit - pound per property more is spent on 'Affordable' RSL housing and even more on Private sector housing than is spent on Council housing, so no 'by nature subsidy there.
So, these three facts aside nonny - your facts are?
04/11/2011 3:29 pm
F451, I have read the proposals. I 'live' the proposals every day.
Joe, what I'm saying is that in some of the lower value towns in the Midlands and the north, the current target rent is already 80% of the market rent so these rents will not increase. All the money from AR would theoretically be coming out of London but, as I'm sure you know, all the LAs are fighting against it. The Government aren't having that becuase, as you say, that would render the entire change to AR pointless.
The Government may or may not win that battle. If they do, as plenty of people have said, this will push people out of London and into 'the regions'. I suppose, then, there is an argument that the new demand will push up market rents in those areas and mean that the AR exceeds the target rent.
So, yes, I suppose in a roundabout way, affordable rent will eventually push up people's rent in areas where it is currently at or below target.
04/11/2011 3:43 pm
My sympathies to your living the proposals Sancho - at least tommorrow is Saturday, a day of rest for some, and on Sunday we can be traditional and family focused, so long as that's still legal, before returning to lives in paper on Monday.
Meanwhile, at Hatfield Poly for one night only - Shapps and the Superstars singing, 'The only way is up!'
04/11/2011 3:56 pm
This could go on for a while - so nonny, does a market landlord make a profit or provide the home at cost, and if not at cost then do you understand why the market rent is not the benchmark, but the social rent is as that is at cost.
I really thought we'd got over this, but then another uneducated poster pops up and we go through all this again - can IH provide a glossary of terms we can point such people to rather than run around in circles.
04/11/2011 4:04 pm
Sorry I was a away for a couple of days, hence my late reply, but thanks for all the answers.
I wasn't looking at affordable housing, or assured tenancies, I was looking at the secured tenancies of council housing.
As mentioned, the basic formula is RPI+0.5%+£2, but this is only part of the formula, and depending on average rents it can work out much higher for individual properties. Having spoken to contacts in three different councils I'm aware of 6.4%, 7.9% and 8.5% in their initial assessment, and someone mentions above another which has assessed theirs at 8.1%.
Last year was not doubled to make up for the previous year, it was also based on a fiarly high RPI, and it happens the previous year had a negative RPI. The year before that the average increase was looking like going to be 6.2%, with some councils facing higher increases, but the Government stepped in at the last minute (literally 4 weeks to the day prior to the increase) and announced they will compensate LAs only if they bring their nicreases down to 3.1%. Social landlords missed out on this com,pensations and faced a public flack for having increases which were double what the cuoncils were charging, and the Government ended up paying out millions to compensate councils for their losses.