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?
Sort: Newest first | Oldest first
04/11/2011 4:06 pm
Excuse my typos, one of my fingers is slower than the others, and I forgot to spellcheck :)
04/11/2011 4:46 pm
Nonny was right. Council housing is subsidised – and by more than the difference between profit and cost. To address your points;
“Development cost - subsidy is also paid for home ownership products, so no 'by nature subsidy there. “
WRONG – both home ownership products and council housing are subsidised
“Rent - current rent income exceeds government payments to Councils, so no subsidy there”
WRONG – this does not take into account the original subsidy put into building the properties that now bring in this rental income.
“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 WHAT – council housing is subsidised, therefore people who can’t afford the rent don’t require as much housing benefit subsidy to pay the rent on a council property. You could perhaps argue that the total subsidy that goes into paying someone’s rent in the private sector via HB is more than the total subsidy that goes into financing the build of a council property and paying the rent via HB, but that does not change the fact that council housing is subsidised.
05/11/2011 0:41 am
Oh dear, I see Chris/F451 is still spouting his "social housing is not subsidised" nonsense.
May I suggest checking out the document "'Table 651: Housing finance: Local Authority expenditure and income on housing from the Housing Revenue Account, England 1, 1997-98 to 2008-09" It shows a considerable level of housing subsidy being provided over those years (£24bn).
Or how about "Rural Housing Economic Viability Toolkit – Stage 1 Report" available from the HCA.
This document details the economics of many rural affordable housing developments and providers. For example, English Rural Housing Association reports the accounting of ten of their sites, and 43% of the cost is covered by HCA and local authority grants.
One other thing that becomes apparent from the HCA document is that even though these housing providers are supposedly "not for profit" organisations, there are plenty of people that are making handsome livings partly thanks to the taxpayer subsidy. For example, the ERHA costs listing includes a "construction consultant" who is paid a large chunk of money for every project. Overall, out of £813,333 total costs, £447,433 went to the "Construction Consultant" while legal costs were just £146,232.
Looks like a very lucrative gravy train to me.
05/11/2011 9:16 am
Actually, Derren's observations go to show that an immense amount of time and effort goes on working out subsidies, compensations, fixed rates of permitted increases etc. None of this is constructive.
It would be better if social housing were pegged to the open market housing price, not RPI. Within the industry there are already mechanisms to measure house pricing and these can be used to determine what the rental price for any house should be, on the open market.
That rent, plus a small supplement to charge for security of tenure (if it is given) should be charged. Then Housing Benefit should be paid to tenants who need it, to bring the rent they pay down to a level they can afford. The benefit would be administered in the same way it is currently worked out. Benefit would be paid directly to the housing provider.
The income from a provider's housing stock would be based on the value in the open market, significantly boosting income. This extra rental income would replace the HCA and local authority grants that currently have to be paid to support housing association developments. The absence of these other grant funding routes and the administration of them would compensate for higher payments and staffing in the HB system.
Overall the total amount of taxpayer money needed to subsidise the social housing sector and allow it to operate as a not-for profit (and not-for-loss) entity is fixed, so the cost to the taxpayer by having to pay housing benefit would be no more than current grants and other subsidies. However, the higher rental income from tenants who could afford market rent but were previously not paying it would reduce the burden on the taxpayer.
Ultimately the social sector should become fully integrated into the normal housing market. By competing equally with other providers but on a non-profit basis this should help to suppress private sector rents.
06/11/2011 12:00 pm
Sanch at 3.29 on 4/11 you said in response to my point
"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."
Look at http://blog.findaproperty.com/renting-letting/findapropertycom-rental-index-october/ which is the latest national figures by private lettings agency which states average market prices regionally.
North West £641 - £118.43 = 80% (56% above nat av social rent)
West Midlands £668 - £123.42 = 80% (62% above nat av social rent)
Average national HB in-payment is £76.16 and so affordable rent at 80% is still 56% - 62% above the national social housing figure. So there is still plenty of scope for rents to increase by 56 - 62% to reach 80% of market rent.
The figures therefore refute your view that social housing target rents and market rent are closely aligned in the NW and WM or indeed in any of the regions.
06/11/2011 2:30 pm
@Nonny - my argument was against your claim that the housing was 'by its nature' subsidised - all you have done is agreed that to be the case by agreeing that other housing tenures are also subsidised through a range of mechanisms. So housing is subsidised, not one particular tenure - well agreed nonny.
It's an odd vitriol that agrees with it's target nonny - but thanks for the endorsement.
@Gavin - still so desperate to be right - yet my point was 'current' rent account - do you not understand the meaning of the word current, Gavin?
I agree with you absolutety that in the previous years the total paid out by the treasury was more than it received from social rents - last year that reversed, which is the onward pattern. After HRA reform that will be amplified as will be seen in the removal of support.
So well done Gavin, you've proven that had I argued what you said then you'd have been right - I did not however argue that.
Now that both the children have been tutored I'll share this with Gavin and Nonny - my view is that social housing should be subsidised, but not through the benefit system, rather as an investment in State Asset.
Argue with that if you will - but at least argue against what I've put not what you'd before. And nonny - learn to read before making more specsavers gags!
Derren - apologies this has occured on your post, but unfortunately I attract stalkers who can be very petty and misguided, and have little regard for the topic.
I believe my points about the rent increases were made previously, and there is nothing more to add to those.
06/11/2011 3:28 pm
Apologies for feeling in a sefl righteous mood today - but F451, you are another who needs to stop, think, and then only if it needs to be said speak - stop arguing all things with everyone. It will only make your life shorter. If you are sure that you are right - be assured that we do not all need to be reminded, all of the time, even if you are!
06/11/2011 10:18 pm
Joe, I am by no means an affordable rent apologist, but what I stated was not my view, it was genuine experience.
You've cherry picked a few statistics to prove a point. I didn't pick the NW or WM and, if you read what I said carefully, I was talking about 'some of the lower value towns' rather than the big cities.
I fully accept that the leap to 80% of market rent will make a big difference in the cities and villages. However, I work nationally and have done the maths on a number of occasions and found that 80% of market rent is often the same as target rent (not all social rent, but full target rent). The main reason is that a major component of the 80% in these areas tends to be the service charge, which is not as market sensitive.
07/11/2011 9:12 am
What an ignorant comment - with so many low paid dependent on benefit to live the only thing higher rents causes is higher benefit bills - why not instead just use that money to invest in cheaper housing, which will be available for generations from the same investment, and as a result make rents affordable to many and reduce the benefit bill in the same action.
Demanding higher rent is simply demanding higher taxation for no discernable advantage - unless of course you one of those into starving the poor oput of existance Nonny.
07/11/2011 10:06 am
My local Council says this:
Nationally there are 181 authorities in the subsidy system in 2010/11 with total stock of approximately 1.81 million homes. Around 75% pay into the national pot and 25% receive from it. Nationally the system overall is estimated to make a surplus in 2010/11 of £100m or £54 per dwelling.
They are proposing increasing rents 8.5% in anticipation of a further £435,000 deficit in subsidy projected this year, and to stay within the maximum permitted rent restructuring allowance.
07/11/2011 10:51 am
Wolverhapton Council is looking at around 5.3% increase from April 2012.
They also note in their report:
3. A further review of the HRA financial position to the period ending 31 March 2013 has recently been carried out by the Cabinet, following the publication of the draft HRA subsidy determination for 2010/2011 on 9 December 2009. As a result Wolverhampton’s HRA shows a significant “surplus” which must be paid to the Government of £6.2M in 2010/2011. This is forecast to rise to £7.9M in 2011/2012 and £11.7M in 2012/2013.
07/11/2011 10:58 am
York is looking to apply the maximum convergence rent increases at least until 2015. This is partly because of their negative subsidy position:
" The two major sources of funding HRA expenditure have been Government Subsidy and rent income. Following the removal of the payment of rent rebates through the HRA there is now a net surplus on the notional HRA as the rent income now exceeds the subsidy payable by the Government for HRA expenditure on management, maintenance, etc. This results in a “negative” subsidy payable by the authority to the Government of £7,746k for 2011/12. This compares to £6,145k for 2010/11. "
07/11/2011 1:44 pm
Milton Keynes predicted a 5.1% increase for this year, but assumed a 4.6% RPI in their presentation detailing the propsect for HRA reform.
• 25 March 2010 the Government published ‘Council housing: a real future’, the then Government’s proposals for the reform of the Council Housing Finance system
• Stock-retaining local authorities to exchange the current complicated subsidy framework: Milton Keynes Council pays over £10m each year to the Government.
• Instead a one-off payment. To make this payment, MKC would have to take on an estimated £139m of housing debt in addition to the £80m currently outstanding.
• The council’s HRA would then be ‘self-financing’, retaining all of its income but having to meet the annual loan costs.
07/11/2011 3:27 pm
Sancho you say above:-
"Joe, I am by no means an affordable rent apologist, but what I stated was not my view, it was genuine experience.
You've cherry picked a few statistics to prove a point. I didn't pick the NW or WM and, if you read what I said carefully, I was talking about 'some of the lower value towns' rather than the big cities"
Firstly I dont think you are being an apologist for the AR programme. Secondly, I didnt cherry pick figures - these are figures for the NW and WMs that all.
Thirdly, I agree that in some areas AR may not make a difference, yet these are very isolated and I will be surprised if these 'areas' make up 1 BMRA. There may be pockets within 1 area but not all areas.
The 44,500 regulated rents receive less HB funding than average RSL does (£79.97 compared with £81.11) yet as these account for less than 3% of all private tenancies in receipt of benefit then I'd be surprised if the lower cost areas were more than 3% and hence 97% plus will have (significantly) higher gross market rents rents than target social rent. One report had Burnley as lowest area with a 2 bed PSL let being as low as £295pcm but these are very very small exceptions as the average figures show.
07/11/2011 4:10 pm
All those numbers,all the claptrap,on and on and on. In the real world people just can't afford above inflation rent increases,year after year.
Housing benefit will have to take the strain,that's it really,end of story.
07/11/2011 4:18 pm
Saying 'Housing Benefit can take the strain' is like saying 'it is all the fault of the markets'. They are both a man made mechanism that we control. Both cost us dearly.
But in terms of Housing Benefit - the higher the rents the higher the cost to the taxpayer - no investment, no return. So unless you are the landlord, where is the sense in pursuing this madness?