Sunday, 01 March 2015

Three authorities will set rates below official guidelines, survey reveals

Councils to increase rents by 5.1 per cent on average

Just three of the 25 top stock-owning councils in England will increase rents below government-set guidelines for 2013/14.

The vast majority of council tenants will face rent hikes of between 4.5 per cent and 6 per cent.

The average increase will be 5.1 per cent, according to a survey carried out by Inside Housing.

Of those councils with at least 20,000 homes, just Lambeth, Leicester and Nottingham councils have elected not to apply the maximum increase possible.

Communities and Local Government department guidelines recommend that councils put rents up by September’s retail price index level (2.6 per cent) plus 0.5 per cent plus up to £2 a week to meet its target of having housing association and council rents converge by 2016.

However, under council self-financing reforms, local authorities can choose their own rent levels.

Sandwell Council raised rents by 9.6 per cent - more than any other local authority surveyed. The west midlands council has, however, switched from an October increase to April and so has not raised rents for 18 months. Leeds Council’s 5.9 per cent rise was also above the government guidelines after it opted not to impose the maximum increase last year.

Last autumn, the Association of Retained Council Housing warned that authorities not taking advantage of the government formula could risk their ability to fund investment in their housing stock.

Nottingham’s increase of 5.5 per cent is 0.5 per cent lower than the maximum allowed. Dave Liversidge, cabinet member for housing at Nottingham Council, said the move was in line with a business plan that assumed RPI of 2.1 per cent and would cost around £600,000 a year.

Lambeth Council in south London has increased rents by 4.2 per cent, rather than the 4.5 per cent allowed. A council spokesperson said it took the decision ‘to cut the cost of living for our residents’.

Similarly, in Leicester rents increased by just 3.4 per cent instead of the maximum 4.1 per cent.

In numbers: council rent increases in 2013/14

25 councils surveyed by Inside Housing

5.1 per cent average rent increase

3 councils plan to set rents below government guidelines

£600,000 amount Nottingham Council will lose in revenue under its planned 5.5 per cent increase

Readers' comments (16)

  • On the sidelines

    is it any wonder the HB bill has gone into melt down

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  • Melvin Bone

    Service charges seem to be going up at a high rate as well...

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  • Georgina Goldsmith

    How it this right its above inflation and yes Service Charges our Excessive

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  • Chris

    Soon to be heard on the floor of the Commons:

    Cameron: and of course, in the same way we have reduced private rental costs, social renting is becomming cheaper by the day - and we've slashed the welfare bill, made work pay, taught Europe their place, restored the economy and cut borrowing - plus my name is Clive and I drink below the recomended healthy units of alcohol - nurse, time for pills!!!

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  • rents up 5.1% benefits up 1% public sector pay up 1% do the math where is the money going??

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  • Being somewhat of a rents specialist I find this article at best meaningless and at worst misleading.

    Quoting stand alone average increase %'s increases across large bodies of stock does not really tell you much. To understand any increase across a large number of properties within any given locality you need to quote what level their current charges are in relation to the "Target Rent".

    In simple terms Council A could have a 3.1% increase - but their rents are mostly already at the Target rent level.

    And Council B could have a 6% increase but their rents could be much lower on average than the Target rent.

    In this hypothetical scenario Council A will have charged its customers far more since the introduction of Rent Restructuring (April 2002), but as reported above Council B are clearly the nasties.

    Its all in the detail.

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  • For the moment it is largely academic how much social rents are increased - as 2/3rds of tenants are fully covered by HB .

    Likely only the circa 20% in full time work will be hit with full increase.

    Over the next decade or so - such increases can easily compound up to double social rents - which before then will have exceeded the HB - which latter is being disconnected from local rents as at 1 April 2013.

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  • Chris

    'Largely academic' Realist - really? So nobody has to pay the extra rent. The money does not need to found to fund the extra HB?

    Have you now found that money tree you were on about Realist, or perhaps jsut formed a different understanding?

    Yes it matters, and matters deeply. Tenants need to fund the extra cost, sucking money out of the consumer market. taxpayers need to fund the extra benefit cost, sucking money out of the treasury that could otherwise be used for positive purpose (like building affordable homes for instance) and increasing the national debt. But worst of all, tenants need to gain ever higher earned incomes to be free of benefit dependency.

    Not academic at all - far from it.

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  • Chris - I meant to say the increase is academic for most tenants - who actually do not pay rent from their own resource.

    If course I am aware that larger families with OBC will have an issue

    Yes the increase impacts mainly on the taxpayer - as SRS gets 61% of HB - as flagged on this forum.

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  • Chris

    You've not graped the basics of Universal Credit then have you Realist.

    Excepting that, a person's housing benefit is part of their income, whether paid directly or not, and still needs to be funded - the rent still gets paid.

    As people achieve more independence from benefit these higher rents and the clawback will really prove a hardship as great, or arguably greater than before.

    The idea that housing benefit is not real money is part of the reason we've ended up in the welfare mess we are in - the policiticians spin has ended up being self believed, only now the bill has landed on the doormat.

    Such thinking, and those who perpetuate it are part of the problem not the solution - they may not like to hear that, but it is a sorry truth that until properly understood and reacted too will continue to see non-solutions and idiocy in the lead.

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