Tuesday, 02 September 2014

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)

  • Bolsover Posh boy

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

    Unsuitable or offensive? Report this comment

  • Melvin Bone


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

    Unsuitable or offensive? Report this comment

  • Tenantplustwo

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

    Unsuitable or offensive? Report this comment

  • 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!!!

    Unsuitable or offensive? Report this comment

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

    Unsuitable or offensive? Report this comment

  • 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.

    Unsuitable or offensive? Report this comment

  • 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.

    Unsuitable or offensive? Report this comment

  • 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.

    Unsuitable or offensive? Report this comment

  • 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.

    Unsuitable or offensive? Report this comment

  • 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.

    Unsuitable or offensive? Report this comment

View results 10 per page | 20 per page

Have your say

You must sign in to make a comment

sign in register

Newsletter Sign-up

More Newsletters

Related

Articles

Resources

  • The magic formula

    13/09/2013

    New business models may be key to unlocking council housing development.

  • Exchanging ideas during job swap

    30/05/2014

    When directors at a Staffordshire-based housing association swapped jobs for seven weeks they ended up learning new skills - and saving money. Helen Clifton reports

  • Trade secrets

    13/06/2014

    Can learning from other sectors help social landlords do their jobs better? Heather Spurr visits retail icon John Lewis with a number of landlords to find out

  • Better together

    14 November 2013

    By working with a social enterprise to bring 15,000 homes back into use, Leeds Council proved that a collaborative approach is best. John Statham reports

  • The apprentice

    17/01/2014

    Faced with thousands of pounds of debt and uncertain job prospects, school leavers are increasingly taking up apprenticeships as an alternative to university. Gwen Smith meets apprentice turned housing officer Jordan McKenna to discover the benefits of learning on the job

IH Subscription