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Welsh landlords to cut spending after ‘disappointing’ rent settlement
Housing associations in Wales have voiced their disappointment at a new inflation-only social housing rent settlement for 2019/20, which will hundreds of thousands of pounds cut from organisations’ budgets.
The Welsh government announced in December that social landlords will be allowed to raise rents only by the Consumer Price Index (CPI) – set at 2.4% – next financial year.
For the past five years, the sector has been subject to a CPI plus 1.5% rent settlement.
Landlords have also been allowed another £2 a week of flexibility, though this will now be removed for those which average weekly rents are within or above their ‘target rent band’, as determined by the Welsh government.
The government said it is “conscious of the demands higher rents can place on tenants”.
The settlement will act as an interim arrangement, expected to last for a year, while ministers await recommendations from an ongoing review of affordable housing policy in Wales, due in April.
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Valleys housing association Trivallis said the 2019-20 settlement will cut £870,000 from its budget and mean it has to delay its plans to introduce a new living rent model across its stock.
A spokesperson for the 10,000-home landlord said: “We understand that the decision of the settlement will apply for this year only but despite its short-term nature, the impact will be immediate for Trivallis.
“Our chief executive, Ian Thomas, has written to the newly appointed minister for housing and local government and expressed his disappointment and is awaiting a response for us to discuss a way forward.”
Alan Brunt, chief executive of 8,000-home Bron Afon Community Housing, said: “For us, it’s disappointing and an odd bit of signalling at a time when everyone is awaiting the outcome of the affordable housing review.
“The announcement for next year will mean we have to find an extra £500,000 compared with our early budget projections.
“It’s too early to tell, but this could mean for example that we have to put on pause some of our planned community investment programmes.”
He added that the announcement highlighted “the importance of a long-term rent settlement”.
Stuart Ropke, chief executive of trade body Community Housing Cymru, warned the settlement would make it “more difficult” for the sector to meet its housebuilding promises with the Welsh government.
However, Amanda Davies, chief executive of Pobl Group – Wales’ largest housing association with 11,500 homes – was more positive.
She said: “We’ve just seen an above inflationary five-year increase road mapped for England and I have no doubt that the Welsh government will be keen to provide similar certainty, so I view this one-year settlement as pragmatic in awaiting the findings of the review of affordable housing in Wales.”
Mike Owen, chief executive of 4,000-home Merthyr Valleys Homes, said: “We are consulting this week on a new position on rents in line with this new government policy and I expect that overall our tenants will be pleased the rent is not going up above inflation.
“However, I also expect that they will be concerned that there will need to be some cuts in services and standards due to loss of anticipated income from not being able to increase those rents that are much lower than the living rent by more than inflation.”
A spokesperson for the Welsh government said: “We know that housing associations in Wales share our commitment to building more affordable homes.
“However, we are conscious of the demands that higher rents can place on tenants, which is why have taken this measured approach.”
