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The government has published a consultation on its social housing rent policy from 2020.
In October 2017, prime minister Theresa May announced that rents would rise 1% above inflation (Consumer Price Index plus 1%) each year for at least five years from April 2020, in a move widely welcomed by the social housing sector.
Social housing is subject to a yearly 1% rent cut imposed by previous chancellor George Osborne, which has cut housing associations’ and councils’ income by billions.
The government is required by law to consult the Regulator of Social Housing (RSH), Homes England and other stakeholders before directing the regulator to change rent rules.
The consultation document also proposes bringing local authority landlords within the scope of the RSH rent standard “to respond to the roll out of Universal Credit”.
Councils are currently subject to “Limit Rent”, which reflects rent policy and is used to control how much housing benefit should be paid on behalf of recipient tenants.
The consultation also proposes making tweaks to how “formula rent” is calculated and the rules around affordable rent – such as preventing social landlords from resetting annual rents by more than CPI+1% when reletting a home to the existing tenant.
Inside Housing has asked the government whether this would limit the ability of providers to ‘convert’ socially rented homes to the affordable rent regime – a practise introduced in 2010 which has attracted controversy.
In its assessment of the impact of the new rent policy, the government concludes CPI+1% “is neutral in terms of delivery of affordable homes and will have no Housing Benefit impact, as a return to the CPI+1% formula (which was in effect prior to social rent reduction) is the counterfactual position”.
The consultation closes on 8 November.