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Welsh Government slashes rent settlement to inflation only
The Welsh Government has issued a new one-year social housing rent settlement – slashing the permitted increase in 2019/20 to inflation only.
The move sparked warnings from the sector that it would become "more difficult" to build new homes in the country as a result.
For the last five years, social landlords in Wales have been able to increase rents by the Consumer Price Index (CPI) plus 1.5%, with the option to add on another £2 a week.
Inside Housing has seen a letter sent to councils and housing associations today confirming the move. The Welsh Government is yet to issue official confirmation publicly.
But under the replacement settlement, in the next financial year they will only be able to raise rents by CPI – set at 2.4%.
Landlords whose average weekly rents are within or above their “Target Rent Band”, as determined by the Welsh Government, will also no longer be apply the £2 add-on.
The settlement will act as an interim arrangement while ministers await recommendations from an ongoing review of affordable housing policy in Wales, due in April.
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Stuart Ropke, chief executive of Community Housing Cymru, which represents housing associations in Wales, said: “Our housing pact with Welsh Government and the ongoing Affordable Housing Review are focused on creating the conditions to build the homes Wales needs.
“Today’s rent settlement will make this task, and our sector vision of making good housing a basic right for all, much more difficult.”
Welsh Government has a target to see 20,000 affordable homes delivered in the 2016-2021 Welsh Assembly term – with housing associations signing a pact to build at least 12,500 of these.
Affordable housebuilding in Wales fell 9% in 2017/18 – meaning the annual output needs to double to more than 5,000 homes in order to meet the 20,000 ambition.
Part of the remit for the Affordable Housing Review – chaired by Lynn Pamment, a partner at PwC – is to examine “whether more can be done to increase the supply of affordable housing in Wales”.
It is expected to make recommendations on a long-term rent policy.
Mr Ropke said: “The review gives us an opportunity to build a policy environment which enables housing associations to deliver more affordable homes across Wales.
“A rent policy which offers long term certainty so housing associations can set sustainable rents at a local level is our preference, but it’s now essential an early decision is made on what the long-term policy will look like.
“This will hopefully enable housing associations to face the future with confidence.”
The Welsh Government has been approached for comment.
At-a-glance: The review of affordable housing supply in Wales
The review will examine "whether more can be done to increase the supply of affordable housing in Wales, maximising the resources available", the Welsh government has said.
It will be chaired by Lynn Pamment, Cardiff senior partner and government & public services lead at PwC.
The Welsh government says the review will:
- examine the scope for increasing match funding to build more affordable homes, to maximise the number of homes created by the Welsh Government’s contribution to social housing
- review the arrangements governing partnership working between local authorities and housing associations
- consider the implications of moving to deliver zero carbon homes by 2020, including the role of off-site manufacture and modern methods of construction
- review the standards governing affordable housing and advise on whether they require updating
- make recommendations regarding a sustainable rent policy that will both allow long term affordability for tenants and allow viability of existing and new housing developments.
The review will be expected to issue a report and make recommendations by the end of April 2019
