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The biggest issue for the housing sector in England is rent affordability as double-digit inflation leaves landlords facing some tough choices in the not-too-distant future, the former director of regulation at the Scottish Housing Regulator has said.
Speaking on day two of Housing 2022 in Manchester, Ian Brennan, now a board member at Historic Environment Scotland, said rent affordability is the biggest challenge currently facing the sector.
He said: “Rent affordability, I think this is the big one for the housing sector.
“You have a policy in England which is CPI [Consumer Price Index) plus 1%. I think this was clearly designed for an era when CPI inflation was at around 2%. But now inflation could go as high as 11%.
“There will be huge issues for landlords and for tenants if landlords implement CPI costs and there will be massive consequences for the financial health reform rules. Plus there will be some issues on 30-year business plans that are predicated on that [CPI].”
In 2019, the government confirmed that social housing rents will rise by CPI plus 1% for the five years from 2020.
Last year, this was based on the September 2021 CPI figure, with social landlords able to raise rents by 4.1%. Nearly every English housing association raised rents by the maximum amount.
With CPI likely to go up even more by next April, landlords will have to make some tough decisions about how much they increase their rents.
In the conference hall, a delegate asked panelists how levelling up can be possible when no region in the UK has housing that is affordable for women due to the impact of the gender pay gap.
In response, Sarah Longlands, chief executive of the Centre for Local Economic Strategies, said: “I think we’ve got a combination of factors where working conditions for women still aren’t good enough.
“Many women and many single parents are still doing multiple jobs in order to make ends meet and there has been a big direction of travel in the past few years of growing levels of in-work poverty, where women are often at the sharp end.
“And, of course, a lack of access to affordable childcare doesn’t help either.”
Panelists were also asked whether there are reasons to be optimistic about the challenge of levelling up the regional and national economic inequalities across the UK.
Paul Johnson, director of the Institute for Fiscal Studies, said he remembers a period in the 1960s where half of all UK adults did not have their own teeth, but he pointed to how young people entering the labour market again after the pandemic and the low unemployment rate were reasons to be cheerful but things could still be better.
Mr Brennan asked delegates to cast their mind back to the Glasgow-based 1980s detective series Taggart, which he said featured social housing that was in poor condition.
But he described the new estates in that area of the city as “transformational” and said that “standards in the sector have never been higher”.
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