Chancellor Jeremy Hunt rejected calls for a social housing rent freeze and also opted to cap rent increases at 7 per cent rather than 3 per cent following a government consultation. Image: Parliament TV
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Chancellor Jeremy Hunt has been accused of “making tenants pay for the failures of the housing market” after announcing in his Autumn Statement that social housing rents will rise by up to 7 per cent.
Hunt announced that social housing tenants would be partially protected from the cost of living crisis through a 7 per cent cap on rent increases, rather than the 11.1 per cent hike they were facing. But campaigners wanted a rent freeze.
In recent months the government has been consulting with tenants, housing associations and other stakeholders on the rate at which increases should be capped with the option of a 3, 5 or 7 per cent rise. Hunt has opted for the latter, claiming it will save tenants up to £200 a year.
Social Housing Action Campaign’s Suz Muna criticised the move. Muna and fellow activists have been campaigning for a rent freeze for households living in the social rented sector, including many families on low incomes.
“It’s a pity that the government has gone in the opposite direction and decided that tenants and residents should be asked to pay for the failures of the housing market,” said Muna.
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“Our members have made it clear that they are already having to move further along the path of borrowing and debt. In some cases, that path will come to an end and they will end up defaulting on rents. This was already happening.
“What is less easy to show in the statistics is the sheer misery and despair that this is causing. The physical harm when people can’t eat properly or heat their homes, the mental health crisis when people can’t cope with all the worry. The impact on children and the elderly whose lives are being disrupted by these cruel policies. The government has chosen to inflict hardship on those with the least political influence and lobbying power.”
Social housing rents are regulated centrally by the government and every year it sets the maximum rate that housing associations can raise rent by every April.
That figure is usually set using the consumer price index inflation rate in the September before plus an extra 1 per cent. This year that posed a problem: with inflation hitting 11.1 per cent this week it meant tenants were in line for an increase in rents of 12.1 per cent.
That figure would have dwarfed the 4.1 per cent increase recorded in April this year and likely would have forced many tenants into rent arrears.
Hunt’s Autumn Statement announcement does not apply to people living in shared ownership homes. Shared owners could be in line for rent rises of up to 14.1 per cent, campaigners warned, with rents set using retail price index (RPI) inflation rate plus an increase of up to 2 per cent. The RPI figure for September sat at 12.1 per cent.
The National Housing Federation (NHF) later confirmed housing associations representing 80 per cent of shared ownership homes in England would also cap rent rises at 7 per cent to match the social housing cap.
Kate Henderson, chief executive of the NHF, which represents housing associations across England, said Hunt’s decisions means associations can “continue to deliver their core services for residents”.
“The sector has made a commitment that no tenant will be evicted because of financial hardship where they are engaging with their housing association. Each housing association also has tailored support in place to help residents who are struggling with the cost of living,” said Henderson.
“We know any additional costs will be difficult for residents. We will continue to push the government for support for people on low incomes. We also urge tenants and shared owners who are struggling with bills to contact their housing associations to find out what support is available.”
Geeta Nanda, chief executive of Metropolitan Thames Valley Housing and chair of G15 representing London’s biggest housing associations said Hunt’s Autumn Statement announcement provides certainty needed to invest in building new homes.
“Setting rent levels for next year means looking carefully at both the challenges people are facing, and the pressing need to continue investing in existing homes and building much needed new affordable homes,” said Nanda.
“With inflation driving up costs facing not-for-profit housing associations, getting this right has been one of the biggest challenges I have seen in more than 30 years of working in housing.”
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