Quarter of social housing tenants can’t afford upcoming rent rise, survey finds
Around five million social housing tenants will be hit with a 4.1 per cent rent hike in April amid the cost of living crisis. The Social Housing Action Campaign says housing associations can afford to cut rents.
Preliminary findings from the Social Housing Action Campaign (SHAC) survey found almost 60 per cent of the 150 tenants quizzed so far would have to cut back on other expenses to afford the upcoming 4.1 per cent increase many tenants will face on April 1.
The rise will hit around five million tenants and will see rents increase by £202 per year on average according to the Resolution Foundation. Renters will be paying more just as the cost of living crisis is set to intensify with the energy price cap increasing to just under £2,000 a year as inflation continues to surge.
“Rent and service charge rises at this time, with all the other financial pressures on household budgets, will surely drive many thousands of tenants into arrears. While the housing association sector collectively sits on surpluses of more than £4billion, no increase can be justified,” said Muna.
Housing associations and other social housing providers such as councils are able to increase rent by the rate of inflation plus one per cent under current rules, following five years of one per cent reductions.
That rate was set in September 2021 when inflation was at 3.1 per cent but inflation has since surged to a 30-year high of 5.5 per cent.
As a result, the 4.1 per cent rise in April is set to be below inflation but comes at a time when the cost of living crisis means households will already be seeing their incomes squeezed.
Not everyone is protected by the rent cap, according to Muna, who said SHAC has already heard cases where tenants are facing rises of up to 10 per cent – and five per cent of those surveyed said they are facing even steeper rises.
“When government ordered rent cuts under the 2016 Rent Directive, housing associations were still perfectly able to function and remain financially viable. Now is the time to reintroduce a rent cut,” said Muna. “Although there is a cap of 4.1 per cent on social rents, lots of tenants are not covered by the cap, for example those in shared ownership homes.”
In the year up to March 2021 there was a 20 per cent decrease in investment in building social homes – down to £10.9bn – and the number of social homes completed fell by 9,000 to 40,000.
But in that time the operating surplus generated by providers grew from £4.7bn to £4.9bn off the back of the inflation-plus-one per cent rent rise in April 2020.
A Local Government Association spokesperson previously told The Big Issue: “Due to significant ongoing funding pressures, councils have had to make difficult decisions to balance increasing costs across a range of services including building repairs that could not take place during the pandemic, and deliver improvements to energy efficiency to make homes warmer and help reduce energy bills.”
A spokesperson for the G15 – a group of London’s largest housing associations – said: “The rents residents of not-for-profit housing associations pay are set and capped in line with government rules. In setting rent levels, we have sought to balance the need to deliver vital investment work in our homes, our commitment to build new affordable homes, and the increasing costs we are facing.
“We are committed to supporting our residents, and anyone struggling financially should contact their housing provider as soon as possible to discuss the range of support that is available.”
SHAC is still running the survey. If you’re living in rented social housing you can fill it out here.
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