“The impact can roll into every other area of life. But for some people, this will be catastrophic and they will end up on the streets. In every single case, it is bad news.”
Councils across England are currently confirming the rises at meetings across the country.
Newcastle City Council voted through the plans at a council cabinet meeting on January 17, which will mean weekly rent charges at Your Homes Newcastle properties will rise by an average of £3.20 per week.
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A Newcastle City Council spokesperson said: “We stand ready to help any tenant in financial difficulty and urge those with concerns to contact Your Homes Newcastle as set out in the letters we will send them.”
Other councils that have confirmed a 4.1 per cent rise include Stoke, Blackpool, Exeter, Wiltshire, Bristol, Newark, Sheffield, Bassetlaw, Guildford and Southwark. Not all councils have opted for the maximum rise – Dorset Council has reportedly proposed a three per cent rise while Darlington is opting for two per cent.
The 4.1 per cent rise is actually below inflation, which hit its highest rate for 30 years when the Consumer Price Index (CPI) hit 5.4 per cent.
Housing associations and other social housing providers have been able to increase the rate of rents by a maximum of the inflation rate plus one per cent annually following an agreement with central government made in April 2020.
The current rate was set in September 2021 when the CPI stood at 3.1 per cent but since then inflation has continued to surge.
Before the current agreement, rents in the social rented sector actually decreased at a rate of one per cent per year between 2016 and 2020 after years of above-inflation rises.
But the current increase comes at a time when Covid’s disruptive impact is being felt across the economy.
As well as prices of food and household essentials increasing through inflation, council tax is set to increase with two-thirds of English councils indicating they would push up the tax by a maximum of 2.99 per cent.
At the same time, national insurance contributions are also set to rise by 1.25 percentage points, which will cut into take-home pay.
Household bills are set to surge in the cost of living crisis too. Last week BT announced broadband prices would increase by almost 10 per cent due to pressures on the telecoms giant’s network. But there are real fears over energy bills, which could rise by more than £500 when the energy cap is raised on April 1.
Benefits are set to rise by 3.1 per cent in April but this is not expected to be enough to enable low-income households to deal with the cost of living crisis.
The Joseph Rowntree Foundation estimated social renters could pay around £4 extra per week on rent, up to £200 a year.
The anti-poverty charity said 46 per cent of social renters – just under five million people – are living in poverty, compared to a third of private renters.
Muna added: “From a council perspective, it is baffling and a completely false economy. Many of those who are made homeless will end up drawing more heavily on council housing services. It is also wholly unnecessary.”
Councils and social housing providers have said the rise is necessary to allow them to invest in existing stock – last week MPs launched an inquiry into the state of complaints and repairs in the sector.
There is also a need to invest in building new homes with a shortage of social housing often cited as one of the key drivers of homelessness as it pushes people into the expensive private rented sector. The shortage of social housing also means more than one million households are on waiting lists for homes.
A Local Government Association spokesperson said: “Councils do what they can to keep rents as low as possible and avoid any increases.
“However 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.”
How you can get support to pay rent this winter
Covid’s disruption to livelihoods has left people across the UK racking up rent arrears even before facing the ongoing cost of living crisis.
The Big Issue’s Stop Mass Homelessness campaign has campaigned in recent months for support to help people pay rent and tackle their arrears.
Discretionary housing payments are available from councils to help with housing costs. Councils have also been given around £360m through the Household Support Fund to help vulnerable people pay for household costs alongside £65m specifically set aside to cover rent arrears. Find your local council and how to contact them here.
If you are struggling to keep up with your rent, contact your local authority for support.