Social housing organisations issue plea for 10-year rent settlement for local authorities and housing associations
Social housing organisations including the Chartered Institute of Housing and the National Housing Federation have sent a joint letter to ministers, calling for a 10-year rent settlement for councils and housing associations.
The signatories said they were concerned that the Government’s proposals as set out in its consultation paper on social housing rent policy would not be sufficient to restore the financial capacity of housing associations and local authorities “to build the homes we need”.
The letter – sent to the Deputy Prime Minister, Angela Rayner, and the Chancellor of the Exchequer, Rachel Reeves – said analysis the groups had commissioned from Savills had shown that further interventions were needed. These are:
- “First, allowing for “convergence” of rents for properties in the sector that are not currently at “formula rent” levels is essential if we are to maintain supply at its current levels, let alone increase output to help achieve the 1.5 million homes target. Over ten years it would deliver a surplus in local authority housing revenue accounts (HRAs), and would boost housing association capacity, reversing the projected decline in output.
- “Second, a cap on rent increases of CPI +1% for five years is welcome in providing stability. However, extending such a policy to ten years would have considerable benefits. For local authorities, it would eventually bring HRAs into balance annually although still leaving a cumulative deficit of £5 billion. For housing associations, interest cover is projected to improve to 137% by 2036/37.”
The letter said Savills’ analysis had also shown that “rent policy alone cannot raise the money needed to resolve the housing crisis and enable an enhanced contribution by the social sector towards the 1.5 million homes target”.
Grant rates will need to be raised substantially within a much more ambitious Affordable Homes Programme, from April 2026, it added.
The letter went on to call for adequate funding for investment into existing homes, including into building safety, decarbonisation, and upgrades to homes that will be required to meet a revised Decent Homes Standard and comply with Awaab’s Law, “which cannot be funded from rents alone”.
It also warned of the effects of employer National Insurance increases, particularly for local authorities and for the supported housing sector.
The letter has been signed by representatives from:
- The Chartered Institute of Housing
- National Housing Federation
- Local Infrastructure and Net Zero Board, Local Government Association
- Association of Retained Council Housing
- National Federation of ALMOs
- Northern Housing Consortium
Last week the G15 group of large London social housing providers and its newly-formed Residents’ Group both called for a 10-year rent settlement and for social housing rents to increase by CPI+1%.
