Social housing rents increase at 7%

Social housing tenants in England will face a 7 per cent rise in rents next year under plans set to be announced by chancellor Jeremy Hunt in today’s Autumn Statement. Rents for the 4mn people in the social housing sector, which the government regulates, were set to rise at the consumer price index rate plus 1 per cent for the coming financial year. Since inflation reached 10.1 per cent in September, that would have amounted to an 11.1 per cent increase. According to official data, about 17 per cent of England’s households rent their homes from councils or housing associations, typically paying less than tenants in the private sector.

Landlords had warned that setting the cap at 3 per cent would give tenants better protection but impose financial constraints on the sector, inhibiting housing associations and councils from building new properties. However, Gavin Smart, head of the Chartered Institute of Housing, said he would support an increase of 7 per cent. Many tenants in the sector receive full housing benefits, meaning taxpayers will pick up the cost of the rise in their rents. But about 30 per cent of social tenants pay the total rent and are not eligible for housing benefits.

The National Housing Federation, which represents the non-profit bodies that control swaths of social housing, had warned against a lower cap. It said opting for 3 per cent for just one year would force members to reduce development activity, given that rents underpin borrowing needed to develop new homes. It warned that that could have a «serious knock-on effect» on the construction sector when private developers are already retrenching.

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