ARCH has been considering how it will respond to the current
consultation on future council and housing association rent
policy. The Government's proposals have been discussed by the ARCH
Board and a specially-convened meeting of finance specialists, held
jointly with the National Federation of ALMOs. ARCH and the NFA
have agreed to submit a joint response.
The main proposal on which the Ministry of Housing,
Communities and Local Government (MHCLG) is consulting
is that council rents will be allowed to increase by up to 1% more
than inflation as measured by the Consumer Prices Index (CPI) in
each of the five years from 2026 to 2030. Views are invited on
extending this policy for a further five years, i.e. until 2036. An
increase of up to CPI + 1% has already been agreed for 2025.
Earlier this year ARCH, with the NFA and LGA, commissioned work
from Savills on councils' future needs to spend on their stock to
ensure compliance with both the current Decent Homes Standard and
the new standard likely to be announced next year, together with
higher Building Safety and energy efficiency standards, alongside
the introduction of Awaab's Law and other cost pressures. It
concluded that a rent policy based on CPI + 1% alone might enable
councils to balance income and expenditure in the long term; but
would do nothing to address a looming shortfall in income compared
with expenditure requirements of £5-7 billion over the next five
years.
In view of this advice, ARCH is assessing the potential of
reinstating a rent convergence policy to allow scope for councils
to ask for an additional increase, perhaps of £2 a week, from
tenants who are currently paying less than the formula rent for
their home. There is no national data on the number of tenants in
this situation, nor on how far below formula their rents currently
are. Most affected councils will, however, be well aware of
their local situation. ARCH Policy Adviser Matthew
Warburton (matthew.warburton@arch-housing.org.uk)
is very keen to hear from councils which would benefit from the
reinstatement of a rent convergence policy, both about the overall
financial impact, and their views on the merits of the policy. Your
views will need to reach him by 19 December in order to be
reflected in the ARCH submission to the consultation, which closes
on 23 December.