In preparing its response to the government's
announcements in the Summer Budget that council house rents must be
reduced by 1% per year over the next four years, Matthew
Warburton, ARCH Policy
Adviser, has done some work to assess the impact
nationally.
You may find this analysis useful in setting the context
of the impact locally on your own councils:
Following the Budget announcement of the government's plans to
reduce local authority and housing association rents by 1% a year
for four years from 2016/17, legislation to achieve this has been
included in the Welfare Reform and Work Bill, which had its Second
Reading in the House of Commons this week. More detail is given in
this briefing.
To raise awareness of the impact of the policy and inform
Parliamentary debate, ARCH has made an estimate of the overall loss
of rent income to councils produced by the changes:
We estimate that imposition of a 1% rent reduction will reduce
aggregate local authority rent income by £153 million in 2016/17,
£381 million in 2017/18, £649 million in 2018/19 and £936 billion
in 2019/20, compared with the previous policy of raising rents by
CPI + 1% each year.
By 2020, the cumulative loss of income will be £2.1 billion and
rents will be 11.8% lower than was previously expected. Assuming
that rent increases return to CPI+1% from 2020, there would be a
further loss of income of over £30 billion over the remaining 22
years of the 30 year business plan.
More detail, including the assumptions underlying this estimate,
is included in this
briefing.