We reported in our last bulletin that the Secretary of State had
said that we could expect an announcement on rent policy post 2020
to be made "very, very soon" and the government have now confirmed
plans to revert to the previous policy of limiting rent increases
to the Consumer Price Index (CPI) +1% from 2020 following expiry of
the current 4 year, 1% year on year mandatory rent reductions.
The Government's previous social rent policy published in 2014 was based
on a 10 year rent policy of rent increases of CPI & 1% from
April 2015 but this was overturned less than a year later in George
Osborne's Summer Budget when he announced the imposition of
mandatory 1% annual rent reductions through to 2020 causing
significant problems for councils' Housing Revenue Account Business
Plans leading many to have to significantly reduce investment in
the housing stock and housing services.
Following imposition of a 4 year period of mandatory rent
reductions introduced by the Welfare Reform & Work Act, the
government's Housing White Paper, promised to consult on a
new rent policy for local authorities and councils from 2020 to
help encourage more investment in social housing and create a
stable financial environment for social landlords.
Under a proposal set out alongside the announcement of an
additional £2bn for investment in social rented housing, increases
to social housing rents will return to the previous policy of
limiting rent increases to the Consumer Price Index (CPI) plus 1%
for 5 years from 2020.
The announcement on rent policy beyond 2020 will be reflected in
a direction to the Social Housing Regulator and the government will
formally consult on this next year. ARCH Chief Executive John
Bibby comments:
A move back to guideline rent increases of CPI+1% post 2020
reflects what most councils said in our recent member consultation
on future rent policy they would like to see. This announcement
will help remove some of the uncertainty in Housing Revenue Account
(HRA) Business Planning and is therefore to be welcomed although
the sector would have ideally hoped for a longer 10 year rent
policy. ARCH will support to a return to CPI & 1% and recognise
that a 5 year policy post 2020 is realistic and probably the best
that could be achieved in the circumstances.