Although the Government have announced a return to rent
increases capped at CPI plus 1% for 5 years from 2020 however
formal consultation on the detail of the proposal has yet to be
A new report and analysis by Capital
Economics commissioned jointly by ARCH, the LGA and SHOUT
will provide an evidential basis for our response to the formal
consultation on the rent policy expected later this year.
The report entitled "Setting Social
Rent - Economic analysis of policy options for social rents
after 2020" assesses whether the Government's policy of
consumer price inflation plus one per cent policy is appropriate.
- Includes background to the issue by considering the role of
- Considers how Government rent policy affects different
- Examines existing policies relevant to social rents.
- Discusses the policy context of future changes to social rent
- Assesses whether the government's proposed consumer price
inflation plus one per cent policy is appropriate.
- Considers other factors which would affect the results of the
The report concludes that the Government
announcement last autumn to allow councils and housing associations
to start increasing rents by 1% above inflation after 2020 was
'broadly right.' However it goes on to say:
- A joined up policy on rents and benefits needs to be drawn up.
That is because the sustainability of real increases in social
rents is dependent on corresponding increases in the overall
- Higher increases could be sustainable in some areas to provide
more properties and larger welfare savings to Government, though at
some cost to tenants not receiving housing benefit.
- The national one-size-fits-all formula is not
appropriate. Differences in regional housing markets mean a
single national policy cannot achieve an optimal impact on
different stakeholders (government, social landlords and tenants)
in all places.
- Modest real terms increases in rents can help finance new
development, but development of homes at genuinely affordable rent
requires Government to remove artificial restrictions on the
borrowing of council landlords and invest in new housing via
housing associations on a much greater scale than now.
Download the full report here.