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UK chancellor Rachel Reeves has introduced plans to lift rents for social housing by greater than inflation over the following 5 or 10 years whereas additionally offering an instantaneous £500mn money injection for housing associations and councils to spice up inexpensive house constructing.
Reeves intends to introduce a system in subsequent week’s Finances that may enhance annual rents in England by the buyer worth index measure of inflation — presently 1.7 per cent — plus a further 1 per cent.
The chancellor will concern a session in Wednesday’s fiscal setpiece introducing this as a long-term settlement. The Treasury mentioned it will be a five-year CPI+1 deal, however added: “The session may even search views on different potential choices to offer better certainty, comparable to offering a 10-year settlement.”
The transfer is designed to stimulate the constructing of extra inexpensive properties by offering certainty over money move for closely indebted housing associations and councils. The federal government units lease ranges in subsidised social housing on the idea of a nationwide system.
On the similar time Reeves will announce a further £500mn for the Reasonably priced Houses Programme, an current £11.5bn five-year scheme allocating cash to housing authorities and councils to construct new properties.
Angela Rayner, the deputy prime minister who can be secretary of state for housing, had held out throughout intense spending-round negotiations with the chancellor early this month to garner more cash for the AHP.
Reeves additionally mentioned she would use the spending assessment to set out the main points of latest funding for inexpensive housing for when the prevailing programme runs out in 2026.
“We have to repair the housing disaster on this nation. It’s created a technology locked out of the property market, torn aside communities and put the brakes on financial progress,” she mentioned.
Lately native authorities have delivered solely a trickle of latest properties, leaving housing associations — not-for-profit organisations — to construct most new social housing.
Guaranteeing larger rents will please housing associations however might immediate a backlash from thousands and thousands of tenants whereas touchdown the federal government with a a lot larger advantages invoice.
A earlier Conservative administration made an identical promise in 2012 with a decade-long lease settlement based mostly on the retail worth index plus 0.5 per cent, however this was ripped up in 2015 to economize on housing advantages. The same five-year deal in 2020 was quickly dropped when inflation spiked in 2022.
Guaranteeing certainty on rents was a vital demand of 20 of the UK’s largest native council landlords who revealed a report this summer season warning that England’s council housing system was “damaged”.
The chancellor may even verify plans to chop reductions on “right-to-buy” offers — the place tenants purchase a council property they’ve been renting. On the similar time councils will be capable to retain 100 per cent of the receipts generated by such gross sales.
Ministers hope the web impact shall be for native authorities to obtain more cash to construct social housing whereas nonetheless permitting long-standing tenants to purchase their very own properties.
Polly Neate, chief govt of housing charity Shelter, mentioned the funding increase was a welcome step given Britain’s “rocketing homelessness”.
“For many years we’ve misplaced extra social properties than we’ve constructed, inflicting non-public rents to soar to document highs and the homeless lodging invoice to hit the billions,” she mentioned.
