A group that represents Southwark council tenants has warned that government plans to cap social rents below inflation may not go far enough, and could result in increased evictions and rent arrears.
The government has launched a consultation for social landlords and social housing tenants, to have their say on the various options, or suggest others.
At the moment, yearly social rent increases are capped at consumer price index rates + one per cent. That means that, left unchecked, social rents could rise by eleven per cent next year, according to the latest Bank of England forecasts.
But the Southwark Group of Tenants Organisations said they were “concerned” that the government intervention could still lead to more people falling behind in their rent.
A spokesperson said: “We welcome any measure that would stop social housing rents rising above the current astronomical rate of inflation.
“But we are concerned that capping rent increases somewhere between 3% and 7% is still not enough to provide residents with the financial stability they need. Such a rise would likely result in an increase in resident arrears and evictions.
“We urge the Government to consider more stringent restrictions on social housing rent increases.”
People renting a three-bed home from Southwark Council are paying £117.80 per week on average. Under the government plans, for those people rent could go up to £121.34 a week at a three per cent increase, or £126, at a seven per cent increase.
Although the rent cap will be welcome to people living in social housing – at least in comparison to the alternative – it will have a massive impact on social landlords like Southwark Council.
The rent the council gets goes towards things like repairs and safety measures on its huge stock of homes across the borough, which run to the tens of thousands. If Southwark cannot charge tenants in line with inflation, that effectively means its rental income is being eroded, and there could be less money to spend on maintenance.
Social landlords can apply for exemptions to the rent cap under the scheme, but it seems unlikely Southwark would do that. The council has been contacted for comment.
The Local Government Association, which represents councils like Southwark, and the National Housing Federation, said they understood the squeeze that inflation was putting on tenants, but called for more support for local authorities from the government to help manage the rent cap.
They said: “We are very concerned that a new cap on social housing rent increases will significantly impact on housing providers’ ability to provide critical services for residents and invest in new and existing homes.
“Decisions on the level of rent increases for tenants need to be made by housing providers within the existing government rent policy commitment, ensuring that there is a careful balance between affordability for tenants and investment in the homes that they live in.
“If the Government does take forward a lower cap, then it should provide additional funding for 2023/24 and for future years so that housing providers can continue to safeguard services and meet the country’s future housing needs.”
Take part in the consultation here if you are living in social housing.