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The ARCH annual report for 2015-16 is now available to view.

 

Download it here.

Rent Setting in Social Housing 03/09/2015

The House of Commons Library has produced a very comprehensive and useful briefing paper explaining key policy developments in relation to setting social housing rent levels in England since 2002.

 

It provides a background to the Chancellor's announcement in the summer Budget that rents in social housing would be reduced by 1% a year for four years resulting in a 12% reduction in average rents by 2020-21. The measure is forecast to save £1.4bn by 2020-21, primarily in reduced Housing Benefit expenditure. Around 1.2m tenants not in receipt of Housing Benefit in the social rented sector are expected to benefit by £700 per year (current prices).

 

This policy change was totally unexpected and has been greeted with some dismay by ARCH members who are now modelling the impact on their business plans. ARCH members have indicated that this policy change will impact significantly on their Housing Business Plans and ability to invest in housing - particularly new build. The Office for Budget Responsibility (OBR) is predicting a reduction in housing investment as a result of the policy which will be implemented by measures contained in the Welfare Reform and Work Bill (currently progressing through Parliament).

 

The announcement by the Chancellor, George Osborne, in the Conservative Government's 2015 summer Budget that rents should be reduced by 1% per annum over the next four years represents a complete u-turn on the previous policy which set out a ten year rent settlement from 2015 introduced by the Chancellor as part of the 2013 Spending Round under the Coalition Government

 

As part of the 2013 Spending Round, George Osborne announced that "from 2015-16 social rents will rise by CPI plus one per cent each year for ten years."

 

Following this announcement, the DCLG sent a letter to housing bodies on 2 July 2013 in which plans to cut short the policy of converging council and housing association rents were revealed. Social landlords whose average rents had not yet reached target levels were concerned about the implications on their ability to repay debt and invest in new and existing social housing stock, but the certainty delivered by a ten year rent settlement was welcomed. However the certainty of this settlement was short-lived.

 

The House of Commons briefing paper sets out a comprehensive guide to rent setting policy under the Labour Government and the Coalition Government and comment on the announcements in the summer Budget of 8 July 2015 which ARCH members will find useful. ARCH is referenced in the document.

 

The House of Commons briefing paper: Rent Setting (social housing)

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