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
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.
House of Commons briefing paper: Rent Setting (social