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Rents to return to CPI + 1% from 2020 12/10/2017 Labelled as Rent, Finance, Legislation

We reported in our last bulletin that the Secretary of State had said that we could expect an announcement on rent policy post 2020 to be made "very, very soon" and the government have now confirmed plans to revert to the previous policy of limiting rent increases to the Consumer Price Index (CPI) +1% from 2020 following expiry of the current 4 year, 1% year on year mandatory rent reductions.


The Government's previous social rent policy published in 2014 was based on a 10 year rent policy of rent increases of CPI & 1% from April 2015 but this was overturned less than a year later in George Osborne's Summer Budget when he announced the imposition of mandatory 1% annual rent reductions through to 2020 causing significant problems for councils' Housing Revenue Account Business Plans leading many to have to significantly reduce investment in the housing stock and housing services.


Following imposition of a 4 year period of mandatory rent reductions introduced by the Welfare Reform & Work Act, the government's Housing White Paper, promised to consult on a new rent policy for local authorities and councils from 2020 to help encourage more investment in social housing and create a stable financial environment for social landlords.


Under a proposal set out alongside the announcement of an additional £2bn for investment in social rented housing, increases to social housing rents will return to the previous policy of limiting rent increases to the Consumer Price Index (CPI) plus 1% for 5 years from 2020.


The announcement on rent policy beyond 2020 will be reflected in a direction to the Social Housing Regulator and the government will formally consult on this next year. ARCH Chief Executive John Bibby comments: 


A move back to guideline rent increases of CPI+1% post 2020 reflects what most councils said in our recent member consultation on future rent policy they would like to see. This announcement will help remove some of the uncertainty in Housing Revenue Account (HRA) Business Planning and is therefore to be welcomed although the sector would have ideally hoped for a longer 10 year rent policy. ARCH will support to a return to CPI & 1% and recognise that a 5 year policy post 2020 is realistic and probably the best that could be achieved in the circumstances. 

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