few weeks ago I argued
that it was time to think again about rents policy in council
housing. CIH agrees. Together with London & Quadrant Housing
Association it has published 'We need to talk about
rents', which calls on the government to undertake a formal,
public review of rents policy after 2015 in social housing.
Their report puts forward three main grounds for a review:
accumulating changes which undermine the coherence of the existing
framework, the absence of any formal policy beyond 2015 and the
challenges posed by welfare reform.
The current framework was intended to provide a common basis for
rents in council and housing association homes that would support
adequate investment and reflect perceived property values while
Council rents would rise ahead of inflation to converge with
housing association rents over ten years, subject to a maximum
annual increase for any tenant. Although convergence with HA target
rents is not complete, the goalposts have been moved, as new RP
provision is now subject to higher, affordable rents.
And with Pay to Stay, the government has opened up the possibility
of future rents being income-linked - a possibility not considered
in the design of the current framework.
Welfare reform challenges a second assumption underpinning the
current framework - that lowest-income tenants could always expect
the rents set by social landlords to be met in full by Housing
Benefit. Since the current rent and investment settlement for
social housing is due to come to an end in 2015, it is time, the
report argues, to look at the future.
CIH and L&Q review 7 options for future rent-setting. They
include options that continue to ignore tenants' incomes, but aim
to bring rents across the board back to target levels, or raise
them closer to market levels. They also include various options
which link individual rents to tenants' incomes.
These are all options that should be considered, and it is to be
hoped that the government will respond to the report's demand and
provide the opportunity for them to be fully reviewed through a
public consultation. But I would also argue that options under
consideration ought to be widened still further to address two
issues that the CIH report does not discuss.
The first is the assumption that there ought to be a national rent
policy that applies to all social landlords. The closest the report
gets to considering the possibility that different landlords might
operate different policies is an option that would give landlords
flexibility to set minimum and maximum rent thresholds depending on
the circumstances of current and prospective tenants.
But there are good localist arguments for allowing councils, at
least, more leeway to determine local rents policies, particularly
in the context of self-financing. This might mean abandoning
convergence, but this was only ever one policy objective among
The second concerns the impact on benefit spending. The CIH report
is, I think, too ready to accept that it is a disadvantage if an
option to add to benefit spending. But the impact of higher rents
on DWP expenditure is only half the story. The other half is the
use to which the rent income is put.
If higher rents support higher investment and in doing so
substitute for HCA grant, there is a compensating saving to offset
the increase in benefit spending, which needs to be factored into