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Social housing rents to fall by 1% a year, chancellor announces Social housing rents to fall by 1% a year, chancellor announces
(about 21 hours later)
Social housing tenants will see their rent reduced by 1% a year for the next four years after chancellor George Osborne attacked rent increases in the social housing sector and compelled housing associations to lower them.Social housing tenants will see their rent reduced by 1% a year for the next four years after chancellor George Osborne attacked rent increases in the social housing sector and compelled housing associations to lower them.
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Previously, social housing rents could increase by 1% more than inflation – a formula set by the chancellor in 2013 and intended to last for 10 years. But this settlement was torn up in Wednesday’s budget as Osborne attacked the “staggering” rent increases that have seen social housing rents jump 20% since 2010.Previously, social housing rents could increase by 1% more than inflation – a formula set by the chancellor in 2013 and intended to last for 10 years. But this settlement was torn up in Wednesday’s budget as Osborne attacked the “staggering” rent increases that have seen social housing rents jump 20% since 2010.
Treasury forecasts suggest the rent cuts could save £1.45bn. Osborne said: “We are also going to end the ratchet of ever higher housing benefit chasing up ever higher rents in the social housing sector.Treasury forecasts suggest the rent cuts could save £1.45bn. Osborne said: “We are also going to end the ratchet of ever higher housing benefit chasing up ever higher rents in the social housing sector.
“This will be a welcome cut in rent for those tenants who pay it and I’m confident that housing associations and other landlords in the social sector will be able to play their part and deliver the efficiency savings needed.”“This will be a welcome cut in rent for those tenants who pay it and I’m confident that housing associations and other landlords in the social sector will be able to play their part and deliver the efficiency savings needed.”
Housing associations, however, estimate the lost income will prevent at least 27,000 new homes being built. National Housing Federation chief executive David Orr said: “At the very least, 27,000 new homes will not now be built, though that figure could be much higher. The right to buy for housing association tenants further compounds this.”Housing associations, however, estimate the lost income will prevent at least 27,000 new homes being built. National Housing Federation chief executive David Orr said: “At the very least, 27,000 new homes will not now be built, though that figure could be much higher. The right to buy for housing association tenants further compounds this.”
The Office for Budget Responsibility forecasts that the policy could result in 14,000 fewer affordable homes being built.The Office for Budget Responsibility forecasts that the policy could result in 14,000 fewer affordable homes being built.
Sue Harvey, a director at consultancy Campbell Tickell, estimated the reduction would cause social landlords’ expected rental income to fall by 15%.Sue Harvey, a director at consultancy Campbell Tickell, estimated the reduction would cause social landlords’ expected rental income to fall by 15%.
Charted Institute of Housing chief executive Terrie Alafat said: “We understand the government’s desire to manage the cost of the housing benefit bill – but undermining their income by cutting social housing rents by 1% a year over the next four years is going to make it much tougher to build new homes at a time when we desperately need to do so.”Charted Institute of Housing chief executive Terrie Alafat said: “We understand the government’s desire to manage the cost of the housing benefit bill – but undermining their income by cutting social housing rents by 1% a year over the next four years is going to make it much tougher to build new homes at a time when we desperately need to do so.”
Chris Walker, head of housing at thinktank Policy Exchange, said housing associations’ operating surpluses should protect their ability to build new homes. “The sector will undoubtedly be up in arms arguing that this will affect the number of new homes being built. This is difficult to argue given housing associations’ large surplus positions.”Chris Walker, head of housing at thinktank Policy Exchange, said housing associations’ operating surpluses should protect their ability to build new homes. “The sector will undoubtedly be up in arms arguing that this will affect the number of new homes being built. This is difficult to argue given housing associations’ large surplus positions.”
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