LGA response to MHCLG consultation on rents for social housing from 2020-21

Key messages

• We welcome the return to a policy of managed rent increases following the social rent reduction from 2020-25. However long-term income certainty is crucial, and a commitment to 30 year rent increases of CPI+1% from 2020 would be extremely valuable in supporting councils to make full use of potential released through the lifting of the cap on borrowing through the Housing Revenue Account.
• We believe it is important to retain an element of local flexibility within a stable long-term national framework of rent increases. We acknowledge why the Government has proposed this model of rent regulation for council rents, however this move reflects a shift away from localism, removing the flexibility for independent council landlords to set rents as was agreed at self-financing. We would support further investigation of other options for applying more proportionate controls to Housing Benefit spending via social rents within Universal Credit, for instance the continuation of a limit rent model.
• Local flexibility is important because the proposal to regulate local authority rents by a maximum increase of CPI+1% will limit the build ambitions in many areas. This especially true for those councils with plans to move towards formula rent after the period of rent reductions has ended in 2020. If the Government goes ahead with this proposal it might consider exemptions for councils to gradually phase up their rents towards the formula rent level, from which point regulation would apply.
• Furthermore our Setting Social Rents report with Capital Economics demonstrated that, while a CPI+1% rent increase is broadly right, a greater level of local discretion on rent setting could generate increased rental returns to invest in new and existing housing stock which would generate welfare savings overall.

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LGA response to MHCLG consultation on rents for social housing from 2020-21