England & Wales

Rent rise u-turn


The government have announced a u-turn on rent rises today after campaigning by many local authorities, local government and housing organisations, supported by the LGiU.

Margaret Beckett has today announced that the average guideline rent increase for 2009/10 will be halved from 6.2 per cent to 3.1 per cent for local authority tenants.  The Government will make funding available to support local authorities to make the changes, and revise their rents for 2009/10 accordingly.   The changes to the guideline rent increase means tenants should see a marked drop in their proposed average rent increase for the coming year from around £4 per week to approximately just under £2. This is a victory for common sense: well done in particular to Waltham Forest and Westminster who were amongst those councils leading the lobbying effort.

Below is my 20th Feb blog post highlighting the issue and the campaign, calling for an 11th hour u-turn:

Our too centralised system of government means that just when councils really need the flexibility to take action to help people in their commuities, they are hamstrung by government guidelines, laws and financial arrangements.   The current controversy over rent rises illustrates the problem.

The Government’s rent guidelines will lead to rent rises of around £6 a week for most council tenants, way above inflation.   Many councils are delaying setting the increases and notifying tenants in the hope of a change of heart by Ministers.    One of the problems is that the rent guidelines set by government are based on last September’s Retail price Index, which was 5%, based on which, the government announced a cap of 6%.   The RPI is now 3.1%.   So why can’t councils just decide to set a lower increase?

Well the answer is that they can, and some will, but they will have to fund this by moving money around within the Housing Revenue Account.   The effect of this is to eat into funds which are already allocated, leading to cutbacks in tenant and neighbourhood services and repairs and improvement of existing homes.   The alternative is for the government to look again at the rules and guidelines, allow councils more flexibility about how they manage their finances, and provide a small amount of financial assistance – the Treasury do after all take £194m from the rents.

Ministers have promised to look again, it is not too late to change the guidelines and even at this 11th hour we hope they will listen.