Industry News


Consultation on imposing a social housing rent cap launched


A consultation has been launched by the


Government inviting views from social housing tenants and landlords on the


introduction of an upper limit to any rent increases made next year. Under the proposals, a cap on social housing


rent increases would be put in place for the coming financial year, with options at 3, 5 and 7 per cent all being considered. It is also seeking views on extending the cap into 2024/25. Te move would prevent rents for an estimated


4 million council and housing association houses from rising significantly, saving tenants an average £300 per year (based on the preferred option of a 5 per cent cap) and providing some financial stability as inflation and energy bills rise. Te consultation exercise runs until 12 October,


with a final decision to be announced later this year when the Secretary of State will direct the Regulator of Social Housing on rent standards, confirming the maximum amount social housing landlords can increase rents by for 1 April 2023 to 31 March 2024. However, there was no statement on whether


the housing benefit element of Universal Credit would rise by a similar amount as the rent cap, nor on whether a similar restriction on rent increases would be imposed on the private rented sector. It is also unclear in what circumstances landlords might be granted exemptions from the cap. In response to the consultation announcement,


campaigners criticised the proposals and called for a complete freeze on rents and service charges, while representatives of social landlords asked what


Launching the consultation, Housing Secretary


Greg Clark said: “We must protect the most vulnerable households in these exceptional circumstances during the year ahead. Putting a cap on rent increases for social tenants offers security and stability to families across England. “Te rent cap would be temporary and would


apply from 1 April 2023 to 31 March 2024. Te consultation also seeks views on whether to set a limit for 2024/25. Te Government understands this will impact social housing landlords and is engaging fully with the sector.” When asked if the cap would encourage social


additional support would be made available to fill the gap between rising costs and a restriction on their main source of income. Landlords say the cap would restrict their income


at the same time as they are expected to spend more on building safety, decarbonisation works and improving energy efficiency. In addition the cost of building new homes rose 12 per cent in the year to June and repair costs are up 14 per cent, they said.


TEMPORARY MEASURE Te Government regulates how much social housing rents can increase each year. Currently this is set at up to the consumer price index (CPI) rate plus 1 per cent – meaning potential increases next year of more than 10 per cent, in line with recent Bank of England forecasts.


housing landlords to increase rents, Mr Clark said there was no requirement on landlords to increase rents up to the cap and the Government wanted to provide reassurance to tenants. Labour’s shadow Housing Secretary Lisa Nandy


said families in social housing already faced “impossible choices” between heating and eating, while the Opposition was also calling for emergency legislation to prevent evictions and a fully-funded energy bill freeze this winter. She said: “Tis announcement is welcome clarity


that social renters shouldn’t be facing rent rises of 11% or more in just a few months’ time. But we urgently need clarity on how the shortfall will be funded because social landlords, including hard- pressed local councils, can’t be expected to take the hit. “Tere is also a huge hole in this plan to address


the hundreds of thousands in the private rented sector who face a cost of living crisis.”


400,000 households unprotected by energy price cap


Te National Housing Federation is warning that 400,000 households in England are not protected by the energy price cap because their energy is supplied through a communal heating system. Over half of households on communal heat


networks (227,848) are living in social housing and on low incomes. Without the domestic cap, the price these people pay for energy depends on the commercial contract their housing provider negotiates with the energy company. Recent contracts are as much as 500 per cent


more expensive than the previous year, with bills in low usage homes projected to rise by as much as £68 a week. Tis increase alone is £1,130 per year over October’s energy price cap for other domestic users. Nearly three-quarters (72 per cent) of the affected


social housing tenants are older people over the age of 55, mainly living in supported or sheltered housing. Tese residents have their heating supplied through a central boiler that supplies all homes in the building, rather than an individual boiler in


their home, and they pay for their heating bills via service charges. In normal times heat networks usually save


these residents money, as housing associations can obtain cheaper prices than individuals on domestic contracts by bulk buying energy. Many HAs are now looking at whether they can


recover some of the cost from other funds, rather than pass on the full increases to residents. Because associations are not-for-profit businesses this means cutting back on other services for residents, or reducing investment in their homes. Heat networks are not regulated by Ofgem, who


sets the domestic gas and electricity price cap. Te uncapped energy price increases will be felt as energy contracts come up for renewal, either yearly or every few years. Te National Housing Federation has called on


the Government to ensure people on heat networks receive the same protection as customers on domestic gas supplies.


6 | HMMOctober/November 2022 | www.housingmmonline.co.uk Tey should do this either by allowing heat


network operators to purchase gas at the capped domestic tariff rates and pass on the saving to consumers, or by providing additional payments to residents or heat network operators to compensate for prices increases above the cap. Kate Henderson, Chief Executive of the NHF


said: “It is unjust that hundreds of thousands of people, through no fault of their own, are exposed to uncapped heating bills just because of the way they pay for their energy. Worst still, the majority of those affected are vulnerable people on the lowest incomes in this country, who will already be struggling to pay for food and essentials. “Te Government has a duty to act urgently and


fairly to protect these people in the same way as the rest of the country. With the new price cap coming into force in October it is essential the Government acts now and negotiates with energy companies to ensure every resident is protected from rising energy bills.”


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