12 November 2004
Ministers have stepped in to reduce the likelihood of hefty council rent increases ahead of next year's expected general election.
Further changes to the rent restructuring formula, introduced three years ago to harmonise council and housing association rents, are to be put off for 12 months, housing minister Keith Hill said this week.
Although landlords in both sectors must still adopt a national formula based on local earnings and property values, they will continue to use slightly different methods to calculate inflation. This means that local authority rents, which are generally lower, will take longer to catch up with those levied by housing associations.
The 12-month delay, confirmed by the Office of the Deputy Prime Minister on November 9, was welcomed by local authorities, even though there was scepticism surrounding the reasons. 'I can't see that there isn't a link between this announcement and the general election,' said Richard Kemp, deputy leader of the Local Government Association Liberal Democrat Group.
Ken Lee, chair of CIPFA's housing panel, added: 'It's standard policy to announce a review and then delay it until after the general election.'
The plan to harmonise rents more rapidly was put forward by the ODPM in July when it published a three-year review of restructuring. The delay could mean some landlords struggle to meet rent targets by 2011.
Housing associations criticised this week's decision, which also affects proposals to widen the difference between rents for smaller and larger properties.
The National Housing Federation said a new system of bedroom weightings would give landlords greater incentive to build four or five-bedroom properties and reduce overcrowding. 'If we're going to get harmonisation of rents then, sooner or later, something has to give,' said Warren Finney, the NHF's finance policy officer.
Hill defended the delay, claiming that 'piecemeal implementation' would only create further confusion. 'It is important that we get this right,' he said.
The ODPM also announced that councils will receive management and maintenance allowances of £3.37bn in 2005/06 – an average increase of £144 per dwelling.