Majority of RSLs bust rent rise limits

4 Oct 01
Increasing numbers of housing associations are exceeding the government's rent rise targets.

05 October 2001

Last year, more than half (55%) of registered social landlords put their rents up by more than 2.1% (the guideline figure calculated by adding 1% to the retail price index). In 1999/2000, just 25% of RSLs exceeded that year's 4.2% guideline.

But the Housing Corporation said most of the larger increases were being recorded by new landlords set up following large-scale voluntary transfers (LSVTs) from councils, whose rents are normally lower in the first place.

Clare Miller, director of regulation policy at the corporation, said that, when homes built or acquired during the year were excluded from the picture, the increase across the RSL sector as a whole in 2000/01 was 2.1% – exactly in line with the target.

LSVT landlords, she pointed out, were 'locked into finance packages' struck at the time of transfer which required them to generate a certain amount of rent income. 'It was a spectacularly low target,' she told Public Finance.

Nevertheless, the corporation was concerned that such a large number of associations were recording increases in excess of RPI plus 1%. 'We shall be investigating the reasons for these increases, and taking regulatory action where appropriate,' she said.

Twenty-four per cent of RSLs raised rents last year by more than RPI plus 2%. LSVT landlords reported average increases of 2.9% (down from 4.4% in 1999/2000) and traditional RSLs 2.2%.

Black and minority ethnic RSLs recorded average increases of just 1.5% in 2000/01, although their rents are generally higher. This suggests there is a convergence taking place across the sector, although a more detailed analysis is needed to see if this is true, Miller said.

'Housing associations with the highest average rents had smaller rent increases,' she added. 'What is clear is that those with rents close to the average also have "average" rent increases.'

From 2002/03, RSLs will only be allowed to put their rents up by RPI plus 0.5%.


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