Social housing tenants face huge rent rises_2

29 Jan 09
Council and housing association tenants face rent rises double the rate of inflation – in spite of a government decision to cap increases

30 January 2009

By Neil Merrick

Council and housing association tenants face rent rises double the rate of inflation – in spite of a government decision to cap increases.

Most local authorities expect to announce rises of 5%– 6% from April. But the London Borough of Lambeth could put its rents up by as much as 16%, or £12 per week.

The retail price index is currently 3.1% but council rent rises are usually determined by the previous September's RPI, which was 5%. An extra sum is then added to bring them closer in line with those of housing associations.

In November, the government announced that it was willing to further delay rent restructuring, which is already well behind schedule, and cap rises at just over 6% for each of the next two years. But with inflation due to continue falling during 2009, tenants question why they are being forced to pay so much extra.

Ken Florey, head of service finance in the London Borough of Wandsworth, which is raising rents by 6.2%, said local authorities had little option but to blame government policy and pass the rises on. 'I don't think there is any relief in sight for tenants,' said Florey, an adviser to the Association of Retained Council Housing.

According to government figures, the Treasury will take about £194m of rent paid by tenants in 2008/09 out of the national housing revenue account. It was these projections that led ministers to announce a review of the HRA.

But Gwyneth Taylor, policy officer at the National Federation of Arm's-Length Management Organisations, said the review would not help in the short term. 'We're not seeing any value coming back to tenants or local authorities,' she added.

Lambeth's 16% rise has been approved by Cabinet members and was due to go before the full council on January 28. A council spokeswoman said that historically the borough's rents were well below the average for London, but it needed to exceed the government cap to avoid cuts in services of £9m.

Most housing associations are expected to raise rents by about 5.5%. David Orr, chief executive of the National Housing Federation, said associations had to consider their financial viability as well as the ability of tenants to pay. Some landlords were talking to the Tenant Services Authority about phasing this year's increase, Orr added.

Meanwhile, the TSA's interim corporate plan, published on January 26, said tenants should in future be offered a 'menu' of rents and charges, which allowed them to decide how much to pay their landlord for accommodation and services.


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