Social rent cut ‘will hit housebuilding’

27 Jul 15

Plans to lower social housing rents by 1% a year for the next four years could lead to as many as 42,000 fewer homes being built across the country, the government has been warned.

Examining the impact of the policy, which was announced in the summer Budget, the District Councils’ Network said the revenue lost from the move, which is set to begin next April, would have been enough to build 42,000 homes over 30 years.

Ahead of a meeting with government officials to discuss the plan, the group called for Whitehall action to ensure the reduction did not lead to lower levels of housing development.

A DCN survey of 73 stock-owning districts found that their incomes would be £600m lower by the end of the decade due to the policy. Over 30 years, the lost revenue will amount to a cumulative loss of £10bn.

Publishing the figures, DCN director Steve Atkinson said: “A 1% rent reduction is good news for existing tenants, but for future tenants the survey shows an effective 3.5% overall reduction would have a significant negative impact on districts’ plans for building new housing stock, without measures to secure a more effective balance between the needs of present and future tenants in the longer term.

“It is a concern that some activity has stalled already, as a result of this announcement and the level and speed of response from DCN members highlights just how strong are their concerns.”

Atkinson said districts hoped to agree a way forward with ministers at tomorrow’s meeting as councils remained “enthusiastic to deliver housing growth in the longer term for their communities [and] for the people and places they serve”.
 

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