The new ‘rent deal’ between Government and housing association bosses, coming in 2020, will encourage landlords to plunder tenants to build out-of-reach homes.

The new ‘rent deal’ between Government and housing association bosses, coming in 2020, will encourage landlords to plunder tenants to build out-of-reach homes.

Increases in rent are to lever in debt to fund the construction of out-of-reach homes.

In November 2018 the Government ‘consulted’ with tenants’ organisations and social landlords on plans to raise rents by inflation +1% year-on-year over a five year period starting from April 2020. 

The Government has just published the results and not surprisingly is going to push up rents at the request of housing association bosses amongst others. 

Housing associations are using rental income to service bank debt . A larger income stream means less risk for banks so bigger loans for associations to build more out-of-reach housing (which does not solve the housing crisis).

The Government first announced their intention to increase rents in 2017. David Orr, the then head of the National Housing Federation (the housing associations’ bosses club), famously said of the planned rent increase:

“This is excellent news. We welcome today’s settlement on rents. It will give our housing association members the certainty they need to leverage in private finance and build the homes the nation so desperately needs (1).” 

No mention of the impact on less well off tenants in housing association homes!

“In essence the poorest have to pay more and so those most in need are hit hardest.”

But a slightly sharper member of the housing association elite bosses’ club, Helen White (1), said to her colleagues on the pages of Inside Housing:

‘Please can we stop celebrating rent increases. The Consumer Price Index plus 1% rent increase is set against a background of benefit freezes, so in essence the poorest have to pay more and so those most in need are hit hardest. And we wonder why we have an image problem (3).’ 

The results of the consultation

The results of the consultation show the complete disconnect between an increasingly aggressive management of housing associations on the one side and tenants on the other.

57% of those responding to the rent consultation agreed with the proposed CPI +1% rent increase.  Not surprisingly 86% of those response were from local authorities and housing associations.

34% disagreed with the proposed rent increase. 87% of these responses came from individuals and organisations representing tenants. As the report says

‘The main concern was increases in rents being unaffordable for those on benefits and those supporting rental payments themselves’

The benefit and poverty traps

In other words tenants of housing associations were worried about the benefit trap and the poverty trap, while the bosses of housing associations are only concerned about plundering tenants in order to build more out-of-reach homes. 

The Government’s English Housing Survey for 2017/2018 shows that around 40% of social rent tenants are working, around 25% are retired and only around 5% are unemployed (see below from the 2017/2018 English Housing Survey).  

Most housing association tenants are not earning a high wage or salary. Around 60% of social renters already receive housing benefit, but those who don’t or whose benefits are capped are going to be hard hit by the rent rises. 

Therefore, a significant proportion of the actual cost of these increase will be charged back to the government.  Effectively, it means an increased subsidy to the Housing Associations via the back door, whilst also punishing individual tenants who are affected by the benefits cap or who have managed to escape it.

Sounds like the National Housing Federation hasn’t learnt anything in the last two years. 

And tenants will have to get ready for another battle against rent increases from increasingly aggressive, commercial and morally bankrupt policies of housing association bosses. 

 

From the English Housing Survey 2017/2018 

Notes:

(1) https://www.insidehousing.co.uk/news/government-announces-five-year-rent-settlement-52664

(2)Helen White is chair of the Regulatory Board for Wales and chair of Knowsley Housing Trust

(3) https://www.insidehousing.co.uk/comment/comment/we-shouldnt-celebrate-rent-increases-52822

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