Trade body says £3 cap would help housing associations raise £3.4bn over 10 years but Northern Housing Consortium calls for £2 limit
The National Housing Federation (NHF) has urged the government to set a higher-than-proposed £3 uplift to weekly rents through the proposed re-introduction of social housing rent convergence.
The government’s consultation on reintroducing the policy – which would allow cheaper rents to rise more quickly to ensure alignment between similar properties – closed last week.
The Ministry of Housing, Communities and Local Government (MHLCG) is proposing to set a cash limit on the additional amount by which non-converged rents can increase each year, over and above CPI plus 1%. It is proposing to restrict this to £1 or £2 to “reduce the additional cost to households whose disposable income would be affected and to limit the impact on social security spending.”
However, in its consultation submission, NHF said: “We welcome the government’s commitment to introducing rent convergence and encourage it to implement a £3 uplift, starting in 2026, that is embedded as a standing feature of social rent setting policy.”
NHF has collected evidence from 40 of its housing association members on the potential impact of a £3 limit. It said a £3 uplift would deliver 10% more new homes than no convergence over 10 years. If scaled up this could mean an additional 51,244 homes built overall.
It said implementing £3 convergence in 2026 would allow housing associations to raise a further £3.35bn over 10 years.
While it is urging a £3 limit, the NHF also stressed that a £2 uplift would have much more impact than £1, with nearly twice as many additional homes built by 2029.
The call for a £3 uplift was echoed yesterday by Paul Hackett, chief executive of Southern Housing, in a column for Housing Today. Hackett wrote: “Having crunched the numbers, it’s clear only a £3 per week premium restores our financial capacity at the pace required to meet new regulatory requirements including the potentially very costly revised Decent Homes Standard.
Other sector organisations are backing a £2 a week limit.
The Northern Housing Consortium (NHC) is calling for a £2 maximum uplift for a 10-year period.
Tracy Harrison, chief executive of Northern Housing Consortium (NHC) said: “A £2 per week policy would not only deliver greater financial capacity for landlords in the North—it would do so faster, enabling meaningful reinvestment in this parliament.
“Crucially, a policy of £2 per week over ten years strikes the right balance between enabling greater investment by landlords and ensuring that rents remain affordable for residents.”
>>See also: Social rents have fallen “significantly” in real terms in past decade, says Housing Forum
NHC said the policy would generate £216m in extra rental income annually in the north of England by year 10 compared to CPI+1% alone.
In its submission, the Chartered Institute of Housing said it supports £2 per week convergence as long as the government supports the sector to meet new regulatory requirements including the Decent Homes Standard, Minimum Energy Efficiency Standards (MEES) and the introduction of the Heat Network Technical Assurance Scheme (HNTAS).
It said: “This should ensure a balance between financial sustainability of providers and affordability for tenants.”
However it said if the government does not commit to this additional funding, it may be necessary to implement £3 per week convergence. “We would note that even this level of convergence may not be sufficient to meet the costs of forthcoming policies relating to quality and decency without an additional existing homes funding stream,” it added.
Re-introducing rent convergence was one of several measures announced in the spending review in a package of policies to boost affordable housing. The The scrapping of the policy in 2015 has been estimated by the G15 group of housing associations in London to have cost its members £2bn.
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