RSH issues warning as concern mounts over impact on development programmes

The Regulator of Social Housing (RSH) has warned housing associations they must not compromise landlord services if the government’s proposed cap to rent increases goes ahead.

balance sheet finances

In a letter to chief executives of housing associations, RSH chief executive Fiona MacGregor said the regulator recognises the rent cap proposals “will have significant, challenging effects on landlords’ finances.”

She said: “They will require you to make hard choices about investment and expenditure priorities, revise your business plans and take action to maintain viability and compliance with the regulatory standards.

“Although the outcome of the consultation is not yet known, it is essential that these preparations happen now. In making these decisions, the safety of tenants and delivery of essential landlord services must not be compromised.”

The warning comes as concern mounts that housing associations faced with constrained income will be forced to cut development or decarbonisation work to focus on maintaining existing properties and services. The issue is of concern for development as housing associations rely on rental income streams to help fund new homes.

Housing associations build around one in four new homes in England each year. They completed 32,200 new homes in 2020/21.

The government is consulting on plans to limit rent rises to 3%, 5% or 7% next year to help tenants with the cost-of-living crisis. This would be significantly less than its original plan to allow rents to increase by up to the consumer price inflation measure of inflation for September plus 1%.

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An impact assessment of the proposals said a 5% limit could lead to a £7bn hit to housing associations and councils over five years. It found the five-year cost to housing providers of limiting the increase to 3% would be £9.2bn, while the cost of the 7% rent rise option would be £4.6bn.

The consultation runs until 12 October.