Return to inflation-linked increases after cost-of-living crisis restriction ends

Social landlords will be permitted to increase their rents by 7.7% next year, official guidance has confirmed.

The government has decided to revert to its previous formula after a cap to help residents with the cost of living comes to an end on 31 March.

Guidance from the Department for Levelling Up, Housing and Communities published in December reveals social landlords will once again be allowed to increase rates by the consumer price index (CPI) measure of inflation in September plus one per cent.

This formula, set under a five-year settlement spanning 2020 to 2025, was scrapped for one year in 2023/24 and replaced with a fixed increase limit of 7%.

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This was because spiralling inflation would have permitted increases of more than 11% and the government felt this was not fair on tenants in the midst of a cost of living crisis.

James Prestwich, director of policy and external affairs at the Chartered Institute of Housing (CIH), said it is vital affordability for residents is “balanced” against ensuring social landlords have the capacity to invest.

He said: ”We know social landlords wrestle with finding this balance each year, and the current squeeze on personal incomes makes these decisions particularly difficult.

“CIH believes the imperative to invest in homes and services does necessitate an index-linked rent increase while also calling upon social landlords to seek to provide sufficient support to those tenants hardest hit by this increase and least able to afford it.”