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Social housing providers “unimpressed” with Budget’s rent reduction for tenants (9 July 2015)

Date: 09/07/2015
Duncan Lewis, Legal News Solicitors, Social housing providers “unimpressed” with Budget’s rent reduction for tenants

The Chancellor has announced that social housing rents in England will be reduced by 1% a year over a four-year period, starting in 2016.

The social housing sector opposed the government’s plans to extend Right to Buy (RTB) to housing association tenants. The government had said that for every property sold under RTB, another would be built, placing pressure on housing associations to fund building new homes.

Reducing social tenants’ rents by 1% annually for four years will place pressure on housing budgets, as income for public sector housing providers falls.

Social housing publisher 24Dash reports that Chancellor George Osborne said that the move – announce din the emergency Budget on Wednesday (08/07/15) – would prevent the housing benefit bill from continuing to rise.

“We are going to end the ratchet of ever higher housing benefit chasing up ever higher rents in the social housing sector,” Mr Osborne said.

“These rents have increased by a staggering 20% since 2010, so rents paid in the social housing sector will not be frozen, but reduced by one per cent a year for the next four years.”

Mr Osborne said the reduction would be “a welcome cut in rent for those tenants who pay it” and added:

“I’m confident that housing associations and other landlords in the social sector will be able to play their part and deliver the efficiency savings needed.”

The Chancellor has pledged to make a further £12 billion in welfare cuts, with housing benefit one of the benefits being targeted, as the cost of housing benefit to the taxpayer continues to escalate.

However, social housing providers have reacted negatively to Mr Osborne’s announcement.

Chief executive of the National Housing Federation, David Orr, said:

“At the very least, 27,000 new homes will not now be built – though that figure could be much higher.

“The Right to Buy for housing association tenants further compounds this.”

Chief executive of the Chartered Institute of Housing, Terrie Alafat, was also critical of the Chancellor’s announcement.

“We understand the government’s desire to manage the cost of the housing benefit bill – but undermining their income by cutting social housing rents by one per cent a year over the next four years is going to make it much tougher to build new homes, at a time when we desperately need to do so.”

As expected, the Chancellor also announced a “Pay to Stay” policy, under which social housing tenants earning more than £40,000 a year in London will have to pay higher rents in the future. Social housing tenants earning £30,000 a year who live outside London will also have to pay higher rents.

Duncan Lewis Housing Solicitors

Duncan Lewis housing solicitors can advise on a wide range of housing matters, including Landlord and Tenant disputes relating to rented property – and unlawful eviction or malicious eviction of tenants in the private sector or social housing.

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• Disrepair of rented property
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For expert legal advice on housing law, call Duncan Lewis housing solicitors on 020 7923 4020.

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