Government may cap rent rises for social housing renters – but shared owners will not be included

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Daniel Hewitt, Political Correspondent, ITV ** https://www.itv.com/news/2022-08-30/social-housing-rent-cap-considered-by-government-as-cost-of-living-squeeze-hits?

A social housing rent cap is being considered by the government to prevent some of the country’s poorest tenants facing huge hikes in monthly payments. Ministers are consulting on whether to limit rent rises that housing associations and councils can impose from April 2023 on more than 4 million households. A cap of 3%, 5% or 7% have been put forward as potential options.

The cap would be limited to the social housing sector, as the government comes under pressure to help tenants in renting privately, with average rent prices soaring in many parts of the UK.

London Mayor Sadiq Khan is calling for the government to freeze rents after they increased by 15% on average in the capital in the past year.

Social housing tenants face biggest hike in rent for more than a decade

The UK government already limits how much social landlords in England can increase social rent each year. The formula is set at the consumer price index (CPI) inflation plus 1%.

With CPI inflation currently at 10.1%, that would mean an 11.1% increase in social rents under the current rules.

In April this year rents rose by 4.1%, the highest in a decade. Angry and worried families told ITV News they would struggle to afford the extra payments.

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Although landlords don’t have to increase rent at all if they don’t want to, research by ITV News found 89% of councils and the vast majority of housing associations increased it by the maximum amount permitted under the government’s formula.

I would expect the same to happen in April next year, in line with whatever ministers decide the cap should be. A capped increase of 5% or 7% in April 2023 would still constitute the biggest rent increase in many years, and would see social housing tenants paying hundreds of pounds more a year just as their energy bills go up again.

https://www.itv.com/news/2022-08-30/social-housing-rent-cap-considered-by-government-as-cost-of-living-squeeze-hits?

**According to MoneyBox Radio 4 (3.9.22) Shared owners will NOT be included in these proposed rent caps meaning that housing associations will be bale to increase rents for shared owners by RPI + 1% , from April 2023. The RPI is likely to be over 10% at that time.