England to Raise Social Rents by CPI + 1%

Chancellor Rachel Reeves is reportedly gearing up to make a bold move in the housing sector by increasing social rents by more than inflation for the next decade. This initiative aims to supercharge efforts in the construction of social homes, according to reports from the Financial Times (FT).

Reeves is expected to announce that social rents can be boosted annually by the Consumer Price Index (CPI), which is currently at 2.2%, plus an additional 1% for the next ten years. The current formula already includes CPI + 1%, but this settlement is set to expire in 2026. Affordable housing sector bodies have been advocating for a new, long-term arrangement.

This significant announcement is anticipated to be revealed in Reeves’ first budget on October 30. It follows a promise from housing secretary Angela Rayner to instill confidence and stability in the social housing system.

The Ministry of Housing, Communities and Local Government (MHCLG) has not confirmed the specifics of the 10-year rent settlement or revealed additional details in advance of the budget. A spokesperson stated, “Work is ongoing to fortify the foundations of our housing and planning system, and we will unveil our strategies at the upcoming fiscal event.”

James Prestwich, director of policy and external affairs at the CIH, highlighted the necessity for a rent settlement that offers assurance to landlords and investors. This certainty enables housing providers to strategize investments in social homes over the long haul. Prestwich pointed out the importance of maintaining affordability for individuals residing in social housing.

Rachelle Earwaker, senior economist at JRF, emphasised the critical connection between a secure, affordable home and a robust income safety net for families. She underscored the need for the government to strike a balance between constructing new social homes and ensuring that social rents remain manageable for families.

Earwaker highlighted the detrimental impact of restricting social security benefits, such as through policies like the benefit cap or penalties for having a spare bedroom, which could leave families unable to cover their rent. She stressed the imperative for the social security system to encompass rental costs for those with the lowest incomes while ensuring that secure, affordable homes are accessible for those in need.