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UK chancellor Rachel Reeves has introduced plans to boost rents for social housing by greater than inflation over the subsequent 5 or 10 years whereas additionally offering an instantaneous £500mn money injection for housing associations and councils to spice up inexpensive dwelling constructing.
Reeves intends to introduce a formulation in subsequent week’s Finances that may enhance annual rents in England by the patron value index measure of inflation — at present 1.7 per cent — plus an extra 1 per cent.
The chancellor will difficulty a session in Wednesday’s fiscal setpiece introducing this as a long-term settlement. The Treasury mentioned it could be a five-year CPI+1 deal, however added: “The session may even search views on different potential choices to provide higher certainty, akin to offering a 10-year settlement.”
The transfer is designed to stimulate the constructing of extra inexpensive properties by offering certainty over money stream for closely indebted housing associations and councils. The federal government units hire ranges in subsidised social housing on the idea of a nationwide formulation.
On the identical time Reeves will announce an extra £500mn for the Reasonably priced Houses Programme, an current £11.5bn five-year scheme allocating cash to housing authorities and councils to construct new properties.
Angela Rayner, the deputy prime minister who can also be secretary of state for housing, had held out throughout intense spending-round negotiations with the chancellor early this month to garner more cash for the AHP.
Reeves additionally mentioned she would use the spending overview to set out the main points of recent funding for inexpensive housing for when the present programme runs out in 2026.
“We have to repair the housing disaster on this nation. It’s created a technology locked out of the property market, torn aside communities and put the brakes on financial progress,” she mentioned.
Lately native authorities have delivered solely a trickle of recent properties, leaving housing associations — not-for-profit organisations — to construct most new social housing.
Guaranteeing increased rents will please housing associations however might immediate a backlash from tens of millions of tenants whereas touchdown the federal government with a a lot increased advantages invoice.
A earlier Conservative administration made an analogous promise in 2012 with a decade-long hire settlement primarily based on the retail value index plus 0.5 per cent, however this was ripped up in 2015 to economize on housing advantages. The same five-year deal in 2020 was briefly dropped when inflation spiked in 2022.
Guaranteeing certainty on rents was a vital demand of 20 of the UK’s largest native council landlords who printed a report this summer season warning that England’s council housing system was “damaged”.
The chancellor may even verify plans to chop reductions on “right-to-buy” offers — the place tenants purchase a council property they’ve been renting. On the identical time councils will be capable to retain 100 per cent of the receipts generated by such gross sales.
Ministers hope the web impact will probably be for native authorities to obtain more cash to construct social housing whereas nonetheless permitting long-standing tenants to purchase their very own properties.
Polly Neate, chief govt of housing charity Shelter, mentioned the funding increase was a welcome step given Britain’s “rocketing homelessness”.
“For many years we’ve misplaced extra social properties than we’ve constructed, inflicting non-public rents to soar to document highs and the homeless lodging invoice to hit the billions,” she mentioned.