This is a discussion article by Martin Wicks. Faced with the possibility of an 8% rent increase next year for ‘social housing’ tenants, how can we campaign against it, and what should we demand? What do you think?
Council and housing association tenants can expect a 4.1% rent increase in April this year. After 4 years of a 1% annual cut in rent (designed to save money on the benefit bill rather than out of concern for tenants) the government introduced a formula for social rent of CPI +1% for five years. Initially the 1% above inflation was discretionary. But most councils are raising the rent to the maximum level anyway. The increase is determined by the level of CPI in September of the previous year. September 2021 was 3.1%, hence the 4.1% increase for 2022/3.
The inflation level for this September will determine what the 2023/4 rent rise will be. If predictions of inflation, with impending gas price rises, are anything like accurate, then the inflation rate might be somewhere in the region of 7% (though current events may drive it up further). If it is then next year council and housing association tenants will face a rent rise of 8%. This would be disastrous for people struggling to get by under growing financial pressure. It will impact on 4 million households (17% of them according to the English Housing Survey).
Tenants and housing activists need to prepare for this eventuality. To stop such a rise going ahead it will be necessary for the government to, at least, suspend their social housing rent regulation.
The Northern Ireland Housing Executive has just declared a freeze on rent for the new financial year. Minister Deirdre Hargey said: “Right now, tenants need security, and a freeze in their rents will provide a bit of stability on an important housing cost in an uncertain climate.” We should demand a freeze as well. This will not be popular with councils and some councillors because the housing revenue account (which runs council housing) has no subsidy and is entirely dependent on rent and service charges which tenants pay. Some housing associations, drunk on above inflation rent increases, and commercialising their organisations, want more. In London the L15 group has called for CPI+1% to be embedded for 30 years; that is an increase of 30% above inflation! How’s that for ‘social purpose’?
So far as council tenants are concerned they should not have to pay the price of the under-funding of the housing revenue accounts by above inflation rent increases. That under-funding, means that councils have insufficient resources to carry out all the work necessary to maintain their housing to a good standard. This problem cannot be resolved by squeezing the tenants. It requires a change of central government policy, including cancelling the bogus debt, and funding a retro-fitting programme.
The greater the pressure that tenants are under then you can guarantee that the phenomenon of having to choose between heating and eating will become more widespread. That has consequences for living conditions because not having the heating on is one factor in the problem of mould and damp. Some of the conditions which councils as well as housing associations have allowed their tenants to live in are scandalous, and show their contempt for tenants.
The impact of the pandemic
The pandemic has had a harder impact on poorer households, especially those in low paid and precarious work. The English Housing Survey has reported that in 20/21 the number of full-time employees living in social rented properties fell from 31% to 25%. Those in part-time work fell slightly from 14% to 13%. Unemployment rose from 6% to 11%. Half (51%) of social renters were retired, in full-time education or ‘inactive’, a group which includes those who have a long-term illness or disability and those who were looking after the family or home. Over half (55%) of households in the social rented sector had one or more household member with a long-term illness or disability
No less than 76% of social renters are in the lowest two income quintiles.
Greenlight for Housing – too poor to afford council housing?
Housing Associations have a process called Greenlight for Housing whereby, before granting a tenancy, officers check whether they think the household can afford the rent. Although this is often presented as a means of helping tenants it is in reality simply a means of trying to guarantee income for the housing association by fending away the poorest applicants. GLH has now been picked up by some councils. So in the case of Swindon there is a means-test to determine whether you are allowed onto the housing waiting (because you have ‘too much’ income) and one to determine whether you should be denied a tenancy (if you have ‘too little’ income to afford the rent). Even if a household comes top of a bidding process for a particular property, their finances are checked and an officer will determine if they can afford the rent. If they are deemed to be unable then they won’t be given a tenancy and they have to agree to participate in the GLH process. Officers will look at their finances in detail, check whether there is any other benefit that they might apply for, and whether they might find some way of increasing their earnings (do more work). Unless they agree to participate into this intrusive process then they won’t be allowed to bid again.
Obviously if you qualify for full housing benefit, covering 100% of your rent, then it does not apply to you. It applies to people in work on low pay, on zero hours contracts, or temporary work. When people are denied a council tenancy because they can’t afford the rent then you have to ask, what could they afford?
Since the new rent policy was introduced, in Swindon tenants have argued for a rent increase of no more than inflation. Predictably, each year the council ignores us. However, with inflation taking off, calling for an increase no higher than the level of inflation is now insufficient: a 7% increase rather than an 8% one is hardly any better. As you can see from the table below the trend of rent arrears for council housing is upwards: a 29% increase between 2018/19 and 2020/21. A huge rent increase in 2023/4 will drive arrears up even further.
The threat of further impoverishment of social housing tenants has to be resisted. There needs to be a broad based campaign, including the new tenant unions, and maybe organisations like the New Economics Foundation (which funds tenant campaigns) and Shelter. We might also be able to include private renters (4.4 million households) where the issue of rent controls is a live one owing to the often extortionate rents. A recent article in the Manchester Evening News highlighted that in no area in the city did local housing allowance cover private sector rents. This is replicated in many areas.
Rather than waiting until October, when we will learn what the September inflation figure is, it would be useful for interested organisations to have some preliminary discussions to see if they can agree a common approach.
This situation presents a challenge to Labour which was silent on the introduction of 5 years of above inflation increases. If it does not support the interests of council and housing association tenants when faced with huge rent increases then how does it expect to be elected? Who does it represent?
Council Housing – England
|Rent loss from voids||£102,648,535||£107,158,920||£133,414,230|
Extracted from Department of Levelling-up, Housing, Communities and Local Government, Local authority housing data.
Voids are empty properties which are either waiting for or having work carried out on them prior to a new tenant moving in or properties awaiting demolition.