lucadelladora – A proposed 10-year rent settlement allowing social landlords to increase rents by the Consumer Price Index (CPI) plus 1% could significantly boost revenue for housing associations and local councils. According to research by the Chartered Institute of Housing (CIH) and Savills. The analysis, submitted as part of the government’s consultation on social housing rent policy. Highlights the long-term financial benefits of extending the rent adjustment period.
If implemented, housing associations could see an additional £7.4 billion in revenue over a decade. While local authorities stand to gain £5.5 billion. By the fiscal year 2035/36, housing associations alone would generate £1.4 billion more annually compared to a CPI-flat rent policy.
Over a 30-year period, the benefits are even more pronounced. A 10-year settlement would allow housing associations to accumulate £41 billion. Significantly outpacing the £21 billion forecast under the government’s proposed five-year settlement. Similarly, local councils could generate £31 billion over three decades, compared to £16 billion under a shorter rent policy.
The government is currently considering feedback on its proposed rent policy, which plans to allow increases at CPI plus 1% for five years starting in 2026. However, CIH and Savills argue that a 10-year plan would provide greater financial stability and enable sustained investment in housing infrastructure and services. The findings underscore the importance of adopting a longer-term strategy to meet the growing demands of the social housing sector.
10-Year Rent Policy Could Unlock £20B in Affordable Housing Investment
New research by the Chartered Institute of Housing (CIH) and Savills advocates for a 10-year social housing rent settlement at CPI plus 1%. Emphasizing its potential to attract £20 billion in affordable housing investment. The British Property Federation and leading groups like the National Housing Federation and G15 housing associations in London also back this longer-term approach. Which aims to provide greater stability for the sector.
While the government has proposed a five-year settlement. CIH argues this timeframe falls short of offering the confidence and stability needed for effective planning and attracting investment. CIH recommends a 10-year settlement. Ideally enshrined in statute, to solidify the commitment and ensure consistent support for social landlords and investors.
The CIH and Savills analysis also highlights the benefits of reintroducing rent convergence. A policy that previously allowed lower rents to rise faster for alignment. A £3 per week rent convergence would generate an additional £6 billion for local authorities and £3.3 billion for housing associations over a decade, significantly enhancing revenue streams.
CIH Calls for 10-Year Rent Settlement Overhaul to Support Social Housing Growth
The National Housing Federation has prioritized advocating for the return of rent convergence, a policy enabling lower rents to rise faster for alignment. However, the government has expressed concerns about potential increases in the benefits bill if some rents exceed CPI plus 1%.
The Chartered Institute of Housing (CIH) is urging a broader review of social housing rent policies. This review would define sector objectives for improving housing standards and meeting new build targets while aligning resources such as rents, grants, borrowing, and sales receipts.
Gavin Smart, CEO of CIH, emphasized the need for long-term stability. “Social housing providers have faced significant financial challenges, exacerbated by sudden changes to rent policies. A 10-year settlement at CPI plus 1%, coupled with mechanisms to rebuild confidence, is essential,” he said. Smart also called for the reintroduction of rent convergence to ensure fair and consistent rent levels, in line with rent formula standards.
CIH maintains that a comprehensive approach is vital to address social housing providers’ financial strains and to support the delivery of affordable housing solutions for communities.
