Increasing social rents cannot be the housing sector’s answer to rising inflation

Poverty Person with house key
Photo by Maria Ziegler on Unsplash
ViewsJune 9th, 2022

Steffan Evans reacts to recent arguments for above inflation social rent rises

The relationship between social rents and inflation has long been a thorny issue. For many years the Bevan Foundation has argued that the Welsh Government’s historic approach of allowing social rents to increase above inflation is the wrong one, putting extra financial pressure on some of the poorest people in Wales.  

Soaring inflation has bought these issues to the fore more than ever. On June 8th, Inside Housing published an opinion piece by Cedric Boston, chief executive, of Unity Homes and Enterprise, a Leeds-based housing association. In it, he argued that the UK Government should permit English social landlords to increase their rents by above inflation. Doing so, he suggested would only negatively affect a small number of tenants whilst allowing social landlords to continue to provide tenants with high quality services. It is crucial that such thinking is not adopted in Wales.

The problem with rising social rents

Rising social rents are not a new problem in Wales. Above inflation rent hikes saw social rents increase by 8% in real terms in the five years to 2020. Whilst it may be true that many tenants were shielded from these increases due to their rents being covered in full by Housing Benefit or the housing element of Universal Credit, it should be remembered that not all tenants receive these benefits.

In November 2020 the Joseph Rowntree Foundation estimated that 40,000 social renters had been pulled into poverty in Wales as a direct result of above-inflation rent rises. With costs surging across the board, many social housing tenants are already finding life difficult. In the current climate, increasing rents in line with inflation, let alone at rates above inflation, is likely to cause significant hardship to many, dragging thousands more tenants into poverty, and driving some into destitution.

Some tenants that receive benefits are also likely to feel the squeeze if rents are increased at or above inflation. Households affected by the bedroom tax, the benefit cap or households that are not entitled to have their rent covered in full by benefits would all be affected by large increases in social rents. Some of these tenants are already hard-pressed by having to use money earmarked for essentials towards their rent.

The impact on services

Significant rent increases would also have an impact on social landlords’ ability to deliver services. It seems inevitable that the cost-of-living crisis will lead to more tenants falling into arrears. A sharp increase in rent would just increase this risk further, undermining social landlords’ balance sheets and absorbing significant staff time.

It could also have an impact on the quality of social housing stock. As the effects of the cost-of-living crisis kick in, it’s likely that more and more households will have to ration their heating. This in turn increases the risk of damp and mould problems developing within properties, affecting the health of tenants, and increasing repairs workload down the line.

Now’s the time for a serious conversation about rents

The social housing sector, like many other sectors, is going to come under increasing pressure over the coming months as cost rise. It is absolutely right that social landlords lobby the Welsh Government for extra support to allow them to continue to provide vital services and to build a much-needed new generation of social housing. For the reasons set out in this article, pushing for above inflation rent increases should not be part of the sector’s calls.

Looking to the longer term the current squeeze serves to highlight once more the limitations of the Welsh Government’s rent-setting policy. It is not sustainable to continue looking to social housing tenants to carry the burden of constructing a new generation of social housing. The Welsh Government and the broader social housing sector should use the current crisis as a catalyst to revisit our approach in Wales and to seek to develop a truly progressive approach to social rents.

Steffan Evans is the Bevan Foundation’s Head of Policy (Poverty)

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