Media Release: Tenants face threat of double digit rent increase
Possible 10% or more rent increase is unreasonable and unsustainable
More than 4 million ‘social housing’ households face the possibility of a double digit rent increase next April. In Swindon this would impact on more than 10,000 council housing and 5,000 housing association households.
Because of the social consequences of such a high rent rise Swindon council tenant representatives are calling on the council to demand the government funds a rent freeze. (See statement below)
They are not alone in this. There is a national coalition being formed which brings together tenant and housing campaign organisations to oppose this potential huge rent increase.
Tenant rep Martin Wicks said:
“The ‘cost of living crisis’ is driving many people close to the financial edge, some of them over it. We face another huge energy price rise in October with another expected in January. A 10% rent increase for tenants would drive more people into poverty. Everybody has heard of the choice of ‘eating or heating’ phenomenon and parents who on occasions go without food to ensure their children eat. More people are likely to face this choice if their rent increases by 10%. Living in a cold house because you cannot afford the heating is detrimental to health.
A recent survey by Nationwide showed 17% of respondents facing a decision to ‘heat or eat’. 8% turned off their heating entirely because they can’t afford it, a third are only turning their heating on for a few hours a day. This wasn’t a survey of social renters exclusively but it gives an indication of the scale of the problem.
In February of this year around half of Swindon tenants who pay their full rent or part of it, were in arrears. Whilst arrears fluctuate throughout the year we can be sure that a double digit rent increase would drive up arrears. Many tenants, even if in work, are struggling to get by month by month.
The council may say that they have to raise the rent in line with inflation because if they don’t they will have less money to maintain our homes. This is a genuine dilemma when Swindon’s Housing Revenue Account is under-funded as a result of government policy. That’s why we are calling for the government to fund a rent freeze. The way to resolve the problem of under-funding of HRAs is for councils to work together to demand adequate funding. The shortage of income cannot be resolved by driving up tenants’ rent to an extent that will further impoverish them. Some people on the waiting list are already being refused a tenancy because the council considers that they cannot afford the rent. If they can’t afford council rent what can they afford?
There is little more stressful that struggling to pay the rent and facing the threat of eviction.
As the Money & Mental Health Policy Institute has said: “The stress and worry of accruing rent arrears can exacerbate existing mental health problems, and, for some, this can cause a mental health crisis.”
Council leader David Renard is Environment spokesperson (which includes housing) for the Local Government Association. He is in a position to influence the policy of the LGA so that they put the government under pressure on this issue. They can bring to bear the weight of councils collectively.”
Letter To Councillor Cathy Martyn
Threat of double digit rent increase
More than four million ‘social housing’ households, including Swindon council tenants, are facing a potentially huge rent increase next April. The government formula for the annual rent increase is a maximum based on CPI (Consumer Price Index) inflation + 1%. The CPI inflation level in September each year determines what the maximum will be the following April. Last September it was 3.1% so the maximum increase this April was 4.1%.
Since the new formula was introduced Swindon council has increased the rent to the maximum, above inflation, every year. They don’t have to do this. A document explaining the new formula in 2020 said that CPI+1% is a ceiling “and providers will be free to apply a lower increase, or to freeze or reduce rents, if they wish to do so.” In a recent survey by Inside Housing it was shown that some councils set the rent at the CPI of 3.1% or below it, and two councils froze the rent.
With inflation now already at 9%, even before the further hike in energy prices expected in October, there is a likelihood of tenants facing a rent increase in April 2023 of 10% or even higher. An increase on that scale is completely unacceptable. It would place intolerable financial pressure on tenants whose rent is not covered by housing benefit. It would have a drastic impact on tenants in the context of the “cost of living crisis”. In the autumn and winter it is likely to mean that the choice between ‘eating and heating’ will be faced by more tenants. Not being able to put on the heating in cold weather, of course, is one factor in damp and mould developing to the detriment of tenants’ health.
In England council tenant rent arrears have increased by 34% over the last three years. We can be sure that a 10% increase will drive more people into arrears (see note below).
Given this alarming situation we are calling for a rent freeze. Nationally the call is being made that the government should fund the difference between a freeze and whatever the September CPI increase is.
We can put a figure on this. For a 10% increase it would cost around £738 million for council homes in England. This sounds like a lot of money but it is a small sum in the context of national expenditure. It is not much more than the £620 million handed out by the government to second home owners, to help with their energy bills!
The council will undoubtedly point to the problem of the Housing Revenue Account being under-funded. This is a genuine problem but under-funding cannot be resolved by above inflation rent increases and impoverishing more tenants. Swindon council should work with other councils to demand adequate funding from the government. David Renard, as Environment spokesperson for the Local Government Association (the body that brings together all local authorities), is in a position to influence it to press this demand on the government.