Chancellor to make huge change for millions of social renters in Budget
MILLIONS of social renters will be impacted by huge changes when the Chancellor delivers her Autumn Statment on Wednesday.
Rachel Reeves is set to announce plans for a new social housing rent settlement, resulting in rent increases above inflation over the next five years.
The government plans to cap social housing rents at CPI inflation plus 1% and will consult on this five-year rent settlement.
The consultation will also explore other options, such as a 10-year settlement.
Additionally, the Chancellor will reduce Right to Buy discounts, which allow tenants to buy local authority-owned homes at a discount.
This change aims to protect existing council housing stock.
This overhaul will allow councils to retain 100% of the money from property sales, helping them to build more social housing.
The moves are part of a housing package that includes £500 million in new funding for up to 5,000 new affordable social homes and £128 million to support delivering 33,000 other homes.
Ms Reeves said: “We need to fix the housing crisis in this country. It’s created a generation locked out of the property market, torn apart communities and put the brakes on economic growth.
“We are rebuilding Britain by ramping up housebuilding and delivering the 1.5million new homes we so badly need.”
Darren Baxter, principal policy adviser at Joseph Rowntree Foundation, added: “Investing in building social homes will make a real difference to the lives of people who are currently locked out of the economic security these homes could give them.
“It’s welcome to see that alongside this investment, the government plans to take steps to reduce the number of homes lost to the private sector through the Right to Buy discounts.
SOCIAL RENT SHAKE-UP
The outcome of the consultation on social housing rents could mean that millions of tenants face up to 10 years worth of inflation-busting rent hikes.
The previous Conservative government capped social rent hikes to 7% earlier this year.
However, Rachel Reeves plans to consult on a 5 to 10-year formula in October’s Autumn Statement that will increase annual rents in England by the CPI measure of inflation plus an additional 1%.
While housing associations are likely to welcome this move, it could worsen the cost of living for millions of tenants and potentially increase the government’s benefits bill.
However, Polly Neate, chief executive of Shelter, says: “As inflation can spiral out of control very quickly, there needs to be mechanisms in place to protect tenants from extreme rent rises that put them at risk of becoming homeless.”
Most social housing tenants receive full housing benefits from the government, meaning taxpayers often fund any social rent increases.
However, around 30% of social tenants pay full rent and will be hit by future increases in full because they’re not eligible for support.
There are around four million households currently living in rented social housing.
That means 1.2million households will face future bill hikes if the new formula eventually comes into force.
However, the exact amount your rent will increase depends on your location, the size of your property, and the level of inflation.
What help is available?
IF you rent from the council or a housing association, you can get help if you’re having problems affording your rent.
If you miss a rent payment, you’ll fall into ‘arrears’ and owe your council or housing associations.
Fail to pay back what you owe and you could be evicted.
If you can’t afford your next rent payment, you should talk to your landlord as soon as possible.
Call them and explain why you’re struggling.
Your landlord may be able to grant a temporary payment holiday or signpost you to other forms of help.
It’s worth asking if you can get a discretionary housing payment.
This provides extra money from your local council to help pay your rent – you don’t need to pay it back.
It’s always worth checking if you’re getting any benefit payments you’re entitled to.
You can use several free calculators, such as Gov.uk, Citizen’s Advice, MoneySavingExpert, StepChange, and Turn2Us, to help you get an estimate.
RIGHT TO BUY SHAKE-UP
In the decade to 2022/23, only 94,000 new council houses were built.
However, over 212,000 were sold via right to buy, and another 58,000-plus were demolished.
To counteract the significant loss of housing stock, the government plans to substantially reduce the Right to Buy privileges for social tenants.
This could mean tenants must live in their homes for ten years – up from the current three – before being allowed to purchase.
For newly-built council homes, the option to buy could be scrapped altogether, preserving much-needed social housing stock.
The exact details of the Right to Buy overhaul will be confirmed when Rachel Reeves delivers her Autumn Statement on Wednesday, October 30.
What Is Right To Buy?
RIGHT to Buy was introduced in 1980 by Prime Minister Margaret Thatcher's Conservative government.
The scheme allows people renting council homes (owned by local councils) to buy their homes at a discount.
The longer you’ve lived in the property, the bigger the discount—up to 70 per cent off.
It was designed to help tenants become homeowners, and millions of people have used it.
However, the scheme has also led to a large reduction in available council homes, as many were sold and not replaced.
This has contributed to a shortage of affordable housing for people in need.