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Five-year social housing rent settlement revealed

Social housing rents in Wales will rise by the rate of inflation plus 1% for the next five years under a deal announced by housing minister Julie James.

The long-term deal is in line with the recommendation of the independent review of affordable housing supply and it means that average rates will rise by 2.7% in April 2020 (1% plus the 1.9% rise in CPI inflation in September 2019).

The rent settlement comes with some strings attached and some flexibilities included. A letter to housing associations and local authorities says  that:

  • CPI+1% is the maximum allowable increase but Welsh Government says it should not be regarded as an automatic uplift – landlords should take affordability into account.
  • To allow landlords to restructure rents where needed, rents for individual tenants can be reduced, frozen or rise by up to an additional £2 per week on top of CPI+1% on condition that total rent income does not rise by more than CPI+1%
  • If CPI falls outside the range 0% to 3%, the minister can make a determination on rents for that year only
  • Social landlords should inform Welsh Government where they have concerns about financial viability or their ability to meet their obligations to tenants and lenders.
  • As an intrinsic part of the policy, landlords will be expected to set a rent and service charge policy that ensures that social housing remains affordable for current and future tenants – and an assessment of cost efficiencies, value for money and affordability shoud be discussed at board, cabinet or council.

Julie James said: ‘It’s important to balance the need for tenants to be able to afford their rent, and ensuring social landlords have the rental income certainty they need to build more social housing. I have taken a variety of factors into account and considered carefully the findings of a number of independent reports in making this decision.

‘We know the quality of people’s homes has a very real impact on their health, well-being and quality of life. Together with Welsh social landlords, we have ambitious plans to build much more social housing in Wales. This rent deal balances that ambition against the need to make sure ordinary people can afford to pay their rent.’

The letter to social landlords also sets out a wider agreement with representative organisations linked to the rent settlement. Under this:

  • Social landlords will strengthen their approaches designed to minimise all evictions and eliminate evictions into homelessness.
  • Carry out a standardised tenant satisfaction survey and provide the data for publication on a central website to assist tenants in scrutinising and comparing landlord performance. First results will be available in April 2021 and bi-annually after that
  • Develop an aspiration that DQR 2020 space standards will apply across tenure on sites which attract Welsh Government funding, on a phased basis from 2021
  • Work towards an aspiration that all new build housing, regardless of tenure, achieves energy efficiency standards of no less than EPC A on sites which attract any Welsh Government funding from April 2021.

Stuart Ropke, chief executive of Community Housing Cymru said:

‘We are pleased that the minister has today responded to the call from housing associations and set out a long term and sustainable rent settlement. This certainty  will allow housing associations in Wales to work with tenants to set rents that are genuinely affordable and ensure housing associations can continue to  build and invest in the high quality homes Wales so desperately needs.’

David Wilton, chief executive of TPAS Cymru, welcomed the settlement as providing ‘some greater certainty to the sector and to some extent tenants’ but added:

‘Whilst we believe that using tenant satisfaction surveys will be beneficial for scrutiny purposes, tenants require greater transparency and engagement in wider strategic decision-making.

‘In particular, if tenants are to be charged at a rate higher than current CPI levels, then tenants must also be afforded a much stronger voice in the decision-making process to determine what value for money they can expect when paying these higher rates. We would like to see a stronger commitment from all social landlords to ensure tenants’ views are reflected in rent-setting decisions and in decisions on service charge levels, which many tenants tell us are of increasing concern in terms of affordability.

‘We would also welcome the publication of explicit value for money statements justifying any rent and service charge increases, enabling tenants to challenge and hold their landlord to account for services they pay for – something referred to in the Affordable Housing Review report.’

Matt Dicks, director of CIH Cymru, welcomed the longer-term certainty provided by the settlement and said he expected greater flexibility to vary rents for individuals to come with meaningful engagement with tenants. He added:

‘The greater certainty with this settlement must now be accompanied by the same certainty regarding social housing grant levels and a long-term outlook on the support available for organisations in improving the quality of existing homes and achieving higher quality standards for homes in the future.

‘It must also be recognised that the forces that impact affordability are wide-ranging and include welfare reform, and in particular the impact of Universal Credit, and the availability of meaningful and suitably paid employment.’


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