Councils and tenants 'confused' by Government plans to reduce rent increases

Published by Jon Land for 24dash.com in Housing

Council leaders have welcomed Government plans to reduce the large rent increases for council housing tenants announced earlier this year but many say they are unclear how the shortfall will be bridged.

In Sheffield, the city council had set rent increases at 6.2% after Government ministers said it must be set at this rate or local people would lose out.

This was the lowest rate the council could possibly set and letters have already gone out to thousands of tenants across the city to explain this increase.

Now, however, the Government has revealed it is planning to help councils cut this increase by proposing a raise of 3.1 per cent instead.

Although council leaders welcome the proposal, they say the Government has not yet made it clear how the budget gap will be filled.

Councillor Bob McCann, Sheffield City Council’s Cabinet member for Housing and Sustainable, Safer Communities explained: “Obviously we are pleased with any cut in rent increases for our tenants, as the last thing we want is for them to have to pay such a huge increase, especially in the current economic climate.

“But we made it quite clear back in January that we did not want to set the increase so high but we were forced to put the rents up way above inflation or our services would have to be cut.

“Now we are being told that the Government is planning to let us reduce this increase, yet they have not made it clear at all how the shortfall from this will then be bridged.

“We need to be able to make it clear to our tenants whether we can give them this cut or not and we need to be able to do that now.”

Already Sheffield Homes, the ALMO which runs the city’s council housing stock, is starting to receive inquiries following the statement from Housing Minister Margaret Beckett, MP, which she made last Friday.

Councillor McCann added: “I really do sympathise with tenants who have heard about this change and are now confused.

“This might well be good news for tenants, however it would have been helpful to have been told earlier and certainly before I wrote to over 40,000 people in the city to tell them about the rent increase for next year.”

He added that until further details are provided by the Government, he could not advise tenants any further on the proposed changes. However, once the position has been made clear he will be writing to tenants again to explain how any changes will affect them.

Meanwhile, the council leading the campaign for the abolition of the national funding system for council housing has dubbed Margaret Beckett's surprise rent announcement as a 'fiasco'.

Waverley Borough Council’s Chief Executive, Mary Orton, said the climb-down proved that tenants' rents should be set locally by councils, and not dictated by Government.

She said: "The current housing finance system is out of touch with local people, and out of step with the economic times. It is time Margaret Beckett admitted that the system simply does not work, and returned control of housing finance to council landlords.

"The shock ministerial statement, that the Government has changed its mind on imposing a 6.2% rent increase, was published just days after councils across the country had completed the mammoth task of setting budgets, printing rent notifications and calculating benefit entitlements.

"According to its own rules, the Government will now need to publish a new draft national rent determination for consultation with local authorities; so it will not be possible to implement the new decision until late April at the very earliest.

"Ministers claim that the setting of rents is a local decision, and its rent figure is merely a "guideline," but the reality is that their subsidy calculations assume that councils will set the guideline rent. Councils choosing to set a lower rent risk financial penalties through the subsidy system."