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Rent reduction for housing association tenants 'will mean fewer new homes'
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Millions of housing association tenants are being asked to
forego an expected rent reduction to help avoid a shortfall of new
properties.
The National Housing Federation (NHF) has warned that even a small
drop in rental income could see thousands fewer new homes being
built as services get squeezed.
Rent rises for tenants are linked to inflation measured by
September's retail price index (RPI). It is expected to fall to
minus 1.7% for July and remain around that level for some time to
come.
Ruth Davison, NHF campaign director, said the impact of a 2%
reduction would cut the number of homes that could be built next
year by 4,000 at a time when nearly five million people were
waiting for council homes.
"This is bad economics and bad politics," she told The Times.
"We desperately need new homes. And as the public finances
deteriorate we will need more private borrowing to ensure we can
continue to build these new homes."
"Taking capacity out is precisely the wrong thing to do. A fair
deal would be to freeze rents, giving a real benefit to tenants but
still allowing the capacity to build new homes and provide good
services."
Housing associations own an estimated 2.4 million homes across the
UK. A 2% fall in RPI would see rents fall next year by around
£1.40 a week, it is estimated.
Gordon Brown recently announced a £1.5 billion funding boost
to supply more affordable homes, as well as proposals allowing
councils to build large numbers of new homes.
Ms Davidson added: "The decision to reduce rents at the same time
as Gordon Brown has announced a £1.5 billion social housing
programme is political ineptitude."
Matthew Gardiner, chief executive of the Trafford Housing Trust
(THT), which owns more than 9,000 homes near Manchester, estimated
his trust would lose around £1 million in the first year
based on a 2% rent drop.
This would mean THT having to "restrict services", he said.
A spokesman for the Department for Communities and Local Government
said ministers recognised housing associations' concerns.
He added: "We are consulting on proposals which will protect
housing associations from a drop in rental income of more than 2%,
striking a balance between the interests of tenants and the
taxpayer, whilst supporting the need for continued investment in
new affordable housing."
Tom11
Commented 129 weeks ago
Dear Oh dear, can these be the very same people who ripped off their tenants this year by raising their rents by the MAXIMUM allowed by law despite the fact that we were in the worst recession in living memory? When many of their tenants were facing severe hardship because of a catastrophic drop in income from savings and investments? When even this Government recognised the injustice and dropped council house rents by half? Last September's RPI was an anomaly that was recognised by everyone except the fat cats running our housing associations. Thay know they have a captive group of tenants so they think they can get away with anything. THey have the temerity to criticise the Government for 'bad economics', did they consider this when they set their rents for 2009/10? We, your tenants, are not cash cows for you to milk, we are your future prosperity. We do however need to be treated with respect and due consideration.