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Anger at council rent rises prompts calls to re-open debt talks

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Anger at council rent rises prompts calls to re-open debt talks


Published by 24publishing for in Housing and also in Central Government, Communities, Local Government

Anger at council rent rises prompts calls to re-open debt talks Anger at council rent rises prompts calls to re-open debt talks

A campaign group is calling on the Government to "re-open" talks on the debt settlement for local authorities which it warns is forcing councils to plan in huge rent rises for council tenants.

Defend Council Housing (DCH) warns that the Government's self financing reforms - which will see councils shoulder a near £30 billion debt burden - and the "inflation-busting rent formula it is imposing on councils", are driving huge rent rises.

As part of the Government's self-financing reforms, councils will keep all the rents and sales receipts they collect from April 2012, but in return, will have to pay off their historic housing debt from when the houses were originally built.

The move to self financing has been generally welcomed by the housing sector - as it will allow councils to prepare long-term business plans - pending the detailed framework and determinations.

DCH highlights a letter sent to Communities and Local Government (CLG), from Cambridge City Council, in response to the Draft Determinations to Implement Self-financing for Council Housing - a consultation which closed on 6 January.

In the letter, it states: "Of very grave concern to the authority, however, is the level of rent increase that CLG expect local authorities to implement from April 2012. The calculation of the level of debt that each local authority is deemed able to take on assumes the application of the rent increase at the prescribed levels, driven by inflation in September 2011 of 5.6% plus 0.5%, with convergence assumed in 2015/16. This results in an average actual increase in rents for tenants of Cambridge City Council of 8.3%."

It wants CLG to to cut the formula increase for 2012/3.

The letter adds: "Cambridge City Council would strongly implore that CLG considers the application of an adjustment similar to that made in 2009, using a lower level of inflationary increase in the calculation of the guideline rent, resulting in a reduction in the level of debt that each local authority can support."

Last week Camden Council announced plans to raise council rents by more than 8% from April as a result of the self-financing reform.

DCH says the Government should look at "writing-off" the historic debt, which they say, has been paid "many times over in rent and receipts siphoned off by Government".

It also wants the Government to re-open negotiation on the debt settlement and look at changes to the rent rise formula, as highlighted by Cambridge.

It has organisaed several public meetings - in London, Cambridge and Leeds - to challenge rent rises and the Government's "attack on tenancies".

The first is in London on 21 Feb at 6.30pm in the House of Commons committee room 14.

Stock-retaining councils will make or receive a payment from Government on 28 March 2012 to enable self financing, which will go live from 1 April 2012.


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