G15 responds to rent consultation announcement

Responding to the announcement of the government's consultation on 2023/24 social housing rent setting, Geeta Nanda OBE, Chair of the G15 group of leading housing associations and Chief Executive of MTVH, said:

“We are deeply concerned by the impact cost of living pressures are having on the people we provide homes to. G15 members have increased support for residents, including providing additional funding for vital crisis support, on top of the work we are doing to bring down people’s energy bills by improving the energy performance of the homes we provide.

"The support government has announced for people is welcome, but it is clear that further assistance is urgently needed, including confirming the uprating of social security payments in-line with inflation.

“All G15 members recognise the current high rates of inflation and are considering the impact of this on residents and the essential work we do carefully. To maintain and improve existing residents’ homes, as well as continuing to build much needed new affordable homes, significant investment each year is essential. Rental income is critical to supporting this work. Housing associations have already seen costs for vital materials for repairs and maintenance work increase by as much as 16.8% this year, and the cost of constructing new homes has grown by more than 11% as well.

“In getting the balance right on rent setting, we are committed to maintaining affordability for residents. We welcome the government’s consultation and the opportunity to discuss these important issues further.”

Background:

• G15 members are seeing increases in our costs across key areas of activity:
  • Analysis by Cebr of ONS data for the NHF has found that:
    • Materials for maintenance and repairs price growth peaked at 16.8% in April 2022, with growth at 14% in July 2022.
    • Costs of construction new homes has increased to 12.3% in June 2022, and the annual rate grew to 11.1% overall. This is above June 2022 CPI at 9.4%.
• As of March, gas costs for G15 members were up 207% on average and electricity costs were up by 32.7%.
• DLUHC has said that inflation, and in particular differential inflation (rental revenues minus costs for providers), presents a major risk to the success of the AHP 2021-2026.
  
• The ratings agency, S&P, has warned that divergence between rent levels and cost inflation poses challenges to social landlords, stating “A persistently negative inflation gap would structurally weaken social housing providers’ credit standing and create a long path to recovery.”
• Many social housing residents, rightly, receive support through the social security system to meet their rent costs. In June, the Chief Secretary to the Treasury, stated that, subject to the Secretary of State’s review, “pensions and other benefits will be uprated by this September’s CPI”. This should be urgently confirmed by the new Prime Minister and Chancellor once in post.