G15 Chair's statement on rents
On 6 October 2022, the G15 provided an update on the social rent ceiling consultation. This statement adds to that summary, which can be found here.
Geeta Nanda OBE, G15 Chair and Chief Executive of MTVH, said:
“G15 members are deeply concerned by the impact cost of living pressures are having on the people we provide homes to. That’s why, alongside increasing the crisis support and specialist advice we offer residents, we have called for further targeted government support for people and for social security payments to be increased in line with inflation.
“To maintain and improve existing residents’ homes, and to continue to build much needed new affordable homes, significant investment each year is essential. With rising costs and economic uncertainty having a growing impact on our capacity, the rent ceilings being proposed will lead to difficult choices on what we can and cannot do.
“A ceiling on social rents of 3% would see a reduction of over £2bn in re-investable rental income for G15 members over 5 years. Over 30-year business plans, this would see re-investable income reduced by just under £18bn for G15 members. At the 7% cap level, the impact is still extremely significant, with a reduction of more than £1bn over 5 years, and £9.3bn over 30 years.
“Whilst ensuring the safety of all the homes we provide is our number one priority, the consequences of low rent ceilings could potentially see planned building safety works slowed down, as well as investment in existing homes having to be delivered over a longer period. Fewer new affordable homes will be built, progress on decarbonisation and retrofitting will be curtailed, and the financial capacity of organisations will be reduced if key ratings and measures are negatively affected.
“It’s vital that these possible impacts are acknowledged by government and shared with residents in the spirit of transparency. If no ceiling was introduced on social rents, it would be extremely unlikely that any organisation would seek to apply the maximum possible increase next year. We are committed to maintaining affordability for residents, and believe that not-for-profit housing associations should be allowed to set rents independently as heavily regulated organisations that are best placed to achieve the right balance in the context of residents’ immediate and future needs, and the long-term requirements of organisations.
“Whilst outside of the scope of the government’s consultation, G15 members recognise the impact of high inflation on the formula for setting the rental element of shared ownership and the concern that many shared owners will have. That’s why we also want to make clear that, if possible, G15 members do not want to apply the maximum increases on rents for shared owners. Any decision we can make on shared ownership rents will be affected by the government’s decision on social rent ceilings, and the volatile economic situation which is driving up costs further. Until we know the government’s decision on social rent setting and Boards are able to consider the impact of this, we are simply not able to make further commitments.
“The issues we are looking to balance are some of the most challenging I have seen, or had to grapple with, in the 30 years I have worked in housing. We are approaching this with a commitment to continuing to provide good, safe, and affordable homes that help people to live well. However, as anyone can see, there are real risks that need to be carefully considered, alongside ensuring residents are supported in the face of the cost of living challenges many face.”