G15 members’ update on rent setting

The government is currently consulting on proposals to introduce ceilings on increases to rents for social and affordable homes in 2023/24. We understand that residents and stakeholders will want to know how the G15 is planning to respond to these proposals, and we are keen to be transparent by sharing this update publicly.

Support for residents with the cost of living

As not-for-profit organisations that work with and support some of the least well-off people in the country, G15 members 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 £5.8m for vital crisis support this year, and helping residents to secure £44m of financial gains last year. This is in addition to the work we are doing to bring down people’s energy bills by improving the energy performance of the homes we provide, alongside charging social and affordable rents far below market rates at around £125 per week on average (around 50% of market rents).

We are also urging the government to provide further targeted support for those most affected by the cost of living pressures, especially around sky-rocketing energy bills that are driving much of the challenges people are facing. Crucially, this must also coincide with the uprating of social security payments in line with inflation, which is something that we have repeatedly called for. Almost 7 in 10 general needs residents living in the homes we provide rely on this support, and for many people this covers the entire cost of renting their home.

Any resident facing financial challenges should contact their housing provider as soon as possible to discuss what support and advice can be provided. G15 members have also reconfirmed their commitment to the NHF eviction pledge and will support people as much as we can where they are engaging.

Potential impact of social rent ceilings:

To maintain and improve existing residents’ homes, and to continue to build much needed new affordable homes, significant investment each year is essential. As not-for-profit organisations, all the resources we generate are put back into the homes we provide and build, and to support the services residents receive. Re-investable rental income for housing associations is critical to supporting this work. Similarly, meeting the significant challenges of building safety, decarbonisation, and addressing homelessness, requires strong and stable income for organisations.

The surpluses (and/or ‘reserves’) that are reported as part of our financial results are not ‘rainy day’ funds that can simply be applied to cover costs elsewhere. Instead, they are key to securing borrowing to deliver the essential work that we do, and are held as fixed assets and working capital, rather than cash.

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%.

Energy costs for G15 members are forecast to have increased by 225% for electricity and by 573% for gas, on average, between 2021/22 and 2023/24. These above inflation increases present significant pressures on members’ budgets and investment plans.

Insurance premiums have also increased sharply over recent years, with one G15 member seeing increases of over £3m in the last two years, and another seeing increases of over 100% year-on-year. Service charges are also rising with inflation, or higher, which places further pressures on both providers and residents (in the case of variable service charges).

Credit rating agencies have cautioned about the impact of divergence between rental income and costs for housing associations and the impact this could have on borrowing costs and investor confidence. The current economic volatility may also have a material impact on borrowing costs for organisations, further impacting our financial standing, which is a critical aspect of how we are able to deliver the work that we do.

Based on the social rent ceilings outlined in the government consultation, this table demonstrates the scale of the reduction in re-investable rental income that G15 members would face from a one-year ceiling:

Reduction in re-investable rental income over 5 years

Reduction in re-investable rental income over 10 years

Reduction in re-investable rental income over 30 years

Rent ceiling at 3%




Rent ceiling at 5%




Rent ceiling at 7%




As these figures demonstrate, the impact of the government’s proposals on G15 not-for-profit housing associations and the activities they deliver would be massive.

In consulting members, it has become clear that, should a low social rent ceiling be applied by the government, reductions in spending across all areas of activity will need to be considered. This includes:

  • Impact on building safety planned works – The safety of all the people we provide homes to is our number one priority. We are concerned that, without government funding assistance, the rent ceilings being proposed will slow planned building safety works. G15 members are currently collectively forecasting to spend over £4bn on building safety works activities between 2021 and 2034, including meeting costs for social housing properties directly as there is no government funding for these homes.
  • Investment in existing homes reduced – G15 members spent around £900m investing in existing homes last year. Investment in existing homes, such as works to replace kitchens, bathrooms, and windows, would have to be delivered over a longer period if income is significantly reduced, meaning few improvements each year.
  • Slower progress on decarbonisation and retrofitting homes - Efforts to decarbonise and retrofit existing homes would be scaled back and progress towards achieving the requirement for all homes to be EPC C rated by 2030 curtailed.
  • Fewer new affordable homes delivered - Significant reductions in the number of new affordable homes to rent and buy that are built, further exacerbating the housing crisis by failing to meet need and having a massive impact on economic activity at a critical time.
  • Reduced interest cover and negative impacts on financial capacity - Organisations’ interest cover will also be negatively affected by the proposed ceilings, which is a key regulatory measure, and would lead to higher borrowing costs that would reduce our capacity to invest in existing homes and to deliver new homes.

G15 members’ approach to rent setting considerations

Each individual G15 member will be responsible for its own approach to rent setting and making budget decisions. However, we have a number of key principles in our approaches that we wanted to share, to provide residents and others with information about the considerations we are seeking to balance.

Social rent setting:

  • 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 under the existing social rent setting standard.
  • All members are carefully considering the impact of the cost of living challenges on residents and the essential work we do in the context of rent setting for 2023/24.
  • In getting the balance right on rent setting, we are committed to maintaining affordability for residents.
  • 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.

Shared ownership rents:

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 want to provide a summary of G15 members’ approaches and current thinking on this too.

It should be noted that limiting shared ownership rent increases at 7%, for example, would reduce re-investable rental income for G15 members by £191m over 5 years, and by £1.15bn over 30 years, in addition to the figures listed above.

  • If possible, organisations do not want to apply the maximum increases on rents for shared owners.
  • We recognise the unusually high level of inflation means rent increases for shared owners could potentially be higher than in previous years.
  • 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.
  • Each organisation will make an individual decision based on careful consideration of multiple factors, including the need to maintain existing homes and services and the financial pressures facing residents, particularly the least well-off.

Mitigations government should consider:

Further action is required by the government to support people facing cost of living pressures that are driven in most part by rapidly rising energy bills, especially those people who are least well-off. In taking action to support people with the cost of living, exacerbating the housing crisis by significantly reducing resources for organisations to invest in existing homes and to build much-needed new affordable homes should be avoided.

A number of measures that the government should consider in making its decision on the rent ceiling proposals are:

  • Social security payments should be uprated in line with September inflation measures to support the least well-off, recognising that approximately 68% of G15 members’ general needs residents are in receipt of Universal Credit.
  • A specific exemption should be made for supported housing from the proposed rent ceilings, recognising the viability challenges that would be created otherwise and the impact this could have on the delivery of such critical services.
  • Mitigations must be announced alongside any rent ceiling decision to prevent significant reduction in investment in existing and new homes, including:
  • the reintroduction of rent convergence
  • allowing Recycled Capital Grant Funding (RCGF) to fund major repairs
  • additional grant funding for development of affordable homes
  • removing VAT on housing association activity
  • discussions on the post-2025 rent settlement should introduce a long-term approach based on key principles to secure the financial future of the sector and affordability for residents.

We will be responding fully to the government’s consultation in due course, and will share that response on the G15 website.