We are calling for a fair rent settlement for social housing

First, it needs to offer certainty and stability while also being resilient to a changing economic environment. Housing associations need a rent policy which carefully balances the need for investment in homes and which ensures affordability for tenants.

It was right to protect tenants from high inflation with the 7% ceiling on rent uplifts for 2023, but the uncertainty of the situation was destabilising for many and has affected investment in both existing and new homes.

We are therefore calling for an inflation-linked rent rise, but with a floor and ceiling built in, to protect tenants from very high increases and eliminate the need for frequent government intervention. However, given the extent of the impact of the 2023 ceiling, such an approach in the future should be funded – either via top-up grant or through a rent catch-up mechanism.

“Breaking agreements not only directly affects housing associations, it also affects how crucial sector stakeholders, such as lenders, investors and rating agencies, view our sector”

Second, for housing associations to deliver for both existing and future residents, we need to balance the affordability of rents with the need to maximise investment capacity.

The government’s rent formula still ensures that social rents are affordable for local people, but many are still below target, as they never caught up under the old convergence regime. This creates inconsistencies in the system and unfairness for residents, and reduces investment capacity.

The NHF will be calling for a return to rent convergence, to enable rents to gradually return to formula and recoup the losses from the 7% last year. At a sector level, convergence will generate over £1bn of additional revenue, while ensuring rents remain affordable.

Finally, a long-term plan for housing needs a long-term rent policy. The NHF will be calling for a 10-year rent settlement, reducing the frequency at which the whole rent standard is held up for debate, with all the uncertainty that brings.

“The uncertainty and instability of the past decade has demonstrated key flaws in the current rent policy”

And it is crucial that the next agreement is not broken. The four-year rent cut cost the sector £3.9bn in forgone income that could have been spent on improvement programmes, decarbonisation and desperately needed new social housing.

Breaking agreements not only directly affects housing associations, it also affects how crucial sector stakeholders, such as lenders, investors and rating agencies, view our sector. Such uncertainty works against the hugely important goal of tackling housing need by building more social housing.

The above set of asks is not radical. It is based on the need to get clarity on the 2025 settlement as quickly as possible, and acknowledges that there is limited government capacity – at a time of huge change for our sector – for a significant overhaul.

But there is a case for a significant overhaul. With members, the NHF has already started to look at larger changes that could, or indeed should, be made in the quest to design a rent framework that is simple, fair and affordable. That work and thinking continue, and we will be making strong representations to the next government about the need for wider change.

The uncertainty and instability of the past decade has demonstrated key flaws in the current rent policy. We need stability and continuity now, and then a bigger rethink. That rethink should form a central pillar of the long-term plan for housing.

Alistair Smyth, director of policy and research, National Housing Federation