Government announces five-year rent settlement

CPI plus 1% was the previous rent settlement, intended to run for 10 years from 2015, which George Osborne binned in favour of a four-year 1% cut from 2016 in a bid to reduce the benefit bill.

The DCLG statement said: “Under the proposal set out today, increases to social housing rents will be limited to the Consumer Price Index (CPI) plus 1% for five years from 2020. This will give social tenants, councils and housing associations the security and certainty they need.”

This represents the government coming good on a promise made when the rent cut was announced to restore the original settlement after 2020.

However, few in the sector had expected this promise to be upheld and many housing associations have modelled for a lower settlement or further cuts.

Housing associations have been lobbying for an inflation-linked rent settlement since communities secretary Sajid Javid promised certainty at the National Housing Federation (NHF) conference last month.

The announcement follows shortly after Ms May used her speech to unveil £2bn of extra funding for affordable housing, some of which will be spent on social rent for the first time in seven years.

David Orr, chief executive of the NHF, said: “This is excellent news. We welcome today’s settlement on rents. It will give our housing association members the certainty they need to leverage in private finance and build the homes the nation so desperately needs.”

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