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Minister commits to post-2025 rent settlement in first half of next year
A post-2025 rent settlement with central government will be decided in the first half of next year, the housing minister has said.
Rachel Maclean also confirmed that the government was still on track to publish a consultation on rent policy later this year.
Speaking at the National Housing Federation (NHF) summit in Birmingham on Monday morning, the minister said: “I recognise the importance of setting a rent policy for social housing that strikes the right balance between championing our shared ambitions on quality and then what’s affordable for tenants and the welfare system.”
“I’ll be considering again, together with the housing secretary, in the round as we publish our consultation on rent policy from 2025 later this year, before making decisions about rents and new requirements in the first half of 2024.”
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Under a rent deal that lasts until 2025, social housing rent rises are usually capped by the government at a maximum of the Consumer Price Index (CPI) of inflation plus 1%, set in September every year.
However, as a result of soaring inflation and the cost of living crisis, in November 2022 chancellor Jeremy Hunt capped rent increases at 7%.
CPI was 6.8% in the year to July. Unless social rents are capped again, this could allow housing providers to raise rents by as much as 7.8% in April 2024. However, this could fall as the CPI figures for September – which rent settlements are based on – have not yet been released.
The rent formula to be used from 2025 onwards has not yet been announced, and Ms Maclean’s comments today were the first time a minister has publicly addressed the issue. Whatever is announced will be implemented by the government that wins the next election – due to be held by January 2025 at the latest – making it subject to political change.
Speaking to MPs in the Levelling Up, Housing and Communities scrutiny committee in June, James Prestwich, director of policy at the Chartered Institute of Housing, said the current settlement does not account for “extraordinary inflationary pressures”.
He added: “As far as business planning and investor confidence are concerned, it is really important that a new rent settlement is agreed pretty quickly.”
Kate Henderson, chief executive of the NHF, said that “rents would rise” under a post-2025 settlement but that this could be done in a way that would be “manageable” for tenants if there was a convergence mechanism.
Convergence would involve increases to rents set under lower, historic regimes towards an overall median.
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