Posts with tag: social rental sector

Private Sector Rents Not Rising Faster than Wages

Published On: January 20, 2017 at 9:28 am


Categories: Property News

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Private Sector Rents Not Rising Faster than Wages

Private Sector Rents Not Rising Faster than Wages

Private sector rents in England are not rising faster than wages, in stark contrast to the social rental sector, where rents have increased faster than earnings, according to a new report from the National Audit Office.

Although private sector rents in England aren’t rising as fast as wages, the report does note that London is the exception to this. In the capital, rents are rising much faster than earnings, warns the National Audit Office.

The Residential Landlords Association (RLA) warns that this is a result of a chronic shortage of housing across all tenures in London. Indeed, it has been suggested that London’s housing bubble may finally burst this year, which would cause property owners to lose thousands off pounds off their assets and private sector rents to plummet.

The Royal Institution of Chartered Surveyors has also warned, “rents are being squeezed higher due to demand consistently running ahead of supply”, in its latest analysis of the sales and lettings markets.

The RLA cautions that there will be further pressure on private sector rents as a result of the forthcoming changes to mortgage interest tax relief.

The Policy Director of the RLA, David Smith, says: “Today’s findings from the National Audit Office will surprise those who have falsely sought to argue that landlords are profiteering. The question must surely now be why the heavily subsidised social rented sector is seeing its rents increasing so much more than earnings.

“We cannot afford to be complacent. Forthcoming changes to mortgage interest relief, due to be rolled out from April, will serve only to place upwards pressure on market rents, stifling the supply of homes to rent and reducing choice for tenants.”

He warns: “In the end, those who will suffer will be tenants unable to save for a house of their own, and the many vulnerable people, such as the homeless, who rely so much on the sector to provide a home for them.”

Right to Buy Extension Explained

One of the first policies to come into force under the Conservative Government will be the extension of the Right to Buy scheme.

Margaret Thatcher introduced the system in her Conservative government, allowing council tenants to buy the homes they had previously rented. However, the new Housing Bill, detailed in the Queen’s Speech today, will give housing association tenants the same right.

The Scottish and Welsh governments have rejected the proposals, indicating a difference in attitudes toward publicly owned housing stock in the UK.


Those hoping to take advantage of the scheme must have been tenants for at least three years, the same requirement as council tenants. The Government believes that around 1.3m housing association tenants will be eligible in England.

About 500,000 housing association tenants are already eligible for discounts. The new policy will extend these rights to a further 800,000 tenants and raise discounts.

In Wales, Right to Buy is being abolished completely and in Scotland it will be phased out by August 2016. A separate scheme is in place in Northern Ireland.


Right to Buy Extension Explained

Right to Buy Extension Explained

For those eligible, discounts begin at 35% on a house and 50% on a flat. The maximum available is 70%, but this is capped at £77,900 outside London and £103,900 in the capital. For instance, if someone has been a pubic sector tenant for ten years, they could buy a £100,000 flat for £40,000 using a 60% discount.


The new Housing Bill will specify that local authorities must sell off their most valuable council homes when they become vacant. The Government believes this could raise £4.5 billion. The councils are then required to build replacement homes with the money raised and the excess will fund Right to Buy. The Government will make up the difference.

The cost

The Government has not revealed what this scheme could cost, but has pledged to refund the discount to the housing association involved.

The National Housing Federation (NHF), representing all UK housing associations, says that Right to Buy for housing association tenants could cost £11.2 billion, if all those eligible actually buy.

The Institute for Fiscal Studies (IFS) thinks that it could cost “billions of pounds” and will “worsen the UK’s underlying public finance position.” The IFS also says the policy will signify a “substantial giveaway” to housing association tenants.1 

Social rental sector

The Government says that by selling off housing association homes and requiring replacements to be built, the scheme will effectively double the amount of homes available. It would also increase the number of homeowners in England, which has dropped recently.

However, the NHF argues that since 2012, just 46% of homes sold have been replaced, despite the requirement. Councils, especially in urban areas, are struggling to find enough land to build new homes on.

Right to Buy Introduction

Mrs Thatcher launched Right to Buy in October 1980, and 2.5m council tenants have bought their homes since. The peak was seen in 1982-83, when 167,000 people bought their house, falling to 3,179 in 2009-10. After discounts were raised, sales grew to over 15,000 in 2013-14. The Government hopes this will increase further.


The NHF has estimated that 15-35% of housing association tenants eligible for the new scheme will be able to afford a mortgage. This means that 221,000 households could make use of the policy, but if mortgage rates rise as expected, this number would fall.


Further Welfare Cuts Could Cause Social Sector Issues

Published On: May 27, 2015 at 8:42 am


Categories: Landlord News

Tags: ,,,

If welfare funding suffers further cuts by the Government, then the social rental sector could experience spiralling rent arrears, tenant evictions and homelessness, warns a new report.

The study of 75 local authorities and housing associations in England by Grant Thornton UK LLP, estimates that the ongoing effects of bedroom tax, alongside plans to extend the benefit cap and impose additional limits to housing benefit, could cause more financial difficulty for tenants.

The report indicates that councils’ and housing associations’ ability to ease growing arrears problems has been reduced. Growing numbers are issuing possession orders to tenants who cannot pay the rent.

The document, titled Easing the burden: The impact of welfare reform on local government and the social housing sector, explored how local welfare has changed over the last two years from the eyes of local authorities and housing associations.

YFurther Welfare Cuts Could Cause Social Sector Issues

Further Welfare Cuts Could Cause Social Sector Issues

Most local authorities and housing associations reported an increase in average Council Tax and growing rent arrears since 2012-13, which they claimed was partly down to welfare reform.

Housing benefit reforms have caused people to move to smaller homes, but less than 10% of those affected have actually moved. This is due to a shortage of smaller properties.

Following the changes, 47% of local authorities and 51% of housing associations stated that housing benefit is substantially more expensive to administer, as cases are now more complicated.

Head of Local Government at Grant Thornton UK LLP, Paul Dossett, says: “In general, welfare reform has prompted an impressive response from many local authorities and housing associations, and has been a key driver for innovation and improvement.

“The question is: Can they continue to make efficient use of rapidly reducing resources? Our research suggests that without flexibility from Whitehall and further measures, such as devolution of welfare funding, this is unlikely.”

Dossett continues: “The collective impact of welfare reform on those in need of support is to some degree hidden due to the lack of data on the casual link between welfare reform and poverty. Our research found that only 42% of local authorities track poverty levels to measure the impact of welfare reform.

“We urge the new Government to consider carefully the impact of the cuts to welfare reform that are put forward, not just in isolation, but collectively. Whilst Whitehall fiscally sees only individual cuts to local authorities, the people affected and we, as auditors, see the cumulative impact.

“A significant cohort of people – both working and unemployed – will remain in need of support, so local authorities and housing associations will need to focus any available money on them. Further devolution of powers to local government for welfare administration could be the key to a sustainable future, especially if different agencies work together.”1 

The report highlights areas of national policy that could be better coordinated, so that the financial impact of welfare put on local authorities can be fully understood and better managed.

They include:

  • Building more homes to keep up with demand.
  • Health and social care integration, particularly following instances of hardship.
  • The policy that supports groups of foreign nationals who have bypassed official immigration channels.