The new Labour government has tied its colours firmly to the landlord mast with a declaration that social landlords (both housing associations and councils) will be allowed to raise rents above-inflation for the next decade. It is a guarantee to housing associations that no matter what happens in the economy, they will enjoy an inflation-busting rental income stream.
The social rent settlement was announced in the Financial Times on the 22nd August
The announcement by new Labour Chancellor Rachel Reeves did not come as a great surprise – housing associations have spent the last year lobbying hard for exactly this. The political influence of the sector’s lobby was strengthened recently with the election of four Labour and one Liberal Democrat MPs who were previously housing association executives,
Private landlords will also benefit from rising rents. Many private rented sector landlords provide high-cost temporary accommodation to the councils who sold their own stock and were left wholly dependent on external provision. And private landlords are also influential among the current cohort of MPs. This is particularly so for Labour as the Financial Times revealed. The biggest landlord in the House of Commons is now the Ilford South Labour MP, Jas Athwal.
No Change
Labour leader Keir Starmer’s mantra throughout the general election campaign was that they represented the party of change. This is not the case as far as housing is concerned. The social rent cap formula has been CPI (inflation) plus 1% for a number of years, originally having been introduced in 2013.
While it was paused during the exceptional inflationary peaks of the last couple of years, it has nonetheless remained the standard formula. Labour’s offer to renters is therefore a continuation of old Conservative policies, with no support or relief for households struggling with housing costs.
The promises of Angela Rayner MP (pictured right) are at odds with the actions of Rachel Reeves (pictured left). Image courtesy of The Times
This commitment cuts across two manifesto pledges. Firstly, that of fiscal responsibility. It is a blind promise to allow above-inflation rent rises without knowing what inflation will do over the same period. It’s not long since inflation spiked at around 11%, with nothing to stop this happening again. This has implications for the public purse which funds housing costs for around 70% of the social renting population. Secondly, it exposes Angela Rayner’s promise to protect tenants from extortionate rent rises to have been an expedient sham.
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The Wealth of Housing Associations
Most social housing is now provided by housing associations not councils, something that SHAC and other campaign groups seek to reverse. Housing associations already have a £4 billion surplus and don’t need their coffers swelled further. They benefit from both city investment and government grants to build new housing, so the idea that a lack of money is preventing development is not borne out by the facts.
By contrast, we know that the financial squeeze has impoverished thousands of people in social housing, creating exceptional hardship. Rents rose by 7% in 2022, when people were already stretched by the heightened cost of living. These inflated rents then rose by another 7.7% in 2023. Such rises far outstrip average pay rises.
One third of social housing tenants do not get any help with housing costs through the benefits system, so those rises meant a severe drain on household income. Service charges are uncapped and for many have doubled or even trebled over the last couple of years. What will happen is that more people will be driven into arrears and even onto the streets. This is hardly a formula for resolving the housing crisis.
The long-term guarantee to landlords on the rent settlement is an embarrassment thinly shielded by the excuse of offering financial stability so that they can build new homes. There are many alternative ways that government could raise the revenue needed to build more social homes. It does not need to pick the pockets of social renters. Government could raise taxes so that the wealthiest in society pay what they owe – including private developers, second-home owners, and landlords like MP Jas Athwal with massive property portfolios.
Read the statement signed by SHAC as part of the Homes for Us coalition here.
If the Labour government insists on backing the interests of landlords, it will not be long before a very deep disillusionment sets in as people realise that instead of voting for a change in government, they’ve just elected different characters to pursue the policies that created the housing crisis. This, combined with an ever bigger impoverished class of people is a recipe for disaster.
SHAC will continue to demand a freeze on rents and a cap on charges through the Unfair and Uncapped campaign. We will lobby politicians, strengthen our alliances with other housing campaign groups, and organise protests. Most importantly however, we will support those affected by the rent and service charge rises to resist them directly. This is the only way that tenants and residents will be empowered to challenge the lack of dominance of our landlords.
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23 August 2024
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It’s like a police state … akin to what’s occurring in Iran. …
Our Social housing landlord is desperately trying over 4 years ongoing, to criminalise/sicken/ruin/destroy and illegally evict us, employing a sophisticated “file building” exercise of false allegations by a “mentally ill” tenant drafted in by the landlord , for us merely speaking up about housing issues.