Tenants and leaseholders are sending a message to their housing association landlords: ‘Cut the Rents and End Rip-Off Service Charging’.
The message comes as a survey by SHAC revealed almost one quarter of respondents could not afford the rent rises being inflicted on them from April 2022. Around 85% will experience negative financial impact.
Tenants are set to receive bills with average increases of around 4.1%. However, a tenth will go up between 7% and 10%. Shockingly, 5% of respondents have been informed that their rents will soar by more than 10%.
With increased costs for travel, food, and energy, many will find themselves falling into serious financial difficulty if they have to pay extra for rents. This in itself would have consequences for housing associations. There are financial costs attached to providing support services, and for legal procedures if they attempt to begin eviction proceedings. The reputational damage could also be severe.
The unfairness of these rent rises could prompt more tenants and residents to withhold payment increases in order to cover other necessities such as food and fuel, especially as localised tenant organisation grows.
The Usual Suspects
The three associations raising some rents by more than 10% were L&Q, Metropolitan Thames Valley (MTV), and Onward Homes. All have been the subjects of complaints to SHAC. One tenant noted that she would be spending 46% of her total household income just to cover rent and electricity.
While tenants and leaseholders continue trying to absorb financial shocks, the housing association sector wallows in its wealth. The most recent Global Accounts (a financial analysis of the sector published by the Regulator of Social Housing), proclaims “Despite the challenges in the period following the 2020 Global Accounts, the sector remains viable and liquidity robust.” It certainly is.
Housing associations collectively have an operating surplus of £4.7 billion, and operating margins of 22%. Margins on social housing lettings were even higher at 28%. This underlines how business risks are greater when associations develop homes for sale on the open market, rather than concentrating on their original social purpose of renting at sub-market rates.
Almost 10% of respondents said that there would be no impact on their finances because their rents were paid through benefits. This will however mean increased pressure on taxpayers and the public purse, while landlords continue laughing all the way to the bank (especially the highly paid executives).
Those replying to the survey were clustered within some of the largest landlords, all of whom could afford to freeze or even cut rents.
Cut the Rents and End Rip-Off Service Charging
SHAC is campaigning to demand that housing associations use their own surpluses and reserves to cut rents. Our members also demand action to tackle long-standing abuse of the service charge system which results in extortionate charges for services, charges for non-existent services, and a host of other errors which leave tenants and residents out of pocket.
The campaign will involve a series of protests, ongoing support for those withholding rent or service charge payments, collaboration with other housing campaign groups, political lobbying, and social media campaigning. Please join us and get involved.
UK Variations
As shown by Inside Housing, the legislation on social rents varies across the four regions of the UK. In Scotland and Wales, increases were lower than in England, and in Northern Ireland the housing executive froze social rents. There are no caps on service charge increases or many of the other tenures of rents such as shared ownership.
All of the London based housing associations opted for maximum increases to social rents, and almost all the London councils. There are some exceptions among English local authorities. However, the fact that some landlords could find a way to freeze rent shows that it is possible.
Across the UK, 91% of housing associations put social rent up to the maximum allowed. In England, around 81% of councils also increased rents by the maximum. Labour politicians have called for a rent freeze as a response to the cost of living crisis but haven’t started with the rents they set for their own council tenants.
Paul Kershaw, Chair of Unite Housing Workers Branch, described the vital role of housing campaign groups and the trade unions to inform and resist rent rises. He noted:
About 17% of households live in social rent housing – around two million of them in housing association properties. It will be down to housing campaigners to get this up the agenda and to alert tenants. It is also an issue for unions, both as the representatives of frontline workers who continue to have their salaries and working conditions pushed down by the well-paid housing association bosses, and because they themselves suffer the effects of the housing crisis.
Paul Kershaw, Chair of Unite Housing Workers Branch and SHAC Committee member
Social rents are currently set by the CPI inflation index as it stands in the autumn before the increase. The formula is CPI plus 1%. In September 2021, inflation was 4.1%, but has jumped sharply since then. By April 2023, social rent tenants could be facing rent rises of around 9% based on current inflation rates.
The G15 bloc of associations started out with 15 landlords, but this reduced to 11 through mergers. Of the group currently shown on the G15 websites, Peabody and Catalyst have recently merged, and Southern is set to merge with Optivo, reducing the original 15 to just nine. Each merger creates an even larger, more remote, and less accountable association. Executive salaries rise, but the standard of service received by tenants and residents declines.
Write to Your MP
You can download a letter to your MP asking them to legislate for rent and service charge restraint, and setting out the possible consequences if they do not. Find your local MP here.