The announcement that social rents will rise one per cent ahead of inflation for five years from 2020 has been widely welcomed. The most important aspect of the announcement is the timescale – a five-year settlement, with no further cuts in rents, offers the stability in their incomes that landlords need to plan their investment, in particular new build. This combined with the £2 billion boost to social housing investment means there really will be a step change in the amount of building and – even more welcome – a significant part of that should be at social rents. Of course, this is not enough to compensate for the loss of genuinely affordable rented homes over the last six years, nor will it make much more than a dent in demand for them, but a few months ago no one could have predicted such a shift in direction.
Inevitably though there are several caveats. The policy won’t kick in until the sector has completed four years of compulsory cuts in rents, which started in April 2016. These cuts began after the coalition had made similar promises on rents which were then broken. In July 2013 it said ‘…when we say rent increases of up to CPI + 1% from 2015/16 onwards, that is what we mean,’ but the new policy had barely begun when George Osborne ditched it in his 2015 Summer Budget. Clearly the sector expects the Conservative government not only to promise stability but to ensure it happens.