Autumn statement: social housing rent cap reportedly to be set at 7%

Chancellor Jeremy Hunt will cap social rent increases to 7% next year, according to unconfirmed reports ahead of today’s Autumn statement.

The Financial Times is this morning reporting the government has opted for a cap of 7%, higher than the 5% limit which was previously the government’s preferred option.

According to a government impact assessment in August, a 7% limit would reduce social landlords’ rental income by £4.9bn over five years, compared to £7.4bn it would have been under a 5% limit.

The £4.9bn would be  made up of £3.2bn lost from housing associations’ income and £1.7bn from local authorities.

The government launched a consultation on limiting rent increases in 2023/24 to help tenants with the cost of living. Without a cap, social landlords would have been permitted to increase rents by the consumer price index (CPI) measure of inflation in September plus 1%, allowing a maximum increase of 11.8%.

>> See also: Can HAs keep development going as the rest of the market slows?

The G15 group of large housing associations in London has previously warned the rent cap could “significantly” reduce spend on development and lead to cuts to building safety, maintenance and decarbonisation work.

It estimates a 7% cap would reduce its members’ re-investable rental income by more than £1bn over five years (see table below) 

The Treasury has been contacted for comment. 

G15 estimate of rent cap impact on its members