Thousands of Northampton Council Tenants hit by more than inflation rent increase!

Thousands of Northampton Council Tenants hit by more than inflation rent increase! void homes cost money 2013

Why is there so little debate about the fact that social housing rents are set to rise so much faster than prices and earnings?

Northampton Council tenants are being hit as follows:

 

Rent Increase

Homes Affected

Greater than 4%

11367

Greater than 5%

8213

 

 

Rent Increase

Homes Affected

Between 0% and 1%

1

Between 1% and 2%

2

Between 2% and 3%

52

Between 3% and 4%

586

Between 4% and 5%

3154

Between 5% and 6%

3035

Between 6% and 7%

4761

Greater than 7%

417

TOTAL Stock

12008

 

 

Figures out this week show that CPI inflation rose 1.9 per cent in the year to January and average earnings rose just 1.1 per cent in 2013. Earnings have now been falling in real terms since 2010, the longest period for at least 50 years.

 

And yet all around the country social landlords are preparing to increase their rents by at least twice the rate of inflation, and many times more than earnings.

 

Among local authorities the average increase will be 5.16 per cent.

 

These increases are partly down to longstanding government policy and partly down to an abrupt change in the rent-setting formula. Until 2015, social rents in England can rise by RPI inflation plus 0.5 per cent plus an extra £2 a week for those landlords who are not yet charging target rents. In a change announced last year, rents can rise at CPI inflation plus 1 per cent from 2015.

 

Rent increases for this April are set according to the RPI figure for last September of 2.7 per cent. However, 2014/15 is also the last year that landlords can use their extra £2 per week flexibility, which has prompted those much bigger increases to fill holes in their business plans. Some even seem to be ignoring the rent increase limits.

 

Since most tenants are on housing benefit that means most (but not all) of the increased bill will be picked up by the Department for Work and Pensions (DWP). That’s one reason for the lack of debate, even if it runs directly against what the DWP claims to be doing about controlling the housing benefit bill and reducing benefit dependency.

 

However, what about tenants who are working? If the increase in average earnings is only 1.1 per cent, the minimum wage did at least rise by 1.9 per cent last year and even George Osborne says he want to see it rise by more than inflation in future. However, thanks to government pay policy, average earnings of public sector workers rose by just 0.5 per cent last year.

 

The extra that working tenants will have to find will obviously vary from property to property, region to region and landlord to landlord.

 

Depending on how much they are paid and their circumstances, families with someone in work will also be entitled to tax credits, child benefit and partial housing benefit. However, in-work benefits like tax credits and council tax support have been cut and that rent increase could still eat into a limited budget. Remember too that their rent has been going up by more than inflation for years and more than their earnings since at least 2010 and that the squeeze on low income families is set to continue.

 

And the rent increase has implications for the bedroom tax too: those deductions of 14 per cent for one ‘spare’ room and 25 per cent for more than one come off the eligible rent. The bigger the increase, the more people on partial housing benefit will ‘float off’ any entitlement, and the more people on full housing benefit will lose.

 

At a local level this sort of issue NEED to be debated.

 

The questions about increases in social rents do not often get asked at a national level. Contrast that to the time devoted to talking about a few high-earning tenants. Housing finance requires tenants to pay more and we seem to have become so used to this that we rarely stop to ask why or whether it’s such a good idea.

 

If austerity and the continuing squeeze on wages and living standards do not give some pause for thought, then what about the prospect of more cuts in housing benefit in future?

 

Labour supporters I assume will NOT be very vocal on this?

 

It would seem that Northampton tenants have Ms Keeble to thank in part for this?

 

REWIND to 2001

The then Minister for Housing, Sally Keeble, outlined the rationale behind rent restructuring in an adjournment debate in December 2001:

Detail can be found at

rent_ setting 

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