Five million families in England face big social housing rent hike, warns thinktank

Resolution Foundation says biggest rise for decade of 4.1% will coincide with higher taxes, rising inflation and soaring energy bills

Almost 5 million families in social housing in England are facing the biggest rent hike for a decade from April amid a mounting cost of living squeeze, according to a report.

The Resolution Foundation thinktank said 4.75 million families would see rent on their local authority or housing association home rise by up to 4.1%, adding to the pressure on living costs by an average £202 extra a year.

It warned the increase would coincide with significant tax rises planned by the government to come in from April and a further jump in household utility bills when Ofgem’s consumer energy price cap is raised. The Bank of England also forecasts inflation will peak at about 6% the same month, the highest level since 1992.

“Rising social rents on top of these increases will be very damaging for living standards indeed,” it added.

Social housing providers set rents each year within a cap calculated on the consumer price index measure of inflation for September plus 1%. While this is a cap rather than a requirement, most providers are expected to raise rents by the full amount. It comes after CPI reached 3.1% in September.

The latest rise follows a decade of housing costs rising faster than incomes for those living in social accommodation, with families renting from local authorities and other providers suffering a faster increase than for those in private rented homes or owning their property.

According to the report, social renters now spend 19% of their income on housing costs after housing benefit is taken into consideration, up from 15% a decade ago – equivalent to an extra £768 per year for the average family.

In contrast, the share of income for private renters has remained flat over the same period, at an elevated level of 31%. Housing costs for homeowners have fallen from about 10% to 9% thanks to a drop in interest rates over the past decade.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Housing benefit paid by the government will help cushion the blow for some social renters, although the thinktank warned the proportion of people receiving support from the state had dropped in recent years amid rising employment levels. Almost half of social renters do not receive housing benefit, meaning they will need to cover the biggest increase in social rent costs for a decade by themselves from April.

Lindsay Judge, research director at the Resolution Foundation, said the rise would put particular pressure on the 2 million social renters who don’t receive housing benefit, but who are likely to face falling real wages, rising taxes and soaring energy bills.

“While government support has helped to limit rent arrears from building up among social renters so far, raising rents to the maximum uprating would be unwise given the cost of living crunch hitting families hard this spring,” she said.

Contributor

Richard Partington Economics correspondent

The GuardianTramp

Related Content

Article image
Send Newham families to Stoke? It reflects a broken housing policy | Glyn Robbins

Glyn Robbins: Affordable homes are being demolished, while the budget for new builds is halved and the building industry stagnates

Glyn Robbins

25, Apr, 2012 @4:21 PM

Article image
Tories' right to buy 'could dent public finances and reduce social housing'
IFS sounds warning over flagship Tory policy, saying sale of best council stock also risks widening gulf between rich and poor

Patrick Collinson

24, Apr, 2015 @12:29 PM

Article image
Half a million more people claiming housing benefit under coalition
UK bill rose £650m a year on average with soaring rents, though government claims substantial savings for taxpayers

Daniel Boffey, policy editor

14, Mar, 2015 @10:00 PM

Article image
Cut housing benefit? A higher minimum wage would help
Patrick Colllinson: The chancellor's new austerity package is only shifting welfare-dependent tenants to worse homes that cost the taxpayer more

Patrick Collinson

06, Jan, 2014 @5:50 PM

Article image
So, George, how exactly will you cut the welfare bill?
Housing benefit and pensions are likely to keep rising, as will tax credits. As the Institute for Fiscal Studies says, it’s time we knew where the cuts will fall

Phillip Inman economics correspondent

19, Mar, 2015 @6:55 PM

Article image
Social housing benefit cap deferred for a year
Government delays implementing policy while it carries out review of impact on tenants in supported housing

Patrick Butler Social policy editor

01, Mar, 2016 @2:21 PM

Article image
The Guardian view on social housing: time to fight for affordable rents | Editorial
Editorial: Margaret Thatcher promised a property-owning democracy. She created a nation of private landlords

Editorial

08, Dec, 2017 @7:04 PM

Article image
Why we are occupying a £3m council house | Housing Action Southwark and Lambeth
Housing Action Southwark and Lambeth: There is no justification for Southwark council selling off crucial property during such a desperate housing crisis

Housing Action Southwark and Lambeth

29, Oct, 2013 @3:42 PM

Article image
Construction of homes for social rent drops 80% in a decade
Figures for England show 6,463 homes built in 2017-18 despite 1.25 million families on waiting lists

Richard Partington Economics correspondent

22, Nov, 2018 @4:32 PM

Article image
London will lose half a million social homes under Tories, says Sadiq Khan
Possible Labour mayoral candidate says government’s housing policies including right to buy will turn crisis into a catastrophe

Frances Perraudin

06, Aug, 2015 @4:52 PM