A rent dilemma

As a chief executive, non-executive and chair of a number of housing associations, I understand the need to maximise income and control costs.

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Therefore I was not surprised when the majority of the housing sector welcomed the recent government announcement on a rent settlement.

On the face of it an above inflation increase is good news. Most have been budgeting for less.

We are told this certainty will enable more homes to be built and more investment in local communities to take place.

We do not know what type of homes or the nature of that investment.

Despite recent announcements I am convinced that unless this or a future government commits to a substantial programme of public investment in social rent homes the majority of the new developments will be for so called affordable rent or home ownership schemes.

Few have mentioned the impact of above inflation rent increases on current and future tenants. The majority of existing tenants are on fixed or reducing incomes generally a mix of low pay and benefits.

All current predictions show these will stagnate or even reduce in the next few years and no one knows what will happen to local housing allowance (LHA), which is often below existing rents.

If nothing changes before 2020 more tenants will find it difficult to pay their rent, arrears will increase and more evictions will take place.

This is in addition to the growing problems for tenants already being caused by the implementation of Universal Credit. I am sure most housing association boards would want to avoid this.

The situation for potential future tenants is even worse. We already know that because of higher rents and reducing incomes plus the effects of LHA more people are being excluded from housing association tenancies.

This is disputed by some but the evidence is incontrovertible.

Any above inflation rent increases in future without substantial changes to incomes and benefits will lead to more people being excluded.

The majority of whom are the people most housing associations were set up to help. Again I am sure this is not the intention of most housing association boards.

As board members we have a responsibility to ensure the financial viability of our organisations but     we also have a responsibility to ensure we continue to meet our social and in most cases charitable objectives.

Before taking any decision to implement the rent settlement in full or part, we should consider all aspects of our decision including the impact on current and future tenants.

In my opinion very few boards receive information that enables them to do this. There is usually much information on future finances and potential development capacity but little on the human impact of increases.

Unless a proper debate takes place based on all of the information available including stress testing and scenario planning we could make decisions that lead the future exclusion of those we were set up to help.

As my old boss John Perry said recently: “The announcement is excellent news for housing associations….Whether it is also good news for tenants…depends not only on the announcement itself but on how it is implemented”

I trust that boards will tread carefully as they consider the rent settlement. People’s lives are at stake.

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