Homes for the South West responds to social housing rents consultation

Homes for the South West (H4SW), a group of 11 housing associations that build new housing across the region, has responded to the Department for Levelling Up, Housing and Communities’ consultation on proposals to cap social housing rents. The consultation sought views on restricting social housing rent increases below the agreed national rent formula.

The members of H4SW work collectively to identify and tackle the barriers to building new affordable housing in our region and act in unison to meet their shared aim of ‘building the affordable housing the SW needs.’

As a group, we recognise that there are intense pressures on both individual and public finances at the moment, and there is difficulty in finding the right balance. It is vital that social housing tenants are not adversely impacted by rent increases. At the same time, any decision by Government must factor in the longer-term implications a rent cap will have on the ability of Housing Associations’ to deliver desperately-needed affordable homes across the region and also the economic benefits derived from these infrastructure investments.

Our current planned development pipeline prior to these proposals anticipated that we would build 25,000 new homes over the next 5 years, of which 22,000 would be affordable. Our planned output would have delivered around 1 in 3 of every home needed each year. With labour, energy and material cost inflation soaring, a cap on rents below true costs will materially affect our ability to fund our development programmes to the same scale.

Our modelling for the scenarios proposed in this consultation tells us that collectively our pipeline will need to reluctantly reduce in all three proposed scenarios:

  • in the event of rents being capped at 7%: by 12%
  • in the event of rents being capped at 5%: by 21%
  • in the event of rents being capped at 3%: by 31%

Put another way, the numbers of new homes we will be able to build will reduce:

  • if rents are capped at 7%, we will deliver 2,621 fewer affordable homes
  • if rents are capped at 5%, we will deliver 4,708 fewer affordable homes
  • if rents are capped at 3%, we will deliver 6,939 fewer affordable homes

Recent research, carried out for us by the University of the West of England, finds that 17,000 new affordable homes are needed annually in the South West. This finding is consistent with a 2018 study by Professor Glen Bramley for Crisis and the National Housing Federation, which suggested a need for 14,000 such homes annually. In 2020-21 only 4,159 new affordable homes were completed in the region because of various structural barriers. We delivered 2,500 that year. Backlogs continue to grow and rent caps will no doubt further slow development build rates.

We hope the Government takes these facts into account when looking at overall policy in this area and we look forward to their considered thoughts.

For further detail, view our response to the consultation in full here.