Social Rent –7% restriction on rent increases for social housing tenancies in 2023 Here at Support Solutions UK, we like to keep our followers and clients up to date with latest industry news. Our December briefing takes a look at Social Rent and the Regulator's recent decision to apply a 7% restriction on rent increases for social housing tenancies in 2023. Importantly supported housing is exempt from the 7% rent increase and can still apply CPI + 1%, which is 11.1% in total. What is Social Rent and how does it work? Around four million families live in the social rented sector. This is almost one-fifth of households in England. Social housing is provided by either housing associations (not-for-profit organisations that own, let, and manage rented housing) or the local council. As a social tenant, you rent your home from the housing association or council, who act as the landlord. Social housing aims to be more affordable than private renting and provide a more secure, long-term tenancy. Social homes are the only type of housing where rents are linked to local incomes, making these the most affordable homes in most areas across the country. Rents for social homes are significantly lower than private rents. Rent increases are also limited by the government, which means homes should stay affordable long-term so people aren’t priced out of their communities by rising rents. Social housing should be there for anyone who needs it. At present, the law states who is entitled to social housing and should get preference on the waiting list. But councils have lots of flexibility on who qualifies locally and social landlords can refuse to let to people if they so choose. People in social housing usually have secure tenancies, giving them greater protection from eviction and enhanced rights compared to those renting privately. They provide the foundation people need to get on in life, meaning families can put down roots, plan for the future and make their house a home. How is Social Rent set? In 2019, the government set a rent policy for social housing that would permit rents to increase by up to CPI plus 1 percentage point (‘CPI+1%’) per annum, and made clear its intention to leave this policy in place until 2025. We are however living through exceptional times and when the current rent policy was set in 2019, inflation was forecast to be around 2% in 2022 and 2023. In July 2022, CPI was 10.1%. If CPI remained at or above this level in September, this would permit social housing rent increases from 1 April 2023 to 31 March 2024 of 11.1% or more. This is much higher than expected rate of inflation and is already placing considerable pressure on many households, including those living in social housing. Registered Providers of social housing (‘Registered Providers’) were obviously concerned about these pressures on their residents and came together on how the sector should respond. In the face of these exceptional challenges, the government thought that there was a strong case for making a temporary amendment to the CPI+1% policy for 2023/24 in order to provide a backstop of protection for social housing tenants from significant nominal-terms rent increases. The government decided to consult on a new Direction from the Secretary of State to the Regulator of Social Housing (‘the Regulator’) on social housing rents. This Direction would operate alongside the Direction on the Rent Standard 2019 issued on 26 February 2019 (‘the 2019 Direction’). The intention of this new Direction would require the Regulator to amend its Rent Standard so that the current CPI+1% limit on annual rent increases would be subject to a ceiling from 1 April 2023 to 31 March 2024. Registered Provider is allowed to implement. Registered Providers would be permitted to increase rents by 5% or CPI+1%, whichever is the lower. However, within this consultation, we are seeking views on 3%, 5% and 7% as ceiling options, and we are also 7% Social Rent Cap 2023/24 The Department for Levelling Up, Housing and Communities (DLUHC) had floated that social rent increases could be capped as low as 3%, however, setting the rent cap at 7% will come as a huge relief to registered providers and prevents a potentially apocalyptic scenario for some.
SUPPORT SOLUTIONS UK
OPERATIONAL & FINANCIAL PERFORMANCE REVIEWS
Support Solutions UK boasts over 25 years’ experience in financial consultancy services within the social housing sector.
Our team of Financial Consultants have carried out lots of work with lots of different companies offering specialised skills for specific projects but particularly specialise in Supported Housing and Supported Living.
Quite often we get asked why companies may want to engage a financial consultant. We will now look at why …
WHY DO CLIENTS NEED A FINANCIAL CONSULTANT?
Companies going through change or new stages of growth may find themselves faced with the need for immediate financial assistance. Currently, it’s a good idea to step back and look at the benefits of bringing a financial consultant onboard.
- Specialised skills for specific projects
Hiring specialised consultants for a project will mean that the project can be completed knowing that you are utilising experience and expertise, which will provide the ability to improve strategic and operational performance.
A consultant will help you actualise a unique task or a one-time project that your company needs.
- Lower costs
Even though a contract worker’s wage is a similar or higher hourly rate, you’ll usually still end up saving, on average, 20 to 30% when you compare all the expenses associated with hiring a full-time employee.
Generally, there are four additional costs associated with hiring employees that you don’t need to worry about when hiring a consultant. These additional costs include:
- Administrative expenses: Accounting fees, payroll taxes, legal fees, etc.
- Benefits: Health insurance, retirement contributions, paid time off, annual bonus
- Overheads: Workspace, computer equipment, office supplies, etc.
- Training: The cost of onboarding and continuous training. Meanwhile, contract workers possess all the necessary specific skills and qualifications required to complete a specific project.
- Fresh eyes
While your internal team is essential to the success of your business, it’s not uncommon that employees miss problems because of being too close to the issues to see them.
Contract workers are not restricted by preconceived ideas and can step in with a fresh perspective. An external contract worker will seek to find new solutions for your business design and be the catalyst that you need to drive your business forward.
- Faster Delivery
Consultants are focused only on the task at hand, without other day-to-day distractions and obligations that employees might encounter. They also know it’s in their best interest to remain viable and meet the goals of their contract within the given specific time frame.
- More Flexibility
Whether you take on a small-scale project or a much larger one, your business needs are fluid, so having a flexible team is favourable. By hiring consultants, you can ensure you have just the right number of workers along with on-demand skills to accomplish all projects that come with the evolution of your company.
As part of our Financial Consultancy offering, SSUK can provide organisations with both OPERATIONAL REVIEWS and FINANCIAL PERFORMANCE REVIEWS.
OPERATIONAL REVIEWS
SSUK are skilled in advising and assisting social housing providers with their human resources to ensure that they are structured and managed, operationally, to achieve compliance and operational efficiencies.
Our team of experts provide operational reviews with the intention of providing an in-depth and objective review of an entire organisation or a specific segment of that organisation. The review can be used to identify and address existing concerns within your company such as communication issues between departments, problems with customer relations, operating procedures, lack of profitability issues, and other factors that affect the stability of the business.
Our operational reviews allow the organisation members to evaluate how well they are performing, given that they perform appropriately according to the procedures set by them, allocating their resources properly, and performing such tasks within time frame set and using cost-effective measures. More importantly, it also shows your company how well it is prepared to meet future challenges.
FINANCIAL PERFORMANCE REVIEWS
SSUK are practised in carrying out robust financial reviews of organisations to optimise efficiencies and to improve the long-term profitability and effectiveness of the business.
Our team of financial consultants offer clients a big picture analysis of their finances. They break down different aspects of a client’s financial picture, including assets, expenses, and income, and help them create a financial plan to reach different types of goals.
They are here to essentially make educated financial decisions for you.
If your company needs assistance from one of our Financial Consultants, get in touch today by contacting:
Tel: 01325 487080