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.
Introduction
Support Solutions UK like to keep our clients up to date with industry updates. As leading advisors in our industry, we like to ensure that our clients are compliant and understand the legislation that helps to regulate the industry.
Support Solutions UK understand certain pieces of legislation can be lengthy, ambiguous, and quite complex to understand. We have a team of legal professionals and health and safety professionals that work for us. Using their experience and expertise, they summarise the legislation in terminology that is easier to understand. We then pass this information onto our clients.
Briefing Purpose
This Briefing looks at the Supported Housing (Regulatory Oversight) Bill
and how it is likely to impact the clients that we work with in the Supported Housing sector. This is a Private Members’ Bill and was presented to Parliament through the ballot procedure. This Bill is sponsored by Bob Blackman (MP) and received its first reading on 15th June 2022.
Before we move on to look at why the bill is important for those working in the Supported Housing sector, it is important that we look at the term ‘regulatory oversight’. What is its meaning and what is its purpose?
Regulatory Oversight – What is It?
“Regulatory oversight” is defined as the variety of functions and tasks carried out by bodies / entities in the executive or at arm’s length from the government in to promote high-quality evidence-based regulatory decision making.
Definitions of “oversight” and “governance” vary across public and private sector organisations, but they share many similar elements. Oversight is a component (or subset) of good governance and adopts definitions of these terms suited to public sector organisations. It refers to the actions taken to review and monitor public sector organisations and their policies, plans, programs, and projects, to ensure that they:
- Are achieving expected results
- Represent good value for money; and are
- In compliance with applicable policies, laws, regulations, and ethical standards.
Oversight is a critical governance function performed by boards of directors, committees, councils, and external bodies.
Supported Housing (Regulatory Oversight) Bill – the importance to those working in the Supported Housing sector?
A Private Members Bill like this is indicative of the pressure for Regulation of Exempt Accommodation, local authority oversight and enhanced enforcement powers.
For those working in the Supported Housing sector, this is extremely important on two parts because the Bill will:
- Make provision about the regulation of supported exempt accommodation
- Make provision about local authority oversight and enforcement powers relating to, the provision of supported exempt accommodation; and for connected purposes.
June 2022 – Formal Introduction (First Hearing)
The formal introduction was made on 15th June 2022 where there was no debate on the bill. This was the first reading, also known as the first stage of a Bill’s passage through the House of Commons.
During this stage, the title of the Bill was read out and was followed by an order for the Bill to be printed.
Now that the First hearing has taken place, the Bill has now been published as a House of Commons paper for the first time. It is awaiting a second hearing which is scheduled to take place in November 2022.
November 2022 – Second Hearing
The second hearing is scheduled for November 2022. During the second hearing, MPs are given the first chance to debate the general principles and themes of the Bill.
What Next?
During the second reading the government minister, spokesperson or MP responsible for the bill will open the second reading debate. Upon doing so, the official spokesperson responds with their views on the Bill and then the debate continues with other opposition parties and backbench MPs giving their opinions.
At the end of the debate, the Commons then decide whether the debate should be given its second reading by voting, meaning that it can proceed to the next stage. It is important to note that there is a possibility for the Bill to have a second reading with no debate so long as MPs agree to its progress.
Once the second reading is complete the Bill will then proceed to the committee stage where each clause and any amendments to the bill may be debated. These are known as proposals for change.
SSUK – Our Views
Support Solutions UK agree that there needs to be better oversight of both quality and value for money in parts of the supported housing market. Residents with support needs should feel confident that they will be provided with appropriate housing and have access to high quality support service.
We believe that it is important that there is the introduction of minimum standards for the support provided to residents, new powers for local authorities to help better manage the supported housing market and changes to housing benefit regulations.
Why?
- The introduction of minimum standards for the support provided to residents.
The aim of this is to ensure that residents receive the good quality support they expect and deserve in order to live as independently as possible and achieve their personal goals.
- New powers for local authorities in England
This should enable local authorities to better manage their local supported housing market and ensure that rogue landlords cannot exploit the system to the detriment of vulnerable residents and at the expense of taxpayers.
- Changes to Housing Benefit Regulations
This will help to seek to define care, support and supervision to improve quality and value for money across all specified supported housing provision.
The Future
We will await the outcome of the Supported Housing (Regulatory Oversight) Bill and will continue to work closely with our members and the government on the detail. This includes pressing for much-needed dedicated funding for housing related support.
As a company, we are also committed to working closely with local government, sector representatives, providers and people with experience of supported housing as we develop these measures to ensure they are fit for purpose.
It is important that these measures are deliverable and must minimise unintended consequences for the providers of much needed, good quality supported housing.
References
https://bills.parliament.uk/bills/3195