More confusion in housing policy at the heart of government

There is a complete contradiction in the government rent policy for housing associations.

The background is that George Osborne, when Chancellor, tore up a previous agreement that allowed rent increases bed on the retail price index +0.5%, replacing it with a 1% year on year reduction until 2020. The only real winner was not tenants but the Treasury.

The government subsequently announced that rents in social housing will capped at Local Housing Allowance (LHA) levels. The original design of LHA was to reflect the market, being set at the 30th centile for private sector rents charged in a locality. However, the freeze means that there is no longer any correlation between actual rents and what people can claim in housing benefit.

Most recently, the government announced the rent settlement for the five years from April 2020. Once again will be allowed to rise by RPI +1%. This news has understandably been welcomed by landlords.

However, the government has left the LHA freeze in place. This means that tenants will have to make up the difference between LHA and the increasing rents where rents are higher than LHA.

Fortunately this will not apply in my own organisation, BHT, as we are committed to charging core rents within LHA levels.

The government must lift the LHA freeze and increase it so that it accurately reflects changes in the market.

This is yet another example of confused government policy which causes hardship amongst the poorest of the poor, or it will do unless the government thinks through its housing policies and acts now.


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