Government considering temporary rent cap for social housing tenants

·4-min read

The government has launched a consultation which could lead to social housing tenants in England being protected from soaring rents through the introduction of a temporary cap.

It comes as ministers face growing pressure to ease the burden of the rising cost of living for households across the UK.

Social housing tenants and landlords are being asked for their views on the idea of a proposed rent cap, which the government says could save vulnerable households an average of £300 per year and provide financial stability for four million families.

The temporary cap would apply from 1 April 2023 to 31 March 2024 and the consultation, launched today, will also seek views on whether to set a limit for 2024-25.

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A final decision on whether the cap should be introduced will be taken later in the year, the government said.

It added that ministers understood such a move would impact social housing landlords and that they are engaging fully with the sector.

The move is being considered as social housing rents are currently regulated to increase each year at a rate of the consumer price index rate plus 1% - which could mean potential rent increases next year of 11% in line with the latest Bank of England forecasts.

Housing Secretary Greg Clark said: "We must protect the most vulnerable households in these exceptional circumstances during the year ahead.

"Putting a cap on rent increases for social tenants offers security and stability to families across England.

"We know many people are worried about the months ahead.

"We want to hear from landlords and social tenants on how we can make this work and support the people that need it most."

The government has also announced it is committing to reviewing social rent policy beyond 2025 through a separate consultation due to be launched next year.

The temporary rent cap would come on top of the current £37bn support package already pledged by the government, which includes a £150 council tax rebate, a £400 energy bill discount to support households over the coming months and £1,200 awarded to the most vulnerable eight million households.

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The government continues to be under growing pressure to announce further support to get households and businesses through the cost of living crisis after last week's news that the energy price cap would rise by 80% in October, leading to the average household paying £3,549 a year for their gas and electricity.

Read more: Everything you need to know about higher bills

Boris Johnson has insisted it is up to his successor to decide what action to take. But a Number 10 source said on Monday that the current PM may say something on the matter later in the week.

With less than a week to go until the winner of the Conservative leadership contest is announced, neither Liz Truss nor Rishi Sunak have given precise details of what they plan to do to tackle rising bills if they get the keys to Number 10.

At the weekend, reports suggested Ms Truss - who is the frontrunner in the contest and has previously dismissed the idea of giving "handouts" to people - is planning to cut VAT from 20% to 15%, alongside her pledges to reverse the National Insurance hike and pause green levies.

But there have been mixed messages from sources in her team over whether she would sign off on direct support to households or targeted support for the least well off.

Mr Sunak's team criticised the rumoured VAT cut as expensive and "incredibly regressive", with the former chancellor saying help with energy bills should be directed at low-income households and pensioners - delivered through the welfare system and winter fuel payments.

Read more: Liz Truss: Who is the front runner to be the next PM?

The Liberal Democrats, Labour and the SNP have all called for a freeze on the price cap, as well as additional support for the least well-off households.

A government spokesperson said earlier this week that the Civil Service was "making the appropriate preparations in order to ensure that any additional support or commitments on cost of living can be delivered as quickly as possible when the new prime minister is in place".

Ms Truss and Mr Sunak will take part in the final Conservative Party leadership hustings this evening in London, with the victor of the contest to be announced on Monday 5 September.