Almost 5 million families living in social housing in the UK face a fresh squeeze this April amid the biggest rent rise in a decade.
According to new data from the Resolution Foundation, some 4.75 million households will come up against rises of 4.1% next year, equivalent to an average of £202 extra per annum. This is the biggest nominal increase in 10 years, the report said on Wednesday.
The latest Housing Outlook examined how the rise in the social housing cap in April 2022 will affect renters, alongside a peak of the cost of living, significant tax rises and an increase in the energy price cap.
Calculated by CPI in September, while the rise to 4.1% is a cap rather than a requirement, most housing providers are expected to raise rents by the full amount.
The latest increase follows a decade in which housing costs have risen faster than incomes for those living in social housing.
Social renters now spend 19% of their income on housing costs, net of housing benefit, up from 15% a decade ago. This rise is equivalent to an extra £786 per year for the average social renter family.
In contrast, the share of income that private renters spend on housing has stayed flat over the same period, though at a far higher 31% of income, while housing costs for homeowners have fallen to 9% of income.
Almost half (44%) of social renters equivalent to over 2 million families are not in receipt of housing benefit, and as a result will have to find the funds to cover their April rent rise entirely by themselves.
The report also found that families living in social housing in London, the South East and South West are the least likely to have part of their housing costs covered by housing benefit, and therefore are the most exposed to the big rise in rents coming next April.
Despite the worsening financial situation of many low-income families during the pandemic, government support, including the £20 per week uplift to Universal Credit (UC) and extra support provided via Discretionary Housing Payments, has prevented housing arrears in the social rented sector from growing significantly so far.
“Social renters have already seen the largest rise in housing costs over the past decade, as rent rises have outstripped income growth since 2005,” Lindsay Judge, Research Director at the Resolution Foundation, said.
He added: “The latest increase will put particular pressure on the two million social renters who don’t receive housing benefit, but who are likely to face falling real wages, rising taxes and soaring energy bills.”
“While the government support has helped to limit rent arrears from building up among social renters so far, raising rents to the maximum uprating would be unwise given the cost of living crunch hitting families hard this spring.”