West London council to raise rents after facing ‘significant pressures’ in 2024/25 budget

Kensington and Chelsea Council is set to increase rents by one per cent above inflation to counter “significant pressures” in its 2025/26 budget. The local authority expects the 2.7 per cent rise to cost social housing tenants an extra £12 to £21 per month, a council report shows.

Broken down weekly, anyone living in a studio flat will see their rent rise to £118.43 from £115.32. Those in a five-bedroom property will see their rent jump to £225.05 from £219.13. Properties that are re-let could be subject to a 5 per cent increase.

Last year, the council raised rents by the government-sanction cap of 7 per cent. Inflation in the UK at the time was roughly 11 per cent. According to the council, the 7 per cent cap, in addition to a 1 per cent rent reduction between 2016 and 2020, means rents are 17 per cent lower in real terms. They said such “pressures” mean they will not be able to sustain the “desired” level of capital investment in the medium term.

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Reports before the Housing and Communities select committee show the council seeking to increase parking charges by 2.7 per cent in April and will be reviewing its charging policy in 2025. Changes to the charging policy will be subject to a public consultation, the report said.

Meanwhile, service charges for tenants are expected to increase “with inflationary pressures and changes in usage”. Among plans being discussed to relieve budgetary pressures in the longer-term are decreasing spending on repairs and tweaking capital investments levels.

Council considering borrowing more money

The council is also considering borrowing more but acknowledged this would lead to it trying to find money to cover borrowing charges. The council’s housing department is also expected to fork out £50k in fees to the Building Safety Regulator, £40k to the Social Housing Regulator and £73k to the Housing Ombudsman.

It is also estimates having to pay £600k in National Insurance contributions after the rate for employers was increased in the Budget. The report read: “At the time of the announcement assurances were given that public sector employers will be protected from this increase. Unfortunately, it is not clear how such support will be paid to the HRA (Housing Revenue Account), and civil servants have been silent on this issue.

“It is therefore considered prudent to make provision in the HRA in case the Government support is not forthcoming.” The council will also reduce its tenant support fund back down to £200k from £500k the previous year.

The council said their housing budget is contingent on the funding settlement from the Government, which is yet to be finalised. The council has a statutory duty to set a balanced budget for the Housing Revenue Account each budget year.

The report read: “There are significant new burdens which place pressure on our revenue spend at a time when it is imperative we bring the condition of our Housing up to the right level as we have a statutory duty to provide decent and safe homes.”

Meanwhile, the council is expected to spend an extra £3.3m on temporary accommodation in the coming financial year. In 2024/25, Temporary Accommodation set the council back £31.9m.

'These are extremely challenging times for local government finance'

The council is also expected to spend an extra £1.9m on extending its contract with Bellrock Property & Facilities Management Ltd to maintain the council’s buildings. The additional cost came after the council had to “revisit” the tendering process, which had expected to bring in £250k of savings. The report suggests staffing issues were to blame.

The council has also deployed 30 uniformed Street Enforcement officers across the borough which has brought in £800k ‘in savings’ since 20219. The council said the officers issued an average of 90 fines per month in 2024 – an increase of 70 per cent from 2019 when the council issued 53 per month.

Cllr Johnny Thalassites, lead member for finance, said: "These are extremely challenging times for local government finance. We are not in the dire straits that some of our peers are in, but we are preparing to make some difficult decisions because we are still looking at a significant budget gap of up to £40 million over the next four years.

“Despite these pressures, we are determined to make positive changes to the borough. That is why we are building new social homes, delivering energy efficiency improvements to schools and community centres, and continuing to keep taxes low and minimise costs for residents.

“We need the help of people who live and work in the borough to set a budget that reflects the needs of our communities. We need to spend wisely, make savings and continue to support our most vulnerable to make the borough a thriving place to live, work and enjoy.”

The Housing and Communities Select Committee will meet Tuesday, December 10, to discuss review the budget proposals.

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