Posted 10.07.15
Social Housing Rents
Social landlords will have to reduce rents by 1% a year for four years, starting from April 2016. The reduction will apply to both 'social Rent' and 'affordable rent' homes.
Estimates suggest that 1.2 million households will save an average of £700 a year.
The Institute for Fiscal Studies has estimated that the income of social landlords from rents will drop by £2.5 billion a year.
The Office for Budget Responsibility said the drop in rental income was likely to result in housing associations calling off plans to build 14,000 homes. Others have put the figure much higher.
Last year the Government committed rent increases based on the CPI measure of inflation for the next decade. Treasury estimates suggest that by 2020/21, rents in the sector could be 12% lower than previously forecast.
Social landlords may face implications for current borrowings and the likely drop in stock valuations could deter lenders from making further finance commitments.
Market Rents for High Earners
Social housing landlords will have to charge tenants earning more than £30,000 (£40,000 in London) market rents.
If it is not known what tenants earn, then the landlord will now have to find out.
Comment, Shelter Policy Blog:
"We should remember that social rents are not artificially low. They reflect the cost of building and managing the homes, are linked to actual earnings, and in fact yield a surplus.
"It is private rents that are ridiculously high, and it is this fact that lies behind the burgeoning benefit bill. Punishing tenants who work hard in this way is counter to the rhetoric of supporting aspiration.
"Even worse, for council homes the additional rental income of £240m that this is expected to bring in will not go to councils to support more house building or better services - the Treasury will pocket it."
Housing Benefit
From April 2017, automatic entitlement to Housing Benefit for 18- to 21-year-olds will be scrapped.
Exceptions will be made for vulnerable young people, including those unable to return to the family home, and for those who were in work for the six months prior to making a claim.
Benefit Cap
The overall amount a family can receive in benefits in a year is reduced from £26,000 to £20,000 (£23,000 in London).
Landlords fear that any loss of income from the reduced benefit cap will first hit tenants' Housing Benefit allowance.
There will be an allocation of £800m of discretionary housing payments for councils to help affected tenants.
Working-age Benefits
Working-age benefits are frozen for four years.
The freeze has implications for private sector tenants, as Local Housing Allowance will fall further behind inflation.
A direct consequence will be to make private renting more unaffordable in many areas.
Buy-to-let Landlord Mortgage Relief
Private landlords will no longer be able to claim tax relief worth up to 45% on interest payments on their buy-to-let mortgages. Instead, all mortgage relief will be limited to the basic rate of income tax.
Landlords have warned the move will see costs passed on to tenants in the form of higher rents.
