The Department of Communities and Local Government has issued directions to the Tenant Services Authority confirming that rent changes should be set at no more than 0.5% above RPI.

The formula for rent changes uses the RPI for September to set rents for the following year. This September the RPI was -1.4%. Therefore, rents could fall by 0.9% from April 2010.

This percentage decrease is less than originally foreseen when the RPI was expected to fall more sharply.

Despite the decrease for 2010/2011 being less than originally feared, the government’s directions have come
under scrutiny and have faced opposition.

The National Housing Federation has attacked the decision. In a recent consultation paper it was stated that cutting rents would provide short term benefits to a small number of tenants but cause “substantial
long-term damage to the capacity of the sector.”

The NHF Chief Executive, David Orr, has reportedly stated

“this is simply the wrong decision. In an environment where the government’s own figures forecast significant cuts in public expenditure over the coming years, a direct cut to the sector’s capacity to build homes and provide services is unwise.”

The NHF is arguing for a rent freeze as Mr Orr confirms “social housing rents have never fallen before, even during 2 world wars and the great depression.”

Antithesis also comes from The Council of Mortgage Lenders (CML) which has stated that

“Housing Associations depend on rental income to provide funding for management services, to carry out promised improvement programmes and raise private finance to build new social homes.”

It is reported that the CML believes that rent cuts will jeopardise fundamental operations performed by Housing Associations by having a detrimental impact on the housing sector and delivery of government
housing policy.