Councils landlords and housing associations could be exempted from forced rent cuts if such cuts would put them in financial jeopardy, draft legislation published today has said.
The Welfare Reform & Work Bill, published this afternoon, will give the secretary of state for work and pensions the power to exempt councils from having to cut their social housing rents by 1% if it would cause unavoidable “serious financial difficulties”.
It adds that the secretary of state could publish a document listing the measures that a council could take to make the 1% rent cut without getting into serious financial trouble.
The bill includes a similar exemption for housing associations and says the rent cut will not apply to rent on low cost home ownership properties.
As the regulator of social landlords, the Homes and Communities Agency, will be able to take action under the Housing and Regeneration Act 2008 if councils or housing associations which are not exempt fail to comply with the rent cut .
Possible sanctions for councils include an enforcement notice while housing associations could be issued with a penalty, asked to pay compensation, be taken over by another landord or have an outside manager imposed.
The 1% rent reduction will apply in England and Wales from 8 July 2015 unless the secretary of state picks a different date, the bill said.
The Welfare Reform and Work Bill also includes other measures mentioned in the Budget such as a new benefit cap of £23,000 in London and £20,000 elsewhere, and a freeze on various benefits from April 2016 to 2020.