Manchester City Council is to increase rents on homes built under private finance initiative as it struggles to cope with the viability of its housing revenue account (HRA) following a government-imposed rent reduction.
The government in 2015 imposed a 1% cut in social housing rents every year to 2020, a move which endangered councils’ business plans drawn up on the previous basis of rents rising by the consumer prices index plus 1% each year.
This reduction though does not apply to homes built under PFI deals, where councils can increase rents to partly close the gap.
Manchester intends to increase rents for about 2,500 PFI properties by 2%, to a weekly average of £77.74 against £73.18 for conventional council housing.
A report to Manchester’s executive last week said: “It was identified in 2016-17 that due to the loss of rent income the current forecast reserves mean that the HRA is no longer viable in the medium/longer term.”
Meanwhile, Manchester has launched a plan to speed up the delivery of affordable homes to between 1,000 and 2,000 a year.
An executive report said in the last five years, 2,721 homes were built through the city’s affordable homes programme, but 1,800 were lost through demolition and right-to-buy sales.
This 921 net gain was “not enough to support the housing needs of Manchester people”, it noted.
Deputy leader Bernard Priest (Lab) said: “Decent housing shouldn’t be a luxury. It should be something that everyone in Manchester can enjoy. We intend to make sure up to 2,000 homes a year are built that are decent, secure and affordable.”