Social housing rents can rise by the Consumer Price Index (CPI) plus 1% for five years from 2020.
The Department for Communities & Local Government said the rent rise “will give social tenants, councils and housing associations the security and certainty they need”.
The announcement was made yesterday after prime minister Theresa May promised “certainty on rents” in her speech to Conservative Party conference yesterday.
It reverses a policy implemented by former chancellor George Osborne to reduce social rents by 1% each year for four years from 2016. At the time the measure was forecast to save £1.4bn by 2020-21, primarily in reduced housing benefit expenditure. Prior to Mr Osborne’s announcement rents had been set to rise by CPI plus 1% every year from 2015 to 2025.
Chartered Institute of Housing chief executive Terrie Alafat said: “This new rent settlement is good news for social housing – it provides the stability and certainty landlords need to build more desperately-needed new homes and to invest in their existing homes and services for tenants.”
Confirmation of the social housing rent settlement came after Ms May announced a £2bn funding pot for social and affordable housing. Both councils and housing associations in “parts of the country where the need is greatest” can bid for a share of the fund.