Social rents in England will be capped at 7% from next April, chancellor Jeremy Hunt as announced in today’s autumn statement.

According to the government, under current rules, rents could have risen by up to 11.1%, thus the 7% cap for 2023-24 will save the average social tenant £200 next year and will generate an overall saving to the government of around £630 million over five years.

Hunt claimed that his statement will deliver stability and that he wants to ensure the Conservatives are not just seen as a party of managed decline. Hunt’s autumn statement revealed (full speech here):

• Households and businesses will be provided with support next year
• The government’s energy price guarantee will be kept for a further 12 months at an average of £3,000 for a typical household, up from £2,500 at present
• New one-off payments of £900 to households on means-tested benefits, £300 to pensioner households, and £150 for individuals on disability benefit
• An additional £1bn funding to enable further extension to household support fund
• The national living wage will rise by 9.7% next year to £10.42 an hour
• Benefits will rise in line with September’s inflation rate, by 10.1%, costing the government £11bn
• The benefit cap will be increased with inflation next year
• The pensions triple lock will be kept.

Reacting to the statement, Matthew Walker, chair of PlaceShapers and CEO of Leeds Federated, responded to the Autumn statement, saying: “We are relieved the Government has delivered on its promise to uprate benefits in line with inflation. The increase in the benefit cap recognises the benefit system as the safety net the Chancellor described it. It is right that support has been given to those who need it most, but many people will still find the winter extremely difficult and will be forced to go without essentials.  

“Housing associations are doing all they can to help tenants in financial hardship, from offering crisis grants to providing debt and benefits advice. No member we talked to ever planned to increase rent in line with inflation.

“The rent cap decision allows Boards, in conversation with tenants, to set rents and make difficult decisions about short and long term investments. We are especially relieved supported housing is exempt from the cap so members who offer care and support services, which are so valued by local communities, will to be in a stronger position to carry on providing delivering them.  

“We believe housing is part of the national infrastructure. The government has committed to building 300,000 new homes a year by 2025. It’s vital the AHP is protected as part of Chancellor’s commitment on capital budgets.”

Nicholas Harris, Chief Executive at Stonewater, said: “The Government’s decision to cap the social housing rent increase at 7% in England acknowledges the significant role the sector plays in providing vital affordable housing and services, and shields customers from an unthinkable 11.1% rent increase and the burden of those higher payments during the cost-of-living crisis.

“Had a reduced increase been announced, it would likely have had a detrimental impact on service quality and may have weakened the sector at a time when the provision of additional affordable housing is vital.”

“The decision to cap rents for one year, rather than two years, allows us to respond to a changing economic climate and protect the services and programmes we offer to customers, who are at the heart of everything we do.

“We will continue to work with the Government on the implementation of today’s announcement, particularly in terms of customer impacts, longer-term planning and our shared commitment to net zero targets and sustainability.”

Lee Bloomfield, CEO of Manningham Housing Association, said: “Confirmation from Jeremy Hunt that we are now in recession, inflation is at its highest level for decades, taxes are going up and spending cuts are on their way will greatly increase financial worries for individuals and families on the lowest incomes.

“I welcome the Government’s decision to raise benefits and the National Living Wage but, given the ongoing cost of living crisis with inflation set to increase even further in the months ahead, the already stretched household budgets of people living in the most deprived neighbourhoods will be under particular attack.

“Housing associations, such as Manningham, will continue to support the communities we serve in every possible way. However, diminishing resources and increasing economic pressures make this incredibly challenging.”     

Elizabeth Froude, Group Chief Executive of Platform Housing Group, said:  “The housing sector supports a wide variety of customers on varying income levels and whilst the government is announcing a cap of 7 per cent it is very unlikely that any social landlord would have considered applying the Consumer Price Index plus 1 per cent formula rent, as we are too aware of how difficult times are already for our customers. 

“Raising benefits by inflation will definitely help to soften the cost inflation of other living costs, but we will still need to support those that still face financial difficulties, as we have been since the start of Covid. 

“Housing associations are feeling the effects of spiralling cost inflation at a time when the need to increase investment in the thermal efficiency of our homes is vital; having a rent increase which allows some offset of our cost increases and supports our customers is a much appreciated and sensible decision which will allow a level of ongoing investment to be maintained.” 

Alicia Kennedy, Director of Generation Rent, said: “As the Chancellor announced plans to cap rents in the social housing sector, and extended access to mortgage support, he left private renters vulnerable to unaffordable rent increases. Market rents have risen by 12% in the past year and it is very easy for landlords to raise the rent on their current tenants when they can threaten a no-fault eviction.

“Freezing rents, suspending no-fault evictions and relinking Local Housing Allowance to actual rents would ultimately benefit the public finances by preventing homelessness, and keeping people near their jobs. Instead, private renters face a winter of hardship, particularly the one in four who are in fuel poverty.

“The additional £6bn fund for energy efficiency is welcome as long as it is effective in insulating private rented homes and ensures the benefits flow to tenants who face fuel poverty rather than their landlords.”

Kate Henderson, Chief Executive of the National Housing Federation, said: “Housing associations are deeply aware of the financial pressures facing their residents.

“The sector has made a commitment that no tenant will be evicted because of financial hardship where they are engaging with their housing association. Each housing association also has tailored support in place to help residents who are struggling with the cost of living.

“The National Housing Federation supports the government’s decision to cap social rent increases at 7% in 2023/24. This is rightly well below CPI+1%, the standard formula for rent setting for social housing. It also ensures housing providers can continue to deliver their core services for residents now and into the future.

“We are also very pleased that the government has announced an exemption from the rent cap for supported housing providers, which will ensure the future viability of care and support for some of the most vulnerable people in the country. The overwhelming majority of tenants who use these specialist services will have their rent increase met in full by housing benefits or Universal Credit.

“With the certainty these decisions provide, housing associations representing 80% of shared ownership homes are also committing to cap rent increases for shared owners at 7% in 2023/24, matching the social rent cap.

“We know any additional costs will be difficult for residents. We will continue to push the government for support for people on low incomes. We also urge tenants and shared owners who are struggling with bills to contact their housing associations to find out what support is available.”

Rick Henderson, CEO at Homeless Link, said: “Everyone deserves a safe place to live and the support they need to keep it, with preventing people from losing their home key to this. Therefore, the confirmation the Government will uplift benefits by 10.1% is welcome, giving people on low incomes greater resources to help them avoid being pushed into homelessness. We hope the Government will build on this decision through uplifting Local Housing Allowance rates to ensure that housing benefit covers the cost of rent and helps prevent people from being pushed into homelessness.” 

 “The Chancellor stated that ‘spending cuts are not compatible with high quality public services’, but has asked services to make efficiencies to deal with inflationary pressures over the next two years. Homelessness services across the country are already running on budgets set when inflation was a fraction of what it is now. At the same time, demand for their support is rising. Services desperately need an inflationary uplift now. Without it, many fear having to scale back or even close down all together. The Government must listen to the homelessness sector and change course, or it will have very little hope of meeting its goal of ending rough sleeping in England by 2024.” 

Cllr James Jamieson, Chairman of the Local Government Association, said: “Local government is the fabric of the country, as has been proved in the challenging years we have faced as a nation. It is good that the Chancellor has used the Autumn Statement to act on the LGA’s call to save local services from spiralling inflation, demand, and cost pressures.

“While the financial outlook for councils is not as bad as feared next year, councils recognise it will be residents and businesses who will be asked to pay more. We have been clear that council tax has never been the solution to meeting the long-term pressures facing services – particularly high-demand services like adult social care, child protection and homelessness prevention. It also raises different amounts of money in different parts of the country unrelated to need and adding to the financial burden facing households.

“Councils have always supported the principle of adult social care reforms and want to deliver them effectively but have warned that underfunded reforms would have exacerbated significant ongoing financial and workforce pressures. The Government needs to use the delay announced today to ensure that funding and support is in place for councils and providers so they can be implemented successfully. We are pleased that government will provide extra funding for adult social care and accepted our ask for funding allocated towards reforms to still be available to address inflationary pressures for both councils and social care providers.

“The revised social rent cap for next year is higher than anticipated and councils will still have to cope with the additional financial burden as a result of lost income. Councils support moves to keep social rents as low as possible but this will have an impact on councils’ ability to build the homes our communities desperately need – which is one of the best ways to boost growth – and retrofit existing housing stock to help the Government meet net zero goals.

“Financial turbulence is as damaging to local government as it is for our businesses and financial markets and all councils and vital services, such as social care, planning and waste and recycling collection, and leisure centres, continue to face an uncertain future. Councils want to work with central government to develop a long-term strategy to deliver critical local services and growth more effectively. Alongside certainty of funding and greater investment, this also needs wider devolution where local leaders have greater freedom from central government to take decisions on how to provide vital services in their communities.”

Adam Scorer, chief executive at National Energy Action (NEA), said: “Changes to the Energy Price Guarantee mean that the breathing space for households struggling with energy costs will now be shorter lived and less helpful. An average bill of £3,000 from spring is an increase of 40% from current record levels given that the Government has ceased the support currently provided by the Energy Bill Support Scheme, yet energy bills are up by a staggering 130%. Sadly, this means there is now no end in sight to the energy crisis for struggling households. For most, it looks as if it will get even harder.

“Boosting welfare payments and the targeted support that has been announced for energy bills will help some of the poorest households and at-risk groups, that’s important, but there are big gaps in these measures especially for low-income households not on means-tested benefits. The reductions in universal support will make these gaps even more challenging.

“Many other vulnerable groups — those with medical health conditions and carers for example, who could have been targeted for additional direct support, are now at acute risk of being left out in the cold unless they are supported by local authorities. With deficit budgets and nothing left to ration, too many could fall further into overwhelming debt or go without energy entirely, to the acute detriment of their health and wellbeing. Even those who will receive cost-of-living payments will find it practically impossible to sit on this cash payment and only channel this money towards soaring energy bills.

“Above all, we have to recognise energy prices will remain high for some years. We can’t keep stumbling forward with short-term, ad hoc responses. The Government and regulator, working with industry and consumer groups, need to get on with the job of designing and implementing a robust social tariff that provides greater protection for the most vulnerable. That’s difficult to do if you are scrambling for a quick response. It’s high time to put the work in and address the fundamental challenge of making sure that a warm home is affordable for everyone.

“The Chancellor did make some welcome commitments to boosting energy efficiency but promises of bigger programmes in two years’ time won’t make homes warmer or cheaper to run soon enough. Any new resources also need to help the Government meet its legal requirements to fuel poor households as a priority.”

Ben Beadle, Chief Executive of the National Residential Landlords Association, said: “The demand for private rented housing is massively outstripping supply.  This will only worsen as growing mortgage rates make home ownership more difficult to afford. 

“The Government has yet again failed to recognise the potential for housing to drive growth and deliver for the economy.  The Chancellor should have focused on boosting supply by ending the Stamp Duty Levy on the purchase of new rental homes.

“Research by Capital Economics suggests that scrapping this could lead to a £10 billion boost to Treasury revenue. This would be as a result of increased income and corporation tax receipts. Instead, these swinging cuts to Capital Gains Tax allowances will dissuade investment for years to come. 

“The last thing renters need is an effective further tax hike on the private rented. All this will do is discourage investment in the new homes to rent the country desperately needs and drive up the cost of renting.”