Headlines: November 8th, 2005

Consultations are beginning on the Government’s proposed council housing subsidy allocations for individual local authorities for 2006-07. On average the proposals will mean an increase in the resources available to housing authorities for management and maintenance costs of 2.7 per cent. The Government has also announced that it will implement the recommendations of the 3-Year Review of Rent Restructuring, alongside limits on rent increases for the next two years.On management and maintenance payments it is hoped that as far as possible the same formulae will apply for the year 2007-08. Local authorities have until December 12th to comment on the draft determinations and until December 2nd to comment on the data. The proposals mean that management and maintenance allowances have seen sustained rises over recent years, with the latest announcement following increases of 17 per cent over the last two years.

The rent restructuring regime, which has been in place since April 2002, was initially designed to ensure social rents were calculated on a fair and consistent basis across the country and included convergence between housing association and council rents in each area, so they are based on the property and location, rather than on any historic financing arrangements.

In response to the Review the Government is introducing bigger differentials for larger properties, bringing in adjustments to the rents formulae to bring council and housing association rents fully into line, removing the floor on rent reductions for properties where rents need to fall, as recommended by the review, and making adjustments to limit average rent increases to less than 5 per cent for councils for each of the next two years, in response to concerns raised about the pace of change in some high cost areas. There will also be further study of the interaction between social rents, housing benefit and work incentives in those high cost areas. The new measures will apply from April next year.

The Housing Minister, Yvette Cooper, said, “These amendments to the rent restructuring programme aim to produce fairer rents for different properties. Nationally rents in the social rented sector will remain at about a half of private sector rents, over the next two years.”