G15 group of housing associations warn of rent cap impact on building safety works and investment in housing

The G15 group of the largest London housing associations has warned that the implementation of a low social rent ceiling currently being considered by the Government could potentially see planned building safety works slowed and delays in investment in existing homes.

The warning comes in response to a Government consultation launched in August, which asked for views on the introduction of a social housing rent ceiling from April 2023 to March 2024. This would put an upper limit on the maximum amount registered providers of social housing can increase rents in that year.

In a statement detailing its stance on the policy, the G15 said it fears that a rent ceiling would slow planned building safety works, delay refurbishments in existing homes, inhibit progress on decarbonisation and retrofitting homes, and reduce the number of new affordable homes on the market.

In addition, the group said the ceiling would mean that organisations' interest cover would be negatively affected, leading to higher borrowing costs "that would reduce our capacity to invest in existing homes and to deliver new homes".

G15 members own or manage more than 650,000 homes across the country, house around one in ten Londoners, and build more than 10,000 homes each year.

Commenting on the consultation, Geeta Nanda OBE, G15 Chair, said: "To maintain and improve existing residents' homes, and to continue to build much needed new affordable homes, significant investment each year is essential. With rising costs and economic uncertainty having a growing impact on our capacity, the rent ceilings being proposed will lead to difficult choices on what we can and cannot do."

Nanda stated that a ceiling on social rents of 3% would see a reduction of over £2bn in re-investable rental income for G15 members over five years. Over 30-year business plans, this would see re-investable income reduced by just under £18bn for G15 members.

At the 7% cap level, the impact "is still extremely significant", with a reduction of more than £1bn over 5 years, and £9.3bn over 30 years, she added.

Nanda said these losses might see reductions in spending across several areas.

She later stated: "It's vital that these possible impacts are acknowledged by Government and shared with residents in the spirit of transparency. If no ceiling was introduced on social rents, it would be extremely unlikely that any organisation would seek to apply the maximum possible increase next year.

"We are committed to maintaining affordability for residents, and believe that not-for-profit housing associations should be allowed to set rents independently as heavily regulated organisations that are best placed to achieve the right balance in the context of residents' immediate and future needs, and the long-term requirements of organisations."

The consultation is set to close 12 October.

Adam Carey