Plans to cut social housing rents by 4% will cost councils £2.6bn by 2019/20, new analysis has revealed.
The Local Government Association (LGA) has warned that the proposals, being debated today as part of the Welfare and Work Bill, will place an 'additional financial burden' on councils as 70% of social housing tenants receive housing benefit so will not be impacted directly.
It said the cost to councils would be the equivalent of building almost 19,000 new homes and will represent 60% of local government’s total housing maintenance budget by 2019/20.
‘It is right that rents are kept as low as possible, but our analysis shows reducing rents in this way over the next four years will cost councils £2.6 billion by the end of the decade and lead to a further funding gap of £1 billion per year from 2020/21 onwards,’ said Cllr Gary Porter, chair of the LGA.
‘It is therefore vital that these costs are considered by the Government as part of the wider debate of council funding to avoid the capacity of councils and housing associations to invest in this much-needed housing being put at risk. For instance councils should be able to keep all the receipts from the sales of their own housing stock.’
The LGA is calling for councils to be given increased powers and flexibility to manage their own housing stock, and for the Government to lift housing borrowing limits.
