Ministers are planning to introduce a rent cap for tenants in the social rented sector as part of efforts to ensure that some of the most vulnerable renters in England are not overwhelmed by the cost of living crisis this winter.
Housing secretary Greg Clark on Wednesday launched a consultation looking at how best to support the 4mn households in the social rented sector, as investment bank Goldman Sachs said inflation could exceed 20 per cent by the start of next year.
The government is considering capping rent rises for the coming financial year at 3, 5 or 7 per cent for tenants in the social sector to insulate them from the rising cost of living.
“We must protect the most vulnerable households in these exceptional circumstances during the year ahead. Putting a cap on rent increases for social tenants offers security and stability to families across England,” Clark said.
About 17 per cent of England’s households rent their homes from councils or housing associations, according to official data. Tenants in the social rented sector typically pay less and are afforded more protections from eviction than those in the private sector.
The six-week government consultation comes alongside measures such as a £400 discount on energy bills and a £150 council tax rebate. These have been welcomed by campaigners but are dwarfed by the rising costs of energy and food.
Energy regulator Ofgem last week said gas and electricity bills for an average British household would increase by 80 per cent to £3,549 from October.
Geeta Nanda, chair of the G15 group of housing associations, said government support was welcome but that a rent cap would affect the ability of housing associations to deliver more affordable housing.
“To maintain and improve existing residents’ homes, as well as continuing to build much needed new affordable homes, significant investment each year is essential. Rental income is critical to supporting this work,” she said.
The consultation does not include measures to protect the 4.4mn households in the private rental sector from rent rises.
Government guidance states that landlords in the private rented sector may increase rents provided they are “fair and realistic, which means in line with average local rents”.
But according to estate agent Hamptons, average rents on new leases are up 10 per cent over the past 12 months. Renters across the UK have also complained that their landlords have attempted to push through bigger increases, leaving them at risk of homelessness.
Dan Wilson Craw, deputy director of Generation Rent, a tenant campaign group, said that “any action to protect the most vulnerable households must also protect private tenants from unaffordable rent increases”.
“With energy bills set to rise further, private renters desperately need government intervention to help them to keep their homes warm this winter.”