Labour ‘to hike social rent prices’

Social rents could go through the roof under Labour as part of their bid to build more affordable homes.

Chancellor Rachel Reeves plans to increase social rents faster than inflation over the next 10 years, recent reports suggest, which could leave millions struggling to pay for their homes while allowing Labour to build more.

The government’s got a target of building 1.5m new affordable homes in the next five years, with the bill looking set to fall on social renters.

Reeves’ social housing plans will be confirmed in her first budget this autumn.

No cap on rent

Rents will increase each year in line with the consumer prices index, which is currently at 2.2%, plus an extra 1%. This is how social rents are calculated at the moment – except they’re currently capped at 7.7% until 2026.

The Tories introduced the cap after inflation hit 11.1% in 2022 so tenants didn’t face a 12.1% price hike under the calculation.

But the cap will be removed after 2016, which may leave people at risk of crippling rent prices if inflation soars again.

The English Housing survey shows that the poorest social households face paying as much as 36% of their income on rent. Social renters were also more likely (23%) to have fallen behind on paying utility bills than private renters or homeowners.

‘Financial misery for struggling families’

Homelessness and anti-poverty charities are concerned about what this could mean for tenants.

Social Housing Action Campaign says the government has “aligned itself with landlords against tenants’ interests” and is “heaping financial misery on the shoulders of struggling families”.

Crisis has called for safeguards to prevent homelessness, while the Joseph Rowntree Foundation is worried about households being unable to afford their rent.

And the move could disproportionately affect those with disabilities. Disability Rights UK says half of all social households have a disabled household member.

What other changes is the chancellor making?

Reeves has a difficult job ahead of her as she needs to plug a £22bn gap in public spending after inheriting the “worst public finances since the second world war”.

It’s why she’s scrapped:

• the winter fuel payment unless you get pension credit
• plans to reform social care
• investing in our roads, rail and hospitals

Reeves is also expected to raise taxes and reject growing calls to remove the two-child cap on benefits.