Following Wednesday’s Autumn Budget, we have had a chance to work through the various documents and announcements / reviews released post budget. These give a little more detail about what is to come and when and how you can get involved in some of the consultation.
The full text of the Autumn Budget is available here.
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Pages 92 - -4 are relevant to MHCLG which includes Housing
Paragraphs 5.147 to 5.155 (page 140 – 141) are relevant to housing and are then confirmed in more detail by the documents below.
Rent Settlement
Consultation on the rent settlement has been released and can be found at:
This consultation seeks views on a new Direction from the Secretary of State to the Regulator of Social Housing in relation to social housing rent policy. It focuses on the introduction of a new rent policy from 1 April 2026. The consultation began on 30 October and ends on 23 December 2024.
We now have clarity that this is looking at:
A rent settlement for 5 years from 1 April 2026 at increasing rents by a max of CPI + 1% (no change to CPI reference) – this at least means that 2025/26 is not included in the 5 years – this had already been announced by the previous Government as CPI + 1%, but of course could have been changed.
Options for extending the rent settlement of CPI +1% for 7 years or 10 years
Option to extend the rent settlement of CPI + 1% on a rolling 5 year basis so that year 6 for example is agreed to be added at the end of year 1
Rents will not be legislative, but continue to be policy
It seems to be ruling out any conversation about changes to the social rent formula calculation
It also seems to dismiss the idea of introducing rent convergence to add extra rent to work back towards target rent other than at re-let of first let.
The policy applies to social and affordable rents but does not (and cannot) apply to shared ownership rents.
It makes it clear that Housing Benefit and the housing element of UC the maximum paid covers actual rents for social housing tenants, as opposed to the private rented sector where the maximum paid to the tenant is the LHA allowance. This is important for local authorities to note, as payments based on the LHA rate does not apply to their tenants.
The rent will need to cover the outcome of consultation on a new Decent homes Standard in 2025 including damp and mould provisions, consultation on minimum energy ratings to achieve and the provisions within Awaab’s law
Homes England and Greater London Authority have been asked to maximise the number of social rented homes in the remaining Affordable Homes Funding – this is better news for achieving supported housing with separate service charges instead of combined affordable rents.
We would encourage you all to respond to the Government on this settlement. Please ask for assistance from us if you require help.
Right to Buy Discounts and Retained Receipts
The Government has also issued a document setting out the result of their initial review of the increased RTB discounts that were put in place at 2012 (self financing date). The full review can be found at:
Pre the introduction of self financing (1/4/2012) and the Conservative change in RTB policy to “Reinvigorate the Right to Buy” in Autunm 2011, the maximum RTB discount that a tenant could expect was set at low levels in the region of around £25,000 but this varied on a regional basis. The tenant still had a discount percentage based on the number of years they had been in social housing, but this was limited by the caps set on discounts. In 2012, the maximum discount was raised to £75,000 . In 2013, this was increased to £100,000 for London areas. These limits have been allowed to increase by CPI each year since. The current limits are £102,40 outside of London and £136,400.
Much was said about the reduction in discount to be announced in the budget. We now know:
The limit on RTB discount will be returned to the levels pre 2012
The levels are regionally based
The levels will not be increased by inflation
The new limits will come into force for anyone making a S122(1) claim to Right to Bu from 21 November 2024 – this is to prevent a spike in applications and also to allow the secondary legislation required to put this in place
The cost floor that can be applied will include expenditure on the property over the last 30 years, rather than 15 years.
The flexibilities given in July which apply to RTB 1-4-1 and Treasury Share payments received before 1 April 2024 remain in place until 31 March 2026 allowing Councils to spend their accumulated balances.
Councils will no longer be required to pay the Treasury Share to HM Treasury and can retain the receipts – we presume this will be for the whole of 2024-25 and not from 21 November 2024, but this is not clear.
It is not clear yet whether the Treasury share will be earmarked (as in 2022-23 and 2023-24) for development, what percentage should be used on development post 31 Match 2026 or whether there will still be a requirement to payback any unused receipts.
Further public consultation however is to be released seeing views on wider reform of RTB – this is likely to cover percentages, time as a tenant and types of property.
The intended legislation is set out in the link
Our Fortress HRA BP model can be set to reflect as closely as possible, the assumptions included above. The 2025 version will fully implement change. Please contact us to work through the changes we suggest to reflect the above.
LHA Rates Frozen at 1 April 2025 for a year at least
LHA rates which limit the benefit paid to tenants in private rented accommodation were rebased in Aoril 2025. On 30 October 2024, the Secretary of Ste for Work and Pensions, Liz Kendall, confirmed that “Although not covered by my statutory review of state pension and benefit rates, I can also inform the House that local housing allowance rates for 2025-26 will be maintained at the 2024-25 levels, following their increase in April 2024; and that the benefit cap has not been reviewed for 2025-26 and will also be maintained at the 2024-25 levels”. The full text of the announcement is included below.
Whilst this should not be relevant to Councils, we are aware that come authorities use the LHA rate in their area as a maximum rent charged for affordable homes where 80% of the market rent at the time of letting would be a higher figure. We are also aware that some authorities limit the annual increase of affordable rents to CPI + 1%, or the LHA limit whichever is the lower. Where LHA rates are frozen regularly, this creates a barrier whereby those affordable rents may not increase at all, but social rents do.
As noted above, the rent settlement consultation refers to the fact that social housing tenant benefits in relation to rent are not related to the LHA.
PWLB Loans – Discounted rates for HRA borrowing extended to 31 March 2026
The Autumn Budget includes para 5.155 (page 141) which sets out that:
“ The government is extending the discounted PWLB HRS lending rate until 31 March 2026”.
Added £500m to the Affordable Homes Funding in 2025-26
The Autumn Budget includes para 4.6 (page 92) which sets out that:
“the government is adding £500 million to the Affordable Homes Programme in 2025-26, increasing the annual budget to £3.1 billion.”
Phase 2 of the Spending Review will then set out details of future grant settlement beyond the current programme.
Angie Marshall-Smith
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