Salford City Council wants a rent freeze for residents funded by government in the cost of living crisis.
Salford City Mayor Paul Dennett has spoken out and published an open letter along with the city’s Members of Parliament after the council took part in the government’s rent cap consultation.
The Department for Levelling Up, Housing and Communities have published its proposals for a cap on social housing rent increases, which will be implemented next year.
The Greater Manchester Combined Authority (GMCA) have modelled the savings to The Treasury/DWP and in relation to the unfunded 5% rent cap the figure is between £42m and £49m in the first year across Greater Manchester, and in the city of Salford, these savings are estimated between £5.3m and £6m.
City Mayor Paul Dennett said: “In Salford we suggest that for these measures to have the positive impact envisioned, government must fully fund these rent proposals ensuring that local authorities and registered providers are compensated for the revenue they would have otherwise received under their business plans for rent increases (generally set at CPI +1%).
“The homelessness crisis remains at the forefront of our minds but with almost 6,000 households on our housing register and 108 bids per property advertised, right now, more social rented accommodation is vitally necessary for the Local Authority to meet its obligations under the Homelessness Reduction Act, to reduce the financial burden to the taxpayer from Temporary Accommodation bills, and to bring much needed affordable housing products into the housing market.
“The situation is more complicated for the city of Salford as the housing stock is managed within a Private Finance Initiative (PFI) contract which sits outside of these proposals but with the same inflationary pressures that are impacting across the housing sector. The city council has previously put in measures to help residents with rising rents and we expect a similar government response to support residents in PFI managed homes struggling to make-ends-meet. Shared Ownership rents and other housing costs for low cost home ownership residents are also outside the scope of this consultation.
“Therefore, at this time an unfunded cap on social rents would be disastrous for the very organisations we are relying upon to get to grips with our housing crisis and protect our most vulnerable residents.
“I hope that government will take note of our submission and trust that our concerns will be taken into consideration.
“The government must do all they can to protect residents in these desperate times during the cost of living crisis. If government are unable to implement a universal freeze on social housing rents then they must look to mitigate the impacts on our most vulnerable residents.
“We are equally concerned of the pressures that these proposals will cause for local authorities and registered providers and their ability to meet the new burdens and work created as a consequence of new building regulations, a new fire safety order and a new regulatory environment including an expanded role for the Regulator of Social Housing and the need to invest in building safety.
“In Salford we are demanding that government fully funds these rent proposals and ensures that local authorities and registered providers receive the finance they would have received if rents has been increased by the customer price index plus one per cent.
“Local authorities and registered providers need vital support from government to compensate them for loss of income if they are going to meet these burdens and build new homes.
“Salford is the 18th most deprived local authority area in England with 22 per cent of children in the city in relative poverty. The city council’s budget has also been reduced by £232m since 2010/11 in cuts to central government grants and unfunded budget pressures – the city council has seen a 53% reduction in central government support since 2010/11. Further real terms budget cuts are planned for next year owing to significant financial uncertainty in local government financing, unfunded budget pressures, in addition to huge inflationary pressures (including energy price hikes and interest rate rises), which has left a £16m black hole in the city council’s revenue budget.
“In addition to our concerns around local government financing we are also deeply concerned by the government’s current considerations on welfare provision, which were only uprated in April by 3.1% – linked to the September 2021 inflation rate – despite inflation having soared to about 9.9%. This has resulted in the biggest fall in the real value of the basic rate of unemployment benefits in 50 years and a real terms cut for already vulnerable people struggling to make-ends-meet. Therefore, any decisions to impose a rent increase, whilst not equally uprating welfare provision (including raising the local housing allowance by inflation, given existing challenges we have with people reliant on welfare support not being able to access properties within the private rented sector) by at least inflation will only worsen the cost-of-living crisis for the very people and families we ought to be supporting and helping at this time, pushing them further into poverty and destitution.
“In these times the government must do much, much more to support the poor and most vulnerable in our society.”