Rent cap on social housing – is the PRS next?

The government has unveiled a consultation to impose a rent cap on social housing next year – at below the rate of inflation.

The move is aimed at helping tenants with the cost-of-living crisis.

However, with PRS rents rising quickly and tenants’ budgets coming under strain, many landlords will be asking if the private rental sector will follow suit.

‘Concerned about a cap being proposed for the PRS’

Mark Alexander, the founder of Property118.com, said: “This isn’t really a surprise but we all should be concerned should a similar rent cap be proposed for the PRS.

“Landlords won’t have access to taxpayers’ money like social landlords so many will struggle with a cap – while their own overheads increase and profits decline.

“This is something the entire sector needs to be vigilant about.”

The government’s proposals would see a cap on social housing rent increases being put in place for the coming financial year, with options at 3%, 5% and 7% being considered.

Prevent rents from rising significantly

The move would prevent rents for council and housing association houses from rising significantly, saving tenants an average £300 per year, and providing stability as inflation rises.

The government regulates how much social housing rents can increase each year.

Currently, this is set at up to the consumer price index (CPI) rate plus 1% – meaning potential increases next year of 11% in line with recent Bank of England forecasts.

The proposed new cap will help support the most vulnerable households in the face of cost-of-living pressures.

‘We must protect the most vulnerable households’

Greg Clark, the housing secretary, said: “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.”

He added: “We know many people are worried about the months ahead. We want to hear from landlords and social tenants on how we can make this work and support the people that need it most.”

The rent cap would be temporary and would apply from 1 April 2023 to 31 March 2024 and the consultation also seeks views on whether to set a limit for 2024-25.