Rent reductions - CLTs excluded from 1% rent cut
The Government, in their Budget on 8th July 2015, announced that affordable and social housing rents would be reduced by 1% each year for 4 years from April 2016. This is enshrined in the Welfare Reform and Work Act.
The rent cut would have affected CLTs that are Registered Providers (RPs) themselves and, potentially, CLTs that are currently working with, housing association partners.
There are eight CLTs that are RPs. All these RPs have very small numbers of homes, tight business plans, very prudent running costs (some of which are delivered by volunteers at zero cost) and no other stock to help absorb the loss of income. The proposal would have meant that these CLTs would have faced a very uncertain and, in some cases, disastrous future. For half of the 8 CLTs that are RPs, the rent reductions proposal would have led to severe financial difficulties and, in two cases, insolvency within three years.
We urged Government to make an exception to the rent cut policy and on the 21st December Lord Best tabled an amendment to the Welfare Reform and Work Bill to exempt CLTs from the rent reduction proposal. On 27th January 2016 we received the excellent news that CLTs are to be excluded from the rent cut for one year. A letter confirming this can be downloaded from the bottom of the page.
However, whilst the one-year exemption alleviated the problem in the short-term, many of the same issues identified above for CLTs would have resurfaced should a rent reduction be applied from April 2017. We have therefore been working closely with officials in the Department of Communities and Local Government to make the case for extend the one-year exception for CLTs to a full exemption.
On Thursday 15th September 2016, in a written statement, the Secretary of State for Work and Pensions confirmed that the exception will be extended for the remaining three years, completely exempting the sector from the 1% rent cut.
The Government has also put back the housing benefit cap for Community Land Trusts until at least 2019/20. It had been planning to cap the amount of benefits payable to social tenants in Community Land Trusts at the level of the Local Housing Allowance. This can make it difficult for some people to afford their rent, such as single people under 35 without children who would only have been entitled to the relatively low 'shared accommodation' rate.
For a briefing on this, please contact Catherine Harrington, Director, on email@example.com.
Please note - we will keep this section updated as much as possible. If you have any questions on the policy environment and our lobbying activities in the meantime, please do not hesitate to contact Catherine Harrington, Director of the National CLT Network, on firstname.lastname@example.org or 020 3764 1842.