(Bloomberg) -- The UK government has confirmed plans to raise social housing rents by more than inflation and slash right-to-buy discounts for council tenants as part of its push to deliver 1.5 million new homes by 2030.
Labour said in a statement that it plans to allow annual rent increases of 1% above consumer price inflation and will seek views on extending the usual five-year settlement to a decade. The proposals will be put out to consultation.
It hopes a long-term arrangement will provide builders the certainty to invest in new homes for those on low incomes and lead to step change in the number of social and affordable homes delivered every year. Campaigners warn, however, that above-inflation rent rises risk impoverishing the poor and driving up the housing benefit bill.
Confirmation of the plans came just days before budget, when Chancellor Rachel Reeves will put house building at the center of the new government’s growth strategy. “We need to fix the housing crisis in this country. It’s created a generation locked out of the property market, torn apart communities and put the brakes on economic growth,” she said.
Discounts for people buying their council home, which can be as high as 70%, will also be reduced and local authorities will be able to keep all receipts from the sales, helping to fund a new generation of homes, the Treasury statement said.
The government has decided right to buy, which was launched by former Prime Minister Margaret Thatcher in the 1980s, is depleting the social housing stock while the sale discounts deter councils from building new homes. About 23,000 council homes with low rents are lost each year and only 11,000 are built.
The announcements came alongside an extra £500 million ($648 million) boost for the affordable housing program, taking the total to £5 billion, and £128 million for housing projects in Liverpool and energy efficient homes.
Kate Henderson, chief executive of the National Housing Federation, said: “We welcome a consultation on a new rent settlement. This will provide both transparency for residents and long term certainty and financial stability for social housing providers. We also support the government’s decision to review right to buy discounts.”
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