It may sound like the title of a James Bond movie never made, but in the world of social housing, certainty is just not enough. Victor Da Cunha, Group Chief Executive at Curo explains.
As the sector grapples with a myriad of new policies, rising costs, and the ever-evolving needs of tenants, the traditional rent model is creaking under the strain. I’ve argued previously for greater clarity on what social housing rents are for. Now, I say it’s time for a fundamental ‘reset’ – a ground-up review that will give social housing providers the funding they need to meet both their contractual obligations, and the increasing demands placed upon them. Anything short is destined to fail.
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For your homes only
The current five-year rent settlement proposed may offer a temporary reprieve, akin to scaffolding around a crumbling tower. But as I recently outlined in my response to the Consultation on Future Social Housing Rent Policy, it fails to address the underlying structural weaknesses. The ‘rent pound’ has been stretched to its limits, expected to fund an ever-expanding shopping list of priorities – from regeneration and new supply to decarbonisation and the professionalisation of the sector.
Quantum of policy
Yes, long-term rent certainty is crucial, and convergence should be factored into any short-term holding pattern. However, it’s not enough when there’s a relentless onslaught of new policies driving up costs and investment requirements. Since 2011, the government has not always upheld rent settlements, undermining stability and confidence. The G15 group of London’s largest RPs reported a loss of £6.6 billion resulting from the government’s 2016-2020 1% annual rent reduction and the 2023 7% rent cap.
Spectre
What we need is a ground-up review of what rents should fund. This should engage all stakeholders, including tenants, lenders, registered providers, and local authorities, in determining the core purpose of rents and the balance between capital grants and subsidies. The current model, inflated over time with no reference to the load it’s under, has become a spectre haunting the sector.
You only pay twice
If rents do not match real cost increases and the demands placed on providers, compromises will inevitably continue to be made. Stretching the rent pound kicks improvements that tenants most want down the road, secondary to important legal and regulatory demands.
Under the current regime, the average cost of maintaining a social housing unit has risen 11% in 2023/24 to a record-high of more than £5,000 per unit. However most of that spend has focused on safety issues and construction cost inflation, rather than new kitchens, bathrooms, and other practical things which most tenants would like us to focus on.
License to review
To strengthen certainty, it’s sensible to consider the role of the Regulator of Social Housing in setting and controlling rents. This idea would not be easy, but it would bring the sector in line with most other regulated sectors and would help depoliticise the process, better aligning rents and capital subsidy to the legal and regulatory expectations required of providers.
Goal-funding
Ultimately, any review must ensure there is alignment between the goal of keeping rents affordable and the need to continue to make major investments arising from evolving standards and policies, stimulate regeneration, and deliver additional supply. Increased capital subsidy for new affordable homes would clearly underline the separate role rents should have and help focus capacity on existing homes. If we could get net zero and fire safety capital funding pooled into the same capital regime and allocated based upon need rather than on a costly and pointless bidding cycle, that would simplify and amplify its impact.
The current rent model is no longer fit for purpose. It’s time to take a closer look, with the help of a dedicated task force representing key stakeholders. Only then will we and others, including our residents, truly know the scope of what rents should fund. This is not about offering ‘Dr. No’ criticism, but rather proposing a “From Victor With Love” approach to securing the future of social housing.
Shaken and stirred
The stakes are high, but the rewards are even higher. A well-funded, sustainable social housing sector can be the foundation for thriving communities, providing comfortable, affordable homes that are the inalienable right of everyone. It’s time to shake up the system, stirring up the changes needed to ensure social housing remains a sector that’s truly fit for purpose.
Further resources
To discuss any points raised in this blog please contact CT Director, Helen Routledge at helen.routledge@campbelltickell.com or +44(0) 20 8830 6777
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