Ministers unveiled a £100 rent cap, rising by 1 per cent above inflationannually. It applies generally, but its effects are most concentrated on black and minority ethnic landlords in London.
But the National Housing Federation has questioned whether the government has the power to freeze RSL rents that already exceed £100.
BME landlords are alarmed because they would have to charge the same rent for all homes with four or more bedrooms, regardless of actual size.
Ian Weightman, chief executive of Spitalfields Housing Association, said the rent cap would discourage BMEs from building homes with five or more bedrooms.
Federation of Black Housing Organisations chair Anil Singh said there should also be a floor to prevent some rents falling to uneconomic levels.
Rob Mallet, interim chief executive of Midland Area Housing Association, said: “I have raised the issue of whether rent restructuring on units over four beds may be discriminatory in general”, and said it would hit construction of large homes.
Mark Lupton, policy analyst at the Chartered Institute of Housing, said: “It is no use making odd exceptions here and there [for BMEs]. The problem with a centralised formulae rent system is that concessions will always have to be made.”
In a letter to housing minister Lord Falconer, federation chair Richard McCarthy said that rent freezes would “emphatically undermine the ‘general direction not individual rent policing’ principles of approach we have agreed with the [housing] corporation”.
The government has not had the direct power to freeze rents since 1973, he added. McCarthy also suggested that rents exceeding the cap should continue rising at RPI plus 0.5 per cent until the cap “catches up”.
“Extending this to rents above the cap level would retain the general framework and direction without risking unnecessary disputes between the regulator and our membership over individual rents,” he explained.
He said the federation had “consistently” argued that stopping the differentiation between bedroom sizes at four undermines the coherence of the new arrangements.
An additional one-off capital contribution will be needed to help restructure debt, he concluded.
McCarthy also raised the prospect of RSLs re-bidding for corporation development funding if their financial projections no longer stack up, as their reserves cannot take the full strain.
A corporation spokeswoman said: “When an RSL is given an allocation we will recalculate to take account of the rent cap at grant confirmation.”
Source
Housing Today
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