Fears of north-south rent split

The scale of the likely disruption to rents in the social sector under government plans has been spelt out for the first time this week.

Councils and housing association rents in the north would be roughly half of those in the south if the government went ahead with plans to base rents on capital values, new figures show this week.

Research for the Chartered Institute of Housing has signalled the huge level of upheaval that would be caused if social rents were related to the size, location and condition of homes.

The institute's annual finance review, published later this week, will show that housing association homes in London are worth more than twice as much as the equivalent in the north east and north west.

The figures, based on the English House Condition Survey, show that council homes in London have almost double the value of council homes in the north. And in the south east both council and housing association homes are worth at least 70 per cent more than homes in the social homes in the north.

At the moment the differences in rent charged bear little relation to these values, in contrast to the rent structure of the private market. Social rents in south are at most around 30 per cent more than those in the north.

The new figures give an idea of the extent to which rents would be slashed in the north but hiked up in the south under proposals expected in the forthcoming housing Green Paper. The government hopes that the plan would make rent setting more transparent and help to tackle problems of low demand.

But housing experts are worried about the idea.

National Housing Federation policy officer John Bryant said: "These figures give some idea of what a rent system based on capital values might look like, but also suggest that the government should be very cautious about this approach because a system based on such huge regional disparity would cause serious dislocation for social landlords."

Institute director of policy John Perry said: "The government is going to have deal with the extremes - you could not have social rents related to capital values in Kensington and Chelsea in the same way that you could have in Leicester for example."

He pointed out that housing associations in the north would have to be compensated for loss of rental income or encouraged to merge with southern associations.

"The government has got to understand the time scale involved. You cannot make the transition (to rents based on capital values) in three or five years, its more likely to be a five to 10 year project. And you have to look carefully at the effects on RSL particularly," Perry added.