Housing associations look to have won substantial concessions over plans to restructure rents and restrict rent increases
Housing Today understands that the government looks set to include RPI plus a half rent rises in its final rent reform package.

RPI plus a half will feature as part of a more flexible rents package than that originally outlined in the housing Green Paper.

On rent restructuring, it is believed that the option of 80/20 split between earnings and capital values hoped for by many housing associations has been ruled out. Restructuring is likely to be carried out around the 70/30 option favoured by councils, although it is believed a compromise of 75/25 has also been considered.

The Green Paper's 10-year timescale for rent convergence could also be relaxed, subject to regular reviews of the impact of convergence.

The confirmation follow news last month that the Department of the Environment, Transport and the Regions was modelling RPI plus a half (Housing Today, 12 October).

Lenders and associations have been critical of the proposal to limit rent increases to RPI plus zero. Research has also shown the viability of many associations could be threatened by rent restructuring.

Housing minister Nick Raynsford told Housing Today last month that the government was preparing to "adapt and amend" its rent proposals.

The Housing Corporation is likely to be given some leeway over where associations fix rents within the regime. Waivers could be issued when housing associations are in danger of default. However black and minority ethnic housing associations will be considered according to separate criteria.

A DETR spokeswoman said that the department was still considering responses to the Green Paper.

Jim Coulter, chief executive of the National Federation of Housing Associations said: "We have made some very real progress in our discussions with the government. We have continued to emphasise the fundamental principles highlighted in our consultation document response and worked on the details. That means we have looked at the separate issues of rent restructuring, the rent influencing envelope, which is very tricky in its impact and implementation, as well as how to keep the policy under review to have managed change."

Chartered Institute of Housing policy analyst Mark Lupton said: "No doubt, half a per cent is good news, but looking at rent convergence, it's important the corporation doesn't use waivers for what are issues of economic sustainability for associations.

"There will be some associations without the capacity to meet local authorities strategic needs. The government should be putting money into a special fund for these."

The consultation results will be announced this month.

Source

Housing Today