The Chancellor said that the decision to cap rent at 7%, was about protecting the most vulnerable as “difficult choices are not just meant to make accountants happy."
The ongoing cost of living crisis will undoubtedly continue to impact many social housing tenants and with the current rate of inflation, as set by the Consumer Price Index, the new 7% cap will mitigate some of the predicted rent hikes of up to 11% that would have otherwise come into effect.
According to the Chancellor, the new changes would affect four million social housing tenants and could save them £200 next year on average.
However, social housing landlords are also facing a financial squeeze.
Matt Cowen, Winckworth Sherwood, says: "Social housing landlords will need to consider how this cap on their main source of income impacts those plans whilst ensuring, as far as possible, that a reduced income does not lead to less and lower quality housing stock over the medium to long term. This requires careful consideration and, in some cases, will involve RP boards making difficult trade-offs.
“It should also be remembered that the rent cap announced today does not apply to shared ownership rents or private sector rents.”
