Source · Select Committees · Public Accounts Committee
Recommendation 13
13
Not Addressed
We asked the Department about the potential impact of the proposed cap on social rents...
Conclusion
We asked the Department about the potential impact of the proposed cap on social rents that it is currently consulting on. The rent cap could prevent housing providers from increasing rents by CPI + 1%, as envisaged.35 Business LDN warn that the Government’s proposed rent cap will leave housing providers with a significant shortfall in their finances resulting in less building of new homes.36 The Department told us that it may introduce a 25 Q 59 26 C&AG’s Report, para 2.2, Figure 5 27 Q 79 28 Qq 47, 49–50, 52 29 C&AG’s Report Figure 5 30 Q 61 31 C&AG’s Report, Figure 5 32 Qq 47–48 33 Written evidence submitted by Shelter, dated September 2022 34 Qq 48, 52 35 C&AG’s Report, para 1.8 36 Written evidence submitted by Business LDN, dated September 20222 The Affordable Homes Programme since 2015 11 cap as tenants could otherwise face unaffordable increases. The Department accepts that lower forecast rent will have a knock-on impact on the Programme, potentially leading to housing providers building fewer homes for social rent. The Department told us it was considering how it could quantify the effect of the rent cap n its consultation response.37 37 Qq 65–68 12 The Affordable Homes Programme since 2015 2 Realising wider objectives Wider government savings
Government Response Summary
The government acknowledges the need for Social Rent homes and mentions existing policies, but disagrees with the recommendation to assess demand.
Government Response
Not Addressed
HM Government
Not Addressed
3. PAC conclusion: We are concerned that the number of homes being built for social rent is not enough to meet demand. 3. PAC recommendation: The Department should assess how much demand there is for social rent and set out how it will use the Programme to better meet this. 3.1 The government disagrees with the Committee’s recommendation to make an assessment of demand. However, the government will continue to maximise delivery of social rent through a mixed tenure programme. 3.2 The government acknowledges the need for Social Rent homes to support functioning communities, with the right homes in the right places. That was the reason for bringing social rent homes into the scope of the programme in 2018. As the NAO’s report notes, the 12 government already directs the delivery of homes for social rent to unaffordable areas1. The programme’s design incentivises the delivery of social rent homes in areas where they are needed the most through its value for money assessment of bids The government’s recent consultation on national planning policy invites views on how policy can be strengthened to enable local authorities to give greater importance in planning to social rent2. 3.3 The government recognises that there is a demand for homes for social rent across England. However, it is for LAs to assess affordable housing need in their area. In practice, housing developers and LAs often prefer housing developments to include a balance of ownership and rental tenures to promote a mixed tenure community. For this reason, the government believes that the Affordable Homes Programme must continue to support a range of different tenures. 3.4 The government will work with the delivery agencies to confirm the 2021 programme’s capacity to deliver homes for Social Rent as a part of the review cited above in response to recommendation 1. The government will confirm the programme’s ability to deliver an increased proportion of homes for social rent to Parliament at the same time as confirming the programme’s overall delivery targets.