Recommendation 13

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