Housing and the cost of living
This paper considers the impact of inflation on rent and mortgage payments and the Government response.
The Department for Levelling Up, Housing and Communities’ (DLUHC) English Housing Survey 2020/21 reported around a quarter of private and social renters as saying they found it either fairly or very difficult to afford their rent. Around 6% of owner-occupiers with mortgages said they found it fairly or very difficult to keep up with mortgage payments.
Research published by Ipsos in June 2022 recorded “a significant proportion of Britons” as “worried about their ability to pay their rent or mortgage”. 54% of renters were already worried about their ability to pay the rent.
Private sector rentsMost private tenants in the UK pay a market rent which is not subject to independent controls or assessment. Assistance with rent payments through the social security system is restricted. Local Housing Allowance rates have been frozen since April 2020. Rental prices paid by private tenants in the UK rose by 5.0% over the 12 months to May 2023 according to the Index of Private Housing Rental Prices published by the Office for National Statistics.
Social sector rentsSocial rents in England and Wales were set to increase by the Consumer Price Index (CPI) plus 1% for five years from 2020. In England, the Government consulted on the introduction of a rent ceiling in 2023/24 to protect tenants from the effect of high inflation. Social rents are capped in 2023/24 with a maximum increase of 7%.
The Scottish Government implemented a rent freeze and a ban on evictions which applied to both private and social housing sectors up to 31 March 2023. Measures approved in March 2023 mean in-tenancy private sector rent increases are capped at 3% to 30 September 2023 with the possibility of a further six-month extension. Social landlords agreed to impose below inflation rent increases in 2023/24. The eviction moratorium was also extended to 30 September 2023.
In Wales, social rent increases in 2023/24 are capped at 6.5%. There’s also a commitment to “no evictions due to financial hardship for the term of the rent settlement in 2023-24 where tenants engage with their landlords
Communities Minister Deirdre Hargey announced a rent freeze for Housing Executive rents in 2022/23. She called on housing associations to consider the financial pressures tenants are facing when considering their rent levels. Housing Executive rents are rising by 7% in 2023/24.