The Budget and Spending Review: what
do they mean for social housing?
Robert Joyce
© Institute for Fiscal Studies
The July Budget: social rents in England
• Social rents cut by 1% per year for 4 years. By 2019-20:
– 12% cut relative to previous plans (CPI + 1%), given new CPI forecasts
– We estimate that’s £2.3bn less annual income for social landlords (of
which £1.3bn is from housing associations)
• Presumably also increased uncertainty over level of future income
– U-turn on pledge for rises of (CPI + 1%) between 2015 and 2024
• ‘Pay to Stay’: from 2017-18, tenants with incomes over £30,000
(£40,000 in London) charged market or ‘near market’ rents
– Housing associations (but not councils) can keep extra revenue
– Important details of policy yet to be specified; but certainly won’t
compensate HAs’ for loss of rental income from 1% annual cuts
© Institute for Fiscal Studies
Capital grants to housing associations (£ million)
2,000
Social rented sector
Build-to-Rent
Shared ownership
1,800
1,600
July plan
1,400
November plan
1,200
1,000
800
600
400
200
Source: Table B.4, Appendix B of OBR’s Economic and Fiscal Outlook, November 2015
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2020-21
2019-20
2018-19
2017-18
2016-17
2020-21
2019-20
2018-19
2017-18
2016-17
0
New builds by housing associations (thousands)
Forecasts from Office for Budget Responsibility
45
40
35
30
25
20
15
10
Without July Budget or Spending Review measures
With July Budget
With July Budget and Spending Review
5
0
2015-16
2016-17
2017-18
2018-19
2019-20
Source: Chart B.1, Appendix B of OBR’s Economic and Fiscal Outlook, November 2015
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2020-21
Housing benefit cut for social tenants
•
•
LHA caps on HB in private sector extended to new social tenancies
–
Applies from April 2018, on tenancies signed from April 2016
–
Small in short run: cuts HB by £225m in 2020-21
But will get much bigger. If applied to all social tenants now:
–
HB would be cut by £1.1 bn (from base of around £25bn)
–
800,000 households would lose average of £1,300 per year
•
Long-run effects larger still if social rents grow faster than HB caps
(which are CPI-indexed)
•
How will this affect allocations, rent-setting and rent collection?
–
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Especially in areas where social rents are closer to market rents
Many challenges ahead for social housing providers
• Less income from social rented sector...
– Substantial cuts to both rents and capital grants ahead
• ...alongside much more support for shared ownership (S-O) tenure
– Increasing role for cross-subsidisation?
– S-O brings income forward: will it be re-invested / leveraged?
• Looks to be more uncertainty over future
– Social rent policy seems very unstable
– HAs must compete with private sector for shared ownership grants
– Increases in grant funding announced last week very back-loaded: will
they be delivered?
• Adjustments to other changes
– Implementation of Pay to Stay
– Significantly less generous housing benefit system
© Institute for Fiscal Studies
The Budget and Spending Review: what
do they mean for social housing?
Robert Joyce
© Institute for Fiscal Studies