Summer Budget: Reactions from the housing sector

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Blake Morgan's head of Social Housing, John Russell comments on yesterday's Summer Budget implications to the social housing sector. 

Following George Osbourne's budget announcements yesterday, the social housing and public sector news website published reactions from legal, financial and operational experts in the housing sector.

Included in this summary were partner John Russell's thoughts on the 'pay to stay' proposals:

“Housing providers currently have no legal rights to monitor income for their tenants so it is unclear how this will be done. We also don’t know who will set the higher rent levels and whether it will take place annually or will be a continuous process.

“The proposal goes against the idea of communities and risks splitting up the people within them to potentially create social divide and cause ghettos. There is also a danger that the tenant paying a higher rent will have greater expectations for service levels.

“There is uncertainty around whether there will be a single threshold or several, and there could be a disincentive to take a pay rise or a better job if the increase is less than the increase in rent.”

On the proposed rent reduction: “This announcement raises a number of questions that will need to be addressed.

“We need greater clarity as to whether this reduction is in absolute terms or after inflation. This could have a significant effect if this causes a breach of banking covenants. We’ve not been told whether this will be across all forms of tenure, and what will happen if the target rent has not been reached.

“The proposal also seems to penalise housing providers whilst not affecting private sector landlords, for reasons that are unclear.”