By Grainne Cuffe, BBC Local Government Correspondent
Council tenant rent is set to go up by 2.7 per cent in Southwark if proposals are approved next week.
The council’s final Housing Revenue Account (HRA) budget is going to cabinet on Tuesday (January 21) and includes a rent hike for the first time in four years.
The Welfare Reform and Work Act 2016 required local authority landlords to reduce rent by one per cent and cap it.
This is the first year since that councils are allowed to increase rent, and Southwark plans to raise it by the maximum of the Consumer Price Index (CPI) inflation rate plus one per cent – according to the council it has lost more than £60 millon pound because of the reduction and cap.
Introducing the HRA budget report, Councillor Kieron Williams, cabinet member for housing management and modernisation, and Councillor Victoria Mills, cabinet member for finance, performance and Brexit, said Southwark was “committed to ensuring the council’s 53,000 rented, leasehold and freehold homes are well maintained and managed”.
“This year sees an end to the four years of National Rent Reduction of one per cent a year which formed part of the Welfare Reform and Work Act 2016.
“We estimate that the cumulative impact has been a £62.5m reduction in the annual HRA budget, which has created a significant hole in our financial planning.
“Under this substantial pressure we have worked hard to protect frontline housing services for our tenants and residents whilst also ensuring long-term investment in making our housing warm, dry and safe continues at pace.
“However, with the ending of this cap the council is proposing a rent rise of inflation plus one per cent (in this case 2.7 per cent) to begin to mitigate the impact of the last four years.
“After the proposed rise, Southwark’s rents will remain eight per cent to nine per cent lower than the government’s assumed target and the eight lowest of the 29 London boroughs with retained housing stock,” they said.
Service charges will increase from £8.97 to £9.25 per week, while standard garage charges will go from £20.70 to £21.30.
The council stands to make more than £7 million from the increased charges, which will come into effect on April 6, 2020, nearly £5 million of which will be from the hike in rents.
Homeowner service charges will bring in £1 million.
Cllr Williams and Cllr Mills went on to criticise the Government for its recent decision to hike interest rates on council borrowing from the Public Works Loan Board.
“[The increase] will have a significant adverse impact on the council’s ability to make use of the lifting of the HRA borrowing cap which we were welcoming this time last year.
“There is a huge and pressing need for new housing to be built across the country and Southwark will of course continue to play its part with our ambitious council housing programme.
“However at a time when the Government is able to access borrowing at historically low rates we urge them to re-think this decision which will have real impact on our ability to build the number of new truly affordable council homes that are needed in our borough.”
Pictured: Perronet House in Elephant & Castle
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