Government publishes proposed council housing subsidy allocations

The government today published its proposed council housing subsidy allocations for individual housing authorities for 2006-07. As far as possible the same formulae will apply for 2007-08.

Authorities have until 10am on December 12 2005 to comment on the draft determinations and until December 2 2005 to comment on the data.

The proposal will, on average, increase the resources available to housing authorities for management and maintenance costs by 2.7%. Management and maintenance allowances have seen sustained increases in recent years, with today’s announcement following increases of 17% over the last two years.

The government will be implementing the recommendations of the three-year review of rent restructuring alongside limits on rent increases for the next two years.

The rent restructuring regime has been in place since April 1 2002 and is designed to ensure that social rents are calculated on a fair and consistent basis across the country. It includes convergence between housing associations and council rents in each area, so that rents will be based on the property and location, rather than on historic financing arrangements.

In response to the three-year review of the programme the government is introducing bigger differentials for larger properties as recommended by the review. This will both be fairer and allow more larger properties to be built for a given amount of government subsidy.

It is also introducing adjustments to the rents formulae to bring council and housing association rents fully into line. This is in line with the original objective of rent restructuring that tenants should pay the same rents for similar properties in similar locations irrespective of who their landlords are.

As recommended by the review, the government is removing the floor on rent reductions for properties where rents need to fall. The current downward limit on individual rents is being removed and the current annual upward limit on individual rents is being retained, so tenants continue to be protected.

In response to concerns raised during the consultation about the pace of change in some high cost areas, the government is adjusting the housing revenue account o limit average rent increases to less than 5% for councils for each of the next two years. It will also be looking further at the interaction between social rents, housing benefit and work incentives in high cost areas. These measures will apply from April 2006.

Housing minister Yvette Cooper says: “These management and maintenance allowances are in addition to the decent homes programme to support improvements to social housing. These amendments to the rent restructuring programme aim to produce fairer rents for different properties. Nationally, rents in the social rented sector will remain at about a half of private sector rents, over the next two years.”