Council tenants will pay big price for small rent cut

The Government’s decision to force all local authorities to cut social housing rents for the next four years, will heap more misery on Kingston’s 5,000 council tenants and see the borough falling even further behind its target of building 2,000 new affordable homes in the next 10 years.

Those are just two of the predictions from former Kingston housing committee chairman, Paul Johnston, who    says the Government’s latest decision to require rent reductions of one per cent per year until 2019, will create a ‘black hole’ of nearly £10 million in the Council’s housing spending plans, hitting everything from routine repairs and maintenance to the growing housing waiting list.

He said: “Successive small cuts in the rent for the next four years might initially sound attractive to tenants, but only because they don’t understand the impact this will have on the services they receive. These cuts will reduce the Council’s housing rent income by almost £1 million next year and, because they are cumulative, it means the loss of income will increase year on year.

“In less than four years’ time, the housing revenue account will have a whopping £9.5 million shortfall in its annual expenditure – and that’s going to impact on nearly all services, including urgent housing repairs, property maintenance, homelessness and quite possibly, the Better Homes improvement programme which should soon be entering its last and biggest year.”

Paul, who is now Chair of Kingston Federation of Residents, which plans to oppose the cumulative rent cuts and seek an exemption for Kingston Council, said he was deeply worried that if the intended cuts could not be stopped or moderated, they would strike another large nail into the coffin of social housing from which it would take years to recover.

He added: “We need to spell out to the Government and the borough’s two M.P.s why these measures are grossly unfair on cash-strapped local authorities like Kingston and its tenants. We will ask the Government to accept that councils which have had no opportunity to build up cash reserves and can only meet budget shortfalls by cutting services, should be exempted from these measures. A 1% rent cut may not affect wealthy housing associations or larger councils that have amassed huge cash reserves, but it could be very damaging to Kingston Council and its tenants.

 “Residents need to know that the savings these cuts produce for the Government’s overall welfare budget will be used to reduce its overall welfare bill and fund its decision to give housing association tenants the right-to-buy at huge discounts, which hardly supports its claims to be supporting social housing.”

He urged all Kingston council tenants to lobby their local M.P., calling on Government ministers to recognise the damage that the rent reduction legislation will cause to Kingston Council’s recent social housing improvements, and to its tenants who are still recovering from a 20-year freeze on nearly all council spending on housing.

Paul said: “The impact of the rent cuts on Kingston’s housing income coupled with Government plans to force councils to end lifetime tenancies and sell off up to 40% of high value council homes as they become vacant, is likely to cause significant difficulties for many of our tenants, and make it even harder for the Council to provide good quality housing services.”

“It is a pity the Government seems to be re-introducing the disadvantages to council housing that had been such an unjust feature of its former longstanding negative housing subsidy scheme, from which Kingston bought its freedom only four years ago at a high cost of £116 million.

He added: “This was done on the assumption that the Council would, from that point on, suffer no further interference to its own housing revenue account from Government, and instead be able to gradually grow its rent income to service the extra debt it took on, and have the funds to carry out long overdue repairs and further improvements to the stock. What seemed like a brighter future dawning for our council tenants is now being put in serious jeopardy by this ill-considered ‘rent cut’ policy foreshadowed in the Budget.”

The Federation Chair’s comments have been echoed by the national Tenant Participation Advisory Service (TPAS) which, in its submission submitted to the Government said: “Many tenants fear a cut in social rents could lead to a cut back on maintenance budgets. Tenants’ concerns about the negative impact of rent reductions on the services they receive, far outweigh happiness about any personal financial gain.”

It added: “Using the Right to Buy to extend access to homeownership (in the housing association sector) must not simultaneously reduce access to social rented housing. There is very little confidence that homes sold through Right to Buy will be replaced, and there is a fairly widespread belief that an intended objective of the Right to Buy policy is to permanently reduce the amount of social housing available. We would like (Government) confirmation of whether this is the case.”