Ministers shown red light on private rented sector

Tuesday 22nd May 2012

A damning report from three housing organisations has accused the Government of failing to deal with the country’s burgeoning housing crisis.

The report has also sparked new arguments as to whether private rents are falling or going up.

The paper, by the National Housing Federation, Shelter and Chartered Institute of Housing, said that not enough new homes were being built, that overcrowding and homelessness are getting worse, and that private rents are becoming less affordable.

Using a traffic light system, the new Housing Report gives the Government a red light on the private rented sector, saying: “Rents in the private sector are rising and the Government’s attempt to rein in benefit expenditure by cutting Local Housing Allowance has so far failed to have a significant effect on rent levels. The combination of rising rents and falling benefit levels will make housing less affordable for low income households.”

The report gives the Government a worse overall score on housing than last October, despite the launch of its housing strategy in November.

It concludes: “Ministers will need to significantly up their game to achieve their objective of meeting the nation’s housing needs.”

But the Government insisted that private rents are falling, not rising.

A spokesperson for the Communities and Local Government department criticised the report and said it ‘conveniently ignores how our housing plans are taking centre stage in the economic recovery’.

The spokesperson said: “Far from rents rising, we have seen a real-term fall in private rents.”

The spokesperson added: “By the end of this parliament, we will have seen a bigger net increase in homes built than in the 13 years under the previous government.”

Alan Ward, chairman of the Residential Landlords Association, welcomed the report. He said: “Through the passage of the Welfare Reform Bill, ministers were adamant that cutting housing benefits would lead to a reduction in rents.

“The report proves that we were right to refute this.

“Already some London boroughs are seeking to house their tenants elsewhere in the country as a result of a shortage of affordable rental property.”

The latest LSL rental index says that rents have risen across the country. The new HomeLet rents index says they have risen sharply in London, but fallen only very fractionally elsewhere. See separate stories.