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Revealed: Housing associations urged ministers to let them increase rents

Representatives of housing associations including Clarion, Peabody, L&Q and Optivo met and wrote to ministers over the summer

Ruby Lott-Lavigna
23 November 2022, 12.01am
Rising rents? Peabody housing association flats in London

CAMimage / Alamy Stock Photo

Housing associations with hundreds of thousands of vulnerable tenants secretly lobbied the government to let them charge more rent – while paying their executives nearly £300,000 a year each.

Representatives of landlords including Clarion – which was rapped last week by levelling up secretary Michael Gove for failings on damp housing – warned against a rent freeze as the cost of living crisis spiralled this year, instead suggesting tenants on the lowest rents should be allowed to “catch up” with those paying more and urging a “discussion” before any decisions were made about a cap.

Correspondence between ministers and the housing association group G15 was revealed through a Freedom of Information request by openDemocracy.

Organisations representing housing association tenants condemned the letter, saying tenants’ voices are being shut out just while social landlords fail “to provide decent living standards”.

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Housing associations are under renewed pressure to sort out the chronic damp that plagues much of the country's social housing, following the death of two-year-old Awaab Ishak as a result of exposure to mould in his Rochdale home.

G15 represents London’s 13 largest housing associations, including Peabody, Clarion, L&Q and Optivo. Though the organisations themselves are classed as non-profits, data from Inside Housing for 2021/22 shows their CEOs earn an average of £286,000 a year each, meaning they take home millions between them.

Social rent increases are currently capped at 1% above the consumer price index. As inflation hit record levels this summer, many feared this would see social housing tenants facing rent hikes of more than 11%, without wages keeping up.

At the end of August, the government conceded there was “a strong case for making a temporary amendment to the CPI plus 1% policy”.

But G15’s letter, sent a month earlier by chief exec Geeta Nanda to then housing secretary Greg Clarke, reveals the landlords’ group had already met ministers and tried to dissuade them from capping social rent too low, saying “possible scenarios” resulting from suppressed rental income would include “taking longer to deliver building safety remediation works”, “reducing investment in improvement works to existing homes” and difficulty in building more affordable homes. The government’s eventual consultation proposed three options: raising rents by 3%, by 5%, or by 7%. Ministers ultimately decided to go with the option that would cost tenants most, a 7% increase.

The letter also reveals that a meeting took place over the summer between officials and G15 on the same subject.

Tenants’ groups say improvements to social housing should be funded by government grants, not by raising the rents of people already experiencing a cost of living squeeze.

Rent arrears were already rising before the pandemic… Very few families will be able to meet these costs without financial hardship

Suzanne Muna, Social Housing Action Campaign (SHAC)

“[The letter] shows that government and housing association executives are working together and the needs of tenants and residents don't even enter the discussion,” said Suzanne Muna from the Social Housing Action Campaign (SHAC). “Housing association rent arrears were already rising before the pandemic… Very few families will be able to meet these costs without financial hardship.”

While all members of G15 are officially not-for-profit, partnerships with for-profit groups are common. Last year, Optivo agreed a £106.5m partnership with for-profit provider Sage Housing, while this year, L&G signed an agreement with Lovell, a property developer. Hyde, a member of G15, launched a for-profit housing association, Halesworth Limited, in July.

Housing association execs take in annual salaries far above UK average salaries, even while many providers face accusations of poor quality housing and unsafe environments. This year, data from City Hall showed that one in seven social properties failed to meet the government’s ‘decent homes standard’.

Evidence seen by openDemocracy shows tenants of G15 members living in poor conditions, struggling to access improvement works.

Nanda, the author of the G15 letter to Clarke, told openDemocracy: “G15 members are deeply concerned by the impact cost of living pressures are having on the people we provide homes to. That’s why, alongside increasing the financial support and specialist advice we offer residents, we have called for further targeted government support for people and for social security payments to be increased in line with inflation.”

But Muna said: “Every 1% increase in social rents costs the taxpayer an estimated extra £1bn through the benefits system to cover housing benefit payments. Instead of raising the social rent cap by the anticipated 5% to 7%, it should be frozen and the money saved redirected towards addressing some of the housing crisis.”

Asked about exec pay, a G15 spokesperson added: “Housing association chief executives’ pay is set by independent committees of each organisation’s board. Pay across the sector is considerably less than comparable private sector companies, and also than heads of many charities.”

The Department of Levelling Up, Housing and Communities would not give details on the meeting that took place between G15 and “officials”, referred to only briefly in the letter.

A spokesperson said: “We know families are worried about the months ahead, which is why we recently consulted on whether to set a lower cap on social housing rent increases next year.”

“The consultation closed on 12 October and we are carefully considering the responses. We will provide an update in due course.”

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