Chancellor Rachel Reeves plans to impose above-inflation rental increases in the next 10 years in a bid to encourage more housebuilding.
As reported in the FT, Reeves plans to introduce a 10-year formula in the Autumn Budget on 30 October that would increase rents by CPI inflation (currently 2.2%), plus an additional 1%.
The move is being encouraged by the debt burdens and maintenance backlogs affecting both housing associations and councils.
Previously there was a 5-year formula of CPI plus 1% in 2020, though rent rises were capped at 7% after inflation reached 11% in 2022.
If move goes through it will be controversial, as social tenants will have to fork out higher rents, while the cost of benefits would correspondingly rise.
Angela Rayner, housing secretary and deputy prime minister, has previously pledged to create “rent stability”, aided by the “biggest increase in affordable house building in a generation”.