Rent hike fears for Norwich council tenants
Norwich City Council is spearheading an attempt to get the government to think again over the way it deals with rents for council properties - because council tenants in the city are facing a hike of £20 a month on their rents.
Brenda Arthur, deputy leader of Norwich City Council, says that a “frightening” 7.5pc increase in rents for more than 17,000 council house tenants in the city would place an “unacceptable burden” on some of the most vulnerable people in the city.
The city council is trying to convince housing minister Grant Shapps to think again over the government’s plans for the housing revenue account – and the guideline rent of 7.58pc it says the city should be charging.
That works out at an average increase of £4.70 a week – on top of the average rent of £60 a week for council tenants.
Ms Arthur has won the support of Norwich’s MPs Chloe Smith and Simon Wright in her attempt to convince the government to come up with an alternative plan.
The housing revenue account subsidy system requires councils to pay rents to central government, which then redistributes the cash among councils according to those most in need. New government proposals will see councils keep all rent and sales receipts they collect in rents, but that has yet to come in and in the meantime the city council says the calculation used for this year means an extra £2.8m of rent from tenants will need to go into the government pot - on top of the usual £6m a year.
Ms Arthur said: “At a time of economic difficulty, when our residents are faced with uncertainty over job prospects and prolonged high levels of consumer price inflation, the size of this rent increase will present very real problems for many of our tenants.
“Norwich is the 58th most deprived area in the country and this deprivation is most concentrated among residents in social housing.
“A rent increase of this size will inevitably increase benefit dependency at a time when the national coalition government is committed to reducing it.”
She said the council had “looked carefully” at whether the council could use its own cash to reduce the hike, but said even a small reduction on the part of the council would have “dire consequences” on its housing revenue account - with a reduction to 5pc creating a shortfall of £150m over 30 years.
That, said Ms Arthur, would have a “disastrous effect” on the council’s ability to repay debt, to pay for repairs to homes or to build new council homes in the future.
She said the government stood to gain a £280m windfall through the rent increase and said it would make sense to cap the government’s receipt at £100m, which would enable the rent increase to be pegged back.
Norwich MPs Chloe Smith and Simon Wright have both written to Mr Shapps asking him to consider Ms Arthur’s suggestion - to spare such a major hike in Norwich.
A spokesman for the Department for Communities and Local Government said: “We welcome all comments submitted, including those by Brenda Arthur.
“All representations received as part of our determination of the Housing Revenue Account (HRA) Subsidy Determination, including local authority rent increase, for 2011-12, are being considered.
“We aim to issue a decision on the details of the final subsidy determination soon.”