A shortfall in new housing association properties could occur unless current tenants opt to forego a decrease in rent.
Rent rates are linked to inflation measured by September’s Retail Price Index. It is thought that the expected fall to 1.7 per cent for July could last for some time and drop rent rates by around 2 per cent. Even a small drop in rental income could see services squeezed and thousands fewer new homes being built, warned the National Housing Federation.
As the waiting list for council properties stretches to five million people, the impact of a 2 per cent reduction would cut the number of homes that could be built next year by 4,000, according to NHF campaign director Ruth Davison.
Ms Davison said: “This is bad economics and bad politics. We desperately need new homes. And as the public finances deteriorate we will need more private borrowing to ensure we can continue to build these new homes.”
“Taking capacity out is precisely the wrong thing to do. A fair deal would be to freeze rents, giving a real benefit to tenants but still allowing the capacity to build new homes and provide good services.”