Exeter City Council faces losing £8m as Government rips up social rent agreement

Exeter City Council’s Housing Revenue Account stands to lose nearly £8m as a result of the cut in Council rents imposed in George Osborne’s recent budget.

Having agreed a rent formula with councils two years ago that was designed to allow them to plan their housing finances with some certainty for the next ten years, the Government has now scrapped this agreement and instead imposed four years of rent cuts.

This will wipe £7.9m from the budget the city council uses to provide services to its tenants and invest in their homes.

Cllr Rob Hannaford, Lead Councillor for the Housing Revenue Account said: “This is a decision that seems to have been taken by George Osborne with no thought or understanding of the consequences.

"This will force many councils and housing associations to slash the amounts they were intending to spend on investing in their assets and building new homes to ease the housing crisis.

"It will lead to fundamental changes in business plans and, almost inevitably, worse outcomes for tenants and potential tenants – because councils and housing associations will be faced with the loss of massive amounts of income that could have been used for reinvestment to improve existing stock and build new stock to meet housing demand.

"The city council will attempt to minimise the impacts as far as it can, but the reality is that we are not going to be able to invest in local housing at the level we wanted to for at least the next four or five years and the blame for that lies squarely with the Government.”

Exeter City Council is the landlord for nearly 5,000 homes and is the biggest landlord in the city.

The Council is exploring the possibility of a legal challenge to the government in partnership with other local authorities.