In a new briefing, the cross-party group said if the increase is agreed, it will take effect from April 2026.
London Councils are calling for a £3 weekly increase in social housing rents. The cross-party group said the proposed rise is linked to the government’s plans to reintroduce ‘rent coverage’, a policy aimed at ensuring tenants in similar properties pay similar rents.
While the policy is designed to promote fairness, London Councils has warned the rent level set in January will shape the future of social housing in the capital for the next decade.
Research commissioned by the group suggests that without a £3 increase, London boroughs would need to cut £269m from housing budgets over the next four years. The reductions would affect repairs, housing management and frontline services.
London Councils said a ‘sufficient rate of rent convergence is essential to delivering wider government ambitions’, arguing lower increases would fall short. A £1 rise would fail to cover planned cuts, while a £2 increase would only prevent further reductions without allowing for new investment.
The £3 proposal is forecast to generate £422m in additional income over four years. London Councils estimates this could support the construction of between 3,700 and 7,000 new social homes over the next 10 years.
The group also projects that the additional homes could save the Treasury at least £115m over the next decade by reducing spending on temporary accommodation.
Addressing concerns about affordability, the group notes that even with increases, average social rents in London – currently £130.22 per week – would remain below average private rents of £471.96.
Boroughs have also said they will continue to provide cost-of-living support for vulnerable tenants.
Cllr Grace Williams, London Councils’ executive member for housing and regeneration, said: ‘Boroughs want to boost investment in council housing, but instead we face stark budget pressures and real-terms cuts.
‘We hope 2026 will be the year we turn around the crisis in council housing finances, and rent convergence should be an integral part of that.’
London Councils is calling for a wider ‘London Formula Rent Reset’, arguing the national formula used to set maximum rent is based on 1999 property values.
‘If the government enables us to introduce a rent convergence rate of £3 per week from April, this will lay financial foundations of a much better future for London council housing,’ Cllr Williams, continued. ‘Boroughs are determined to work with ministers to deliver on our shared ambitions for housing.’
The full briefing can be read here.
Image: Jakub Żerdzicki/UnSplash
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