A ten-year rent inflation plan is one of the things being prepared by Chancellor Rachel Reeves in her first budget to help alleviate the pressure on social housing providers.
According to the reports, the government plans to set the 10-year formula for inflation to social rents at CPI+1%, noted analysts at Citi.
The US bank added that the 10-year settlement should provide clarity on future cash flows for housing associations and local councils and help them fix their balance sheets.
Many are currently struggling with funding challenges from high debt burdens and large maintenance backlogs, while listed firms in the social sector such as Triple Point and Civita have faced major hurdles.
Home Reit is winding down its portfolio after legal wranglings with its association clients; Civitas Social Housing PLC (LSE:CSH) recently accepted a knockdown takeover bid; and Triple Point Social Housing Reit PLC (LSE:SOHO) currently trades at a 45% discount to its last year-end NAV.
Citi added: “The measure expected in the upcoming Autumn budget (30-Oct) was largely anticipated by the housing sector and will help in some way to resolve the current deadlock in (affordable housing) take-up and drive fresh funding towards future affordable housing projects.”