A council tenant rent hike of 2.7 per cent has been approved by Southwark Council.  

The council’s final Housing Revenue Account (HRA) budget was agreed by cabinet on Tuesday (January 21) and includes a rent hike for the first time in four years.   

The Welfare Reform and Work Act 2016 required local authority landlords to reduce rent by one per cent and cap it.  

This is the first year since that councils are allowed to increase rent, and Southwark has voted to raise it by the maximum of the Consumer Price Index (CPI) inflation rate plus one per cent – according to the council it has lost more than £60 million pounds because of the reduction and cap.  

Introducing the HRA budget report, Councillor Kieron Williams, cabinet member for housing management and modernisation, said: “The Government introduced an arbitrary reduction each year in rent of one per cent. 

“Obviously there are ups and downs to that; it was good for our tenants to have slightly less rent to pay but it’s made it very difficult to maintain our stock to the standard that we of course want to maintain it to. 

“Now we are able to go back to the rate that is inflation plus one per cent.” 

He said the council has “broad support” for the increase. 

“This allows us to put more money into the things that matter to residents; that’s district heating, repair services, and it also allows us to put more money into […] our great estates programme,” he added.  

Service charges will increase from £8.97 to £9.25 per week, while standard garage charges will go from £20.70 to £21.30.   

Private renters will now pay £35.50 per week, an increase of £1.  

Council tenants, resident leaseholders and freeholders, who get a £5 discount, will pay £16.30, an increase of 60p.  

It emerged at the meeting that the tenants council had suggested private renters should pay more.   

A council officer told the cabinet: “There was broad support for all the recommendations with the exception of garages, which was a particular issue for residents. 

“There was an alternative proposal put forward which said that the standard charge remain as it is and that we look at the rate for private sector renters, of which there are about 600.  

“The tenants council would like the private sector charge to go up to compensate for the £170,000 which the original proposal would generate a year.  

“If that’s the case we would be putting private sector garage charges up by £5.50 a week.” 

The suggested changes were not approved by cabinet but a review into charges will be undertaken. 

The council stands to take in more than £7 million from the increased charges, which will come into effect on April 6, 2020, nearly £5 million of which will be from the hike in rents.   

Homeowner service charges will bring in £1 million.