Contrary to economic forecasts, the September CPI figure came in this morning at only 1.7%, much lower than where many thought it would be. This is the first time that inflation has dipped below the Bank of England target of 2% for over three years. Whilst this may be good news for the Labour Government, finance directors of housing associations (and LAs with housing) may tonight be reaching for a rather stiff drink.

This is because the current Rent Standard (2020) means social housing rents will only go up by 2.7% in April 2025 and effectively reduce the future financial capacity of housing associations to provide safe, warm and affordable homes for their residents.

The inflationary pressures on housing associations are running at far higher than 2.7% - responsive repairs, building safety costs, wage inflation and materials supply are all running ahead.  And many housing associations are braced for the 24/25 cost impact of Awaab's Law, increased CPD costs for the Competency and Conduct Standard and this week, a rumoured increase to employers' National Insurance costs.   

With Homes England having also delayed any further funding announcements for the Affordable Homes Programme until April 2025, many potential development schemes will end up being paused for up to two years. 

Plugging in a 2025 rent increase of 1.7% may make some proposed development schemes even more marginal. Maybe a number of development directors will be reaching for the same stiff drink tonight…

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