CPI Inflation: Rising inflation continues to challenge the social housing sector

18 December 2024

John Guest, head of social housing at leading audit, tax and consulting firm RSM UK, said: “Although today’s increase in inflation won’t impact next year’s rent settlement, it will place additional pressure on the sector. Social housing providers will now face higher costs, including rising expenses for repairs and maintenance. This, coupled with increased employers’ National Insurance Contributions, will place additional strain on budgets and limit the ability to invest in new housing projects.

“The government’s latest quarterly survey shows that at the end of September, the majority of providers reported that their levels of arrears, rent collection and voids were all within, or outperforming, their business plan assumptions.  However, as day to day costs, including energy, for tenants rise, additional financial pressure could potentially lead to increased rent arrears and a higher demand for support services.

“In addition, hopes of an early cut in interest rates, which could benefit those providers with variable borrowings, or looking to refinance, have been dashed. Rising inflation means that the MPC is, once again, facing the dreaded trade-off between weak growth and higher inflation and is unlikely to cut rates at tomorrow’s meeting.  

“Providers once again face increased pressure on their operating margins and with the expectation to maintain decent, safe homes for their communities, whilst looking to invest, they face some difficult decisions in 2025.”

John Guest
Partner, Head of Social Housing
John Guest
Partner, Head of Social Housing