Social housing tenants in Shropshire are set to see their rent hiked by seven per cent.

Shropshire Council’s cabinet is expected to agree the increase, which will come into effect in April, next week.

A report by James Walton, the council’s director of resources, recommends rents for both social housing and affordable housing are increased by seven per cent – the legal maximum rise for 2023/24.

Since 2020, social and affordable rents have been permitted to rise in line with inflation, capped at the previous September’s CPI (consumer price index), plus one per cent.

Using this formula, the council increased rents by 4.1 per cent last year.

However, Mr Walton’s report says the government has imposed new restrictions this year in response to the huge rise in inflation.

The report says: “CPI in September 2021 stood at 10.1 per cent which gives rise to a potential increase of 11.1 per cent from April 2023.

“In recognition of the significant adverse impact on tenants of an increase of this amount, the government undertook a consultation exercise in autumn 2022 on proposals to cap the increase permissible for 2023/24.

“The consultation identified three options for a cap of either three, five or seven per cent and sought the views from housing providers on the financial impact of this proposal.

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“On November 17, 2022 the government announced that following consideration of the responses to the consultation, the rent increase from April 2023 would be subject to a seven per cent cap.

“The rationale behind this was that a below inflation increase protected the most vulnerable tenants whilst recognising the financial pressures on housing providers to deliver service and address the need to provide new housing supply in the face of rising costs.”

The government cap does not apply to rent on shared ownership properties, but the report says: “In recognition of the high level of inflation in September and the resulting impact on residents it is recommended that the increase in shared ownership rent from April is aligned with the rent cap at seven per cent.”

The report goes on to say the council has a safeguard to ensure rent does not exceed the local housing allowance (LHA).

Mr Walton says this has previously not affected many properties, but with the proposed seven per cent increase – and the fact LHA has not risen since February 2020 – there will be 56 households protected by the measure in 2023/24. This will cost the council around £15,500.

The report adds that between 2016 and 2020, government policy saw social housing rents cut by one per cent each year.

Mr Walton says this means current rates are actually 15.2 per cent below original expectations, at a cost to the council of £2.5 million a year.