Portsmouth council to decide on 2.7 per cent rent increase

The increase is the most allowed under the government’s rules for setting social housing rents and is based on the Consumer Price Index (CPI) from September 2024.

A Portsmouth City Council report explained that all income and spending for council housing must be managed separately in the Housing Revenue Account (HRA). Since 2020, councils have been able to decide rent increases, following government guidelines. These rules allow rents to go up by CPI plus 1 per cent each year.

In 2024, the government extended this policy for another year, meaning rents can increase by up to 2.7 per cent in 2025/26 because the CPI was 1.7 per cent.

However, the council says a 2.7 per cent rise won’t be enough to cover costs. “The latest modelling indicates that a 5 per cent rent increase would be needed to ‘break even’,” the report states.

If rents were increased by less than 2.7 per cent, the council would lose significant income.

“For every 1 per cent reduction in the rent increase, the HRA would lose approximately £870,000 in income in 2025/26 and over £40m in the 30-year business plan.”

The council says it is facing higher costs due to rising interest rates, increased National Insurance payments, inflation in building costs, and staff pay rises.

“It will be important to make sure the HRA has enough funding to continue providing services for our most vulnerable tenants,” the report adds.

There are also plans to adjust other housing-related costs. For example, electric charges at Edgbaston and Tipton would drop by 5.4 per cent, Dickens block heating would be reduced by 2.9 per cent, and gas charges at sheltered housing would fall by 2.8 per cent.

Parking and garage permit costs would rise by 1.7 per cent in line with CPI.

The decision to raise rents will be determined in a cabinet meeting on January 22.