Housing association rents to fall

Housing associations invest £272m a year on services

England's five million housing association tenants will get their first ever rent reduction next year, the government is expected to confirm.

Housing ministers will announce a fall in rents of just under 1% from next April as a consequence of deflation.

But the National Housing Federation warned the cut would cost millions in lost income and threaten services.

The government said it was aware of concerns, but added rent increases this year had been relatively high.

In a poll of 300 tenants, conducted for the federation, almost 70% of respondents said they would rather see rents frozen than reduced and services like creches and IT classes continued.

'Meet that challenge'

BBC local government correspondent John Andrew said housing association rents have never gone down before - not even during the two world wars or the Great Depression.

The fall has come about because rent changes are based on inflation as measured by the retail price index the previous September. Last year that figure was negative.

The federation, which represents housing associations in England, said even a small cut could affect many community services, like job training schemes, recycling projects or energy efficiency programmes.

Thousands of services could be at risk of cutbacks David Orr

Chief executive David Orr said: "The government wants housing associations to deliver more new homes and more community services during the recession - and our sector is ready to meet that challenge.

"But faced with a cut in their incomes next year, housing associations may be forced into cutting rather than expanding the services they offer - and thousands of services could be at risk of cutbacks."

Housing associations invest £272m a year on services and attract a further £163m from other sources.

The government has proposed cuts for 2010/11 of around 0.9%, based on inflation measured by the retail price index the previous September, which was negative.