Southwark Council's Housing Revenue Account (HRA) budget for the upcoming financial year will see rents increase by 4.8%, with service charges rising by an average of 7.45%. This decision, made by the council's Cabinet, comes as the HRA faces significant financial pressure due to historic rent caps and increased operational costs.
The rent increase is in line with the government's 10-year rent settlement formula, which allows for an annual increase of Consumer Prices Index (CPI) plus 1%. For the 2026-27 financial year, this equates to a 4.8% rise, based on the September 2025 CPI announcement of 3.8%.
Service charges, which cover essential services such as cleaning and grounds maintenance, will see a higher average increase of 7.45%. These adjustments are necessary to maintain the quality and provision of these vital services.
The HRA budget remains under significant financial pressure, exacerbated by factors such as unfunded regulatory burdens from recent Fire and Building Safety Acts, high inflation in the construction industry, and increased interest rates impacting debt financing for the housing capital programme. Despite these challenges, the council has presented a balanced budget for 2026-2027, largely due to savings identified through an organisation-wide transformation programme.
Councillor Stephanie Cryan, Cabinet Member for Equalities, Democracy and Finance, acknowledged the difficulty in balancing the budget, stating that this has not been easy.
She highlighted the rising costs of temporary accommodation as a significant pressure. However, she also noted that savings identified through the transformation programme have been instrumental in achieving a balanced budget without further departmental reductions.
