Islington Council blames housing budget shortfall on government rent caps

Islington Council’s housing chief Cllr Una O’Halloran

Islington Council faces a deficit ‘in excess of’ £1.8bn in its housing revenue account (HRA) over the next three decades.

The Town Hall claims that government-imposed rental caps on social housing were behind the shortfall outlined in its 2024 Principal Risk Report, which revealed the HRA was under “significant pressure”.

The council’s business plan was pessimistic about Town Hall’s ability to close this ‘significant shortfall’ between investment and available resources, given that rent increases are the council’s largest source of income.

It added that the deficit scuppers the local authority’s aims to meet the Decent Homes Standard for all properties within the next decade.

The plan says the cost of retrofitting homes to improve energy-efficiency and meeting new safety requirements for tall buildings make it difficult to meet the “challenge of providing services on a tight budget”.

The Town Hall says it is working to improve the health of its HRA, assuring that it would push the government for a “more favourable” settlement on rent.

As for the wider scope of Islington’s finances, the council predicts a hole in its budget of £31m for 2025/26.

Speaking to the Citizen, Cllr Una O’Halloran, executive member for homes and neighbourhoods, said: “Good council homes transform lives and we will keep working to bring more and better housing to Islington.

“This summer, together with some of England’s biggest council landlords, we’ve published five solutions to secure the future of council housing as recommendations to the new Government.

“This includes a call for a new, fair and sustainable HRA model so we can properly maintain and improve council housing and build new council homes.

“We’ve also written to the Deputy Prime Minister requesting a meeting to discuss these issues.”