Key workers face nine per cent rent increase by Peabody housing association
Dozens of key workers have expressed concern following the announcement by Peabody housing association that rents will increase by 9 per cent.
Key workers fear they won’t be able to pay their rent and will be forced out of London after discovering their housing association is planning to increase their annual rent by up to 9 per cent.
Peabody, one of London’s oldest and largest housing associations, rents out homes to key workers at a discounted rate which according to its website are 20 per cent to 35 per cent cheaper than average market rents in the capital.
The housing association says the key worker scheme, a type of intermediate market rent, is for those who don’t qualify for social housing and aren’t in a position to buy a home.
Peabody told the Local Democracy Reporting Service (LDRS) that only some key workers on former crown estate homes would see their rent rise by 9 per cent, while others would see an average increase of 5.4 per cent and some will see no increase depending on whether their rent has already hit the maximum cap in line with London Living Rent.
The proposed increase of up to 9 per cent for those in former Crown Estate homes, many of which are occupied by key workers, and up to 9.4 per cent for other tenants on intermediate rents, will come into force from April 1, 2024.
It has left many key workers including teachers, paramedics, nurses and firefighters worried they won’t be able to make ends meet for themselves and their families.
Last week (February 8), an emergency meeting was hosted by Peabody resident Mary Pimm, chair of the Victoria Park Community Association, while Tower Hamlets councillor Sirajul Islam and Hackney councillor Clare Joseph were also present to hear concerns from residents.
During the packed-out meeting, Peabody tenants raised fears that they were being used as a ‘cash cow’ and that the homes were no longer affordable for key workers and their salaries. Ms Pimm accused Peabody of ‘social cleansing’ and fears the estates, based in Hackney, Tower Hamlets, Camden, Lewisham and Millbank, will soon be taken over by wealthier people.
She told the LDRS: ‘What’s really worrying is key workers are no longer going to be able to afford to live in places like this. If [Peabody] go on like this, it’s going to lead to a total churn of people on the estate with the poorer folks and certainly key workers and also pensioners having to move out.’
She added: ‘Wealthier people will come in and won’t probably stay terribly long because they just want a place to rent for a few years until they’ve saved enough money to buy their own house – it’s social cleansing.’
In 2011, Peabody bought the four estates, Victoria Park, Cumberland Market, Millbank and Lee Green from the Crown Estate for £140.8 million.
Ms Pimm, who is now a pensioner and has lived with her husband Nik in their flat in Hackney since 1976, said living under the Crown Estate was once ‘very good’.
She explained: ‘They were old fashioned but they were very, very good landlords, they kept the rents low and were genuinely affordable and their services were really good too – repairs and that sort of thing.’
Katherine Angus, a paramedic said: ‘When we successfully campaigned to stop the Crown Estate selling us off to a private bidder we thought Peabody might protect our communities. Unfortunately Peabody has betrayed us by driving up our rent. These 9 per cent rises really show their true colours.’
Ms Angus is worried that key workers will be driven out of London and will have to travel miles to get to work. Helena Miras, who works as a nurse, says key workers on the estates are already struggling to make ends meet and says the rent rises are way above pay rises for this year.
She said: ‘I do not understand how they think we can afford these rent rises. They have already increased our rent. Now they want nearly 10 per cent more.’
But Peabody insisted anyone whose rents have already risen won’t see the full rise if they have already hit the cap. Meanwhile local teacher, Jamie Duff argues the rents should be set to entry-level key worker pay brackets instead of average market rents.
Mr Duff said: ‘Areas like Hackney and Tower Hamlets have seen dramatic rises in house prices and private rents forcing up so called affordable rents. Why are key worker rents linked to the market not wages?’
He added: ‘There is a recruitment and retention crisis in teaching. Teachers simply cannot afford to live in places like Hackney any more. Primary schools in Hackney are closing because of falling rolls; this is largely to do with families moving out as rent becomes increasingly unaffordable. This key worker housing scheme is vital to ensure London retains its key workers.’
A spokesperson for SHAC (Social Housing Action Campaign) said: ‘Peabody tenants are absolutely right to fight these rises. It is a shocking increase in their housing costs and will drive many over a financial cliff edge. People cannot bare rent rises of around 9 per cent to 10 per cent each year. This is far higher than the mortgage rises, but are being levied on some of the poorest and most vulnerable tenants. They end up defaulting and face eviction.’
They added: ‘The cost to the taxpayer is enormous. It increases the call on extremely expensive temporary accommodation, and the Housing Benefit bill. We know from the despair amongst our members that it is also contributing to the mental health crisis with a knock-on effect on people’s jobs and health.
‘If the government invested properly in enough fully-funded council housing, it would ultimately cost the public sector less and it would certainly halt the terrible toll on people who are struggling to survive financially.’
A spokesperson for Peabody said: ‘We appreciate that no rent increase is ever welcome. For more than half of residents living on the former Crown Estates, rents will stay the same or increase by an average of 5.4 per cent. Like all housing associations, we’re having to balance rising costs with a need to continue maintaining existing homes, build more desperately needed homes where we can, and provide essential services.’
The spokesperson said Peabody has invested more than £23m in improving homes on all four Crown Estates since 2020. They added: ‘Although these homes aren’t for social rent, they are decent value for money in these Central London locations, at an average of £1,233 per month for a three-bed home.
‘People are paying significantly more for similarly sized homes in the same areas on the open housing market. No resident on a former Crown Estate will pay any more than our self-imposed cap of more than £1,400 per month.’
The spokesperson said Peabody invests ‘every penny in homes and services’ and in 2023 spent 66 pence on repairs and major improvements for every £1 spent on rent. The rest was used to deliver other services for residents, including providing more local teams and to pay for financing more social homes, they said.
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