As the government prepares its upcoming Budget, London’s boroughs are warning that this moment could be make-or-break for the future of council housing in the capital.
Fresh analysis from London Councils, the cross-party group representing boroughs, shows the scale of the problem. Unless something changes, boroughs will be forced to cut £269 million from council housing budgets over the next four years. That means less money for repairs, day-to-day management, and vital services for tenants.
At the heart of their campaign is a call to bring back rent convergence – a policy that ensures tenants in similar social homes pay similar rents. The government has already said it will reinstate the approach in the Autumn Budget, and boroughs want to make sure it’s implemented in a way that genuinely works for London.
They are pushing for two key measures:
- A faster rent convergence rate – at least £3 per week – to speed up progress towards fairer, more consistent rents for tenants.
- A London Formula Rent Reset, which would give boroughs extra flexibility to reflect the city’s unique challenges, like high property prices and costly maintenance, while keeping rents affordable.
London councils collectively own and manage around 390,000 social homes, providing secure housing for more than one in ten London households. But they say budgets are in “managed decline” – stuck covering the basics but unable to improve homes or invest in new council housing at the scale London needs.
Why rent convergence matters
The idea isn’t new. Rent convergence was first introduced in 2002, aiming to make rents fairer by linking them to local incomes and property values. But when the policy was scrapped in 2015, London boroughs were hit particularly hard. Their housing budgets have been squeezed ever since.
Reintroducing it now could make a real difference. Boroughs highlight three major benefits:
Fairness for tenants – Right now, two families living next door in nearly identical council flats can be charged completely different rents. Rent convergence would end these arbitrary discrepancies and make the system easier to explain and defend.
More money for homes – A £3-a-week convergence rate could bring in an extra £588 million over the next five years, and £1.78 billion over a decade. That money would go directly into fixing damp, cold, or overcrowded homes – and into building much-needed new council housing for the 183,000 Londoners currently in temporary accommodation.
Protecting affordability – Even with convergence, social rents would stay far below London’s sky-high private rents. Boroughs say they’ll keep supporting tenants at risk of falling into arrears, striking the right balance between affordability and generating enough income to keep housing decent and secure.
With too many Londoners trapped in poor-quality or overcrowded social housing, boroughs argue that rent convergence is the single biggest step government can take right now to unlock investment, improve homes, and build a fairer system for tenants.
Cllr Grace Williams, London Councils’ Executive Member for Housing & Regeneration, said:
“Boroughs are determined to build new council housing and to improve standards in existing homes. However, at a time when boroughs want to invest more, the squeeze on our housing resources mean we are instead in a state of managed decline, and we find ourselves forced to plan significant spending reductions.
“The Budget must be a decisive moment for turning this around and fixing the crisis in council housing finances. The government is taking important steps to restore stability to the social housing sector, and the reintroduction of rent convergence will potentially bring a major boost.
“London faces the most severe housing pressures in the country, with one in 50 Londoners living in temporary accommodation and in need of a permanent home. We are keen to work with ministers in ensuring that a renewed approach to rent convergence is fair for tenants, puts council housing budgets in a healthier position, and enables the investment in standards and new social homes we all want to see.”
Ian McDermott, Chair of the G15 and Chief Executive of Peabody, said:
“The return of rent convergence at £3 per week is essential if we are to stabilise social housing finances and tackle London’s housing crisis.
“Housing associations in the capital are facing the same pressures as councils; rising costs, squeezed budgets, and the need to invest in building safety, decarbonisation, and better homes and services for residents. As not-for-profit landlords, G15 members reinvest our income into homes, services and support, but with an average weekly rent of just £128 in the capital we are increasingly under pressure.
“Without an equitable and fairer rent system, our ability to invest in both quality and much-needed new supply will be significantly constrained. Convergence of £3 a week until rents reach the government’s target social rent level would enshrine affordability for residents whilst providing the foundation for a fairer, more sustainable and properly funded social housing system in the future.”