The financial strain on social housing across England could lead to government housebuilding targets not being met, according to a new LGA survey.
The survey found that 72 per cent of councils with a housing revenue account expect to draw on their reserves to balance the books in 2025/26.
Additionally, all responding councils expect to raise social housing rents within the allowable limits, while 67 per cent foresee cuts to real-terms spending on management, and 57 per cent expect reductions in repairs and maintenance.
The Government is currently consulting on a long-term rent settlement of inflation (CPI) plus 1 per cent over five years.
However, only 38 per cent of councils surveyed believe this would provide sufficient funding to support planned new housebuilding programmes.
The LGA is urging the Government to restore £600 million in lost revenue from the 2024/25 rent cap and introduce a 10-year rent settlement, allowing annual increases of up to 1 per cent above CPI, to ensure long-term financial stability.
Without immediate intervention, councils could struggle to maintain existing homes and invest in new developments, exacerbating the housing crisis.
Cllr Adam Hug, LGA Housing Spokesperson, warned that the situation is “untenable and unsustainable”.
He added: “Specifically, the impact of the proposed five-year ‘CPI plus 1 per cent’ rent settlement needs to be looked at.
“The upcoming Spending Review is the opportunity to help give the sector the certainty it needs to build more homes and better look after its residents.”