Funding for housing services and building safety is likely to plunge into the red in the next two to three years, a new report has warned.

Housing consultancy Savills said rising prices, new regulation and four years of enforced rent cuts have stretched councils' housing revenue accounts to the limit.

It predicted that housing management budgets will be hit by 16.4% inflation this year and 9.4% in 2024-25.

The independent investigation into local government housing finance added that, at the same time, rent rises will be capped at 7% in 2023-24 and many landlords will try to keep rises even lower to help hard-pressed tenants.

Chloe Fletcher, of the National Federation of ALMOs [arms-length management organisations], said: ‘Councils simply don't have enough money to do all they are being asked to do on housing.'