Investment in social housing will be hit if the Government pushes forward with moves to cap rents well below the rate of inflation, the District Councils' Network (DCN) has warned.

Under Government proposals today, a cap of either 3%, 5% or 7% would be imposed for the coming financial year to help support households with the cost of living.

But DCN chairman Sam Chapman-Allen said: 'The capping of rents far below inflation at a time local housing authorities face both growing wage pressures and a dramatic increase in the costs of maintenance and new building work will have a dramatic effect on investment in the sector.

'The proposed caps would mean there is less income available than expected to invest in providing crucial housing services, improving the quality of existing housing and the construction of new affordable housing.

'The irony is that much of this investment is required for energy efficiency improvements, which would help protect social housing residents from fuel poverty in the years to come.'