How Your Rent is Worked Out
In April 2002 the Government introduced rent reforms for tenants of social landlords, which included local authorities and housing associations.
The Government's aims for the national social housing rent reforms are as follows:
- Rents should remain affordable in the long term
- Rents should be fairer and less confusing for tenants
- The link between rents and the qualities which tenants value in properties should be closer
- Unjustifiable differences between the rents set by local authorities and by registered social landlords (housing associations) should be removed
The factors that have been taken into account include:
- Property size, based on the number of bedrooms
- Relativity of local earnings to the national average so as to take account of affordability
- Relativity of individual property values to the national local authority average
- Setting target rents
These factors have been set out in a formula for local authorities and housing associations to calculate target rents at the individual property level. The elements of the formula are as follows:
- 70% of a property's rent should be based on relative local earnings
- A "bedroom weighting" factor is applied to the above so that, other things being equal, smaller properties have lower rents
- 30% of a property's rent should be based on relative property values, the property value is based on social housing use and that value is fixed at January 1999 valuation levels
- Phased implementation
These new rents are being introduced gradually so that each year the actual rent of each property moves from its current level (up or down) to its target rent by using the above formula. Originally the Government expected target rents to be fully implemented by 2012; this has now been extended to 2017 following adjustments to the process.
Protection for Tenants
The Government has introduced "rent limits" to prevent any excessively large increases falling on any tenants. The guidance imposes a cap to limit annual increases to inflation+0.5%, plus a maximum of £2 per week.
These are identified separately on your statement and cover the cost of any service you receive. These charges may include heating and a charge for communal facilities. You will receive a breakdown of these charges at the beginning of the year.
These changes may affect your entitlement to Housing Benefit. Not all benefit customers are affected but if it is likely that your benefit may change we will notify you in due course.
If you want more information about the rent setting process, or would like to discuss the information on this web page in more detail, please contact us on 01509 634 666.