The use of large up-front fees and disproportionate deposits has already resulted in significant cost consequences for one care provider.
However, the provisions surrounding social housing rents are in force and further regulations have been drafted in the Social Housing Rents (Exceptions and Miscellaneous Provisions) Regulations 2016 (the “Regulations”). These regulations provide confirmation surrounding the rent reductions, specific exemptions for 1 year from the rent cuts and exemptions from the rent reductions entirely. For the full Regulations see this link.
These Regulations contain the exclusions to the rent decrease (Regulation 3), most of which were expected following the announcement by the NHF in early January 2016.
The below instances are where the rent reductions will not apply at all:
- Accommodation where total household income meets the income qualification criterion or where the household income met qualification criterion in the previous relevant year. This is the ‘pay to stay’ discretionary policy, a Registered Provider's right to obtain information from HMRC is contained in the Housing and Planning Bill.
- Intermediate rent accommodation; accommodation let below market rent that was not let as social housing or affordable rent tenancies, or accommodation that was funded wholly or partly by schemes as listed by legislation. In our view this is a significant clarification – do note the detailed definition in the legislation.
- Specialised supported housing; this has a definition of its own that must be met and is exempt from the Rent Standard (see below with regards to supported housing).
- Private Finance Initiative social housing; the exemption will apply where the housing is developed specifically under the PFI initiative.
- Temporary social housing
- Student accommodation
- Accommodation where the rent registered under the Rent Act 1977 is lower than the social rent rate and instances where the Rent Act 1977 criterion is met if not lower than social rent rate.
- Care homes
- Relevant Housing Act 1996 accommodation; referring to stock under the 1996 Act that is not 'low cost rental accommodation'.
- Accommodation where the rent payable by the tenant was temporarily reduced or waived for any period during the previous relevant year.
These above accommodation types above will not require any rent reductions at all.
It has been confirmed in the Regulations that during the first year the rent cut will not apply to:
- supported housing which is not specialised supported housing;
- almshouse accommodation;
- accommodation provided by a co-operative housing association or a fully mutual housing association;
- accommodation provided by a community land trust.
The rent decrease will begin to apply for the above accommodation types from the first review date in 2017 (or from 1 April 2017).
For more information
If you have any queries about whether your current stock would fall into any of these categories then please contact Zishaan Saleem.
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