Rents for local authorities from April 2020

Following a consultation earlier this year, the Regulator of Social Housing (RSH) has now published the final form of the new Rent Standard.

Together with the recent publication of the September Consumer Price Index (CPI) figure, the final pieces of the jigsaw are now in place for registered providers (RPs) to start their rent review process.

The new framework

The new Rent Standard forms part of the new framework for RPs from April 2020 once they have completed the four years of the rent decreases required under the Welfare Reform and Work Act 2016. 

The framework is made up of:

• The Direction to the Regulator published by MHCLG;
• The Policy Statement on Rents published by MHCLG; and
• The Rent Standard published by RSH and currently available here as Annex 2 of the Decision Statement.

This framework will apply for the next five years. This is the first time local authorities have had to comply with the Rent Standard - failure to do so could have regulatory consequences for landlords.

As expected, the final form of Rent Standard has not changed substantially from the form that was consulted on.

CPI

The annual change in CPI for September 2019 was 1.7%. So the maximum increase RPs may apply to its low-cost rental accommodation is 2.7% (CPI +1%). Local authorities must also ensure rents do not exceed the registered rent for particular properties.

The Policy Statement sets out the properties that fall outside the CPI + 1% restriction. The definitions should be carefully checked to ensure the intended exception applies.

What to do now?

Local authority landlords should now take the following steps:

• Updating their Rent Policy to reflect the new framework.
• Obtain relevant elected member or delegated approvals for:
  • The level of increase (if any) that will be applied to next year’s rent reviews, subject to the maximum 2.7% where relevant.
  • Any use of rent flexibility levels (tolerances) permitted under the new framework - the 5% flexibility for general needs accommodation is re-introduced.
• Prepare rent review letters to send to residents.

How can we help

We can help you implement the new framework in the following ways:

• Reviewing rent policies.
• Reviewing rent review letters and enclosures to ensure they comply with legislative, regulatory and contractual requirements.
• Training for your teams.
• Responding to technical queries and help you deal with any challenges.

For more information

If you would like further details about any of the services we offer in connection with rent reviews or a link to our recent webinar on this topic, please contact Emma Hardman.