Rents for private registered providers (PRPs) from April 2020

Following their 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) and private registered providers (PRPs) 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 Ministry of Housing, Communities and Local Government (MHCLG);
• The Policy Statement on Rents published by MHCLG; and
• The Rent Standard published by RSH and currently available as Annex 2 of the Decision Statement.

This framework is intended to apply for the next five years.

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 PRPs may apply to its low-cost rental accommodation is 2.7% (CPI +1%).  PRPs should also be alert to any contractual restrictions within its tenancy agreements.

The Policy Statement sets out of the properties that fall outside that restriction.  The definitions should be carefully checked to ensure the intended exception applies: some very specific requirements mean they are narrower than you may expect.

What to do now?

PRPs should now be taking the following steps:

• Updating their Rent Policy to reflect the new Framework.
• Obtain Board approval 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 reintroduction of the 5% flexibility for general needs accommodation.  One of the new requirements under the Policy Statement and the Rent Standard is to set any rent flexibility following consultation with residents.
• Prepare rent review letters, including enclosures, to send to residents.  For those organisations who operate section 13 rent increases for some or all of their assured tenants (and this will be determined by the terms of tenancy agreements in operation), particular caution this year needs to be taken regarding completion of paragraph 3 of the Form 4 as newer tenants may not have received this form previously

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.  Getting rent increases right is important not only to maximise income but because where it goes wrong, this can have negative consequences both from governance and reputational perspectives.
• Training for your teams.
• Responding to technical queries and helping 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.