Closed consultation

Future social housing rent policy

Published 30 October 2024

Applies to England

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Scope of the consultation

Topic of this consultation

This consultation seeks views on a new Direction from the Secretary of State to the Regulator of Social Housing in relation to social housing rent policy. It focuses on the introduction of a new rent policy from 1 April 2026.

Scope of this consultation

The Direction would require the Regulator to set a standard on rents that will apply to Registered Providers of social housing. This encompasses:

  • Private Registered Providers (including housing associations that are Private Registered Providers)
  • Local authority Registered Providers (i.e. local authorities with retained housing stock)

Section 197 of the Housing and Regeneration Act 2008 gives the Secretary of State the power to direct the Regulator of Social Housing to set a standard on rent, and about the content of that standard. Once issued, a Direction is binding on the Regulator.

We propose to use this power to issue a new Direction to the Regulator on rent, and to revoke directions on rents that were issued by the previous government in 2019 and 2023. The proposed Direction and an accompanying policy statement have been published alongside this consultation.

Geographical scope

The proposals will apply to rents charged by providers registered with the Regulator of Social Housing. They will therefore mainly affect tenants of social housing in England.

Impact assessment

We have assessed the impact of this policy and estimate it to be below the threshold of requiring a full impact assessment.

Basic information

Body/bodies responsible for the consultation

The Ministry of Housing, Communities and Local Government

Duration

This consultation will begin on Wednesday 30 October and close at 11.45pm on Monday 23 December.

Enquiries

For any enquiries about the consultation please contact:

[email protected]

How to respond

Please note that we are required by law to publish every response to this consultation.

Therefore please ensure that your response does not include any material that you are not content for us to publish.

You may respond by completing an online survey on Citizen Space.

Alternatively, you can email your response to the questions in this consultation to:

[email protected]

If you are responding in writing, please make it clear which questions you are responding to.

Written responses should be sent to:

Social Housing Rents
Affordable Housing Regulation and Investment Division
Ministry of Housing, Communities and Local Government
Fry Building
2 Marsham Street
London
SW1P 4DF

Please submit your response through only one of the above routes.

When you reply it would be very useful if you could confirm whether you are replying as an individual or submitting an official response on behalf of an organisation and include:

  • your name
  • your position (if applicable)
  • the name of organisation (if applicable)

1. Introduction

1. The government has committed to the biggest increase in social and affordable housebuilding in a generation. We are also committed to ensuring that people renting homes in both the social and private rented sectors can live in safe and decent housing. It is therefore vital that our rent policy for social housing gives Registered Providers the stability they need to borrow and invest in new and existing homes, while also ensuring that there are appropriate protections for existing and future social housing tenants. These aims underpin the rent policy we are proposing in this consultation.

2. We are proposing to set a rent policy for social housing that would:

  • Remain in place for at least 5 years, from 1 April 2026 to 31 March 2031. It is the government’s intention to set a further 5 year settlement for the period beyond this. However, we are also seeking views on possible variations to this approach that could potentially improve the stability of rent policy – such as confirming our policy for a longer period (e.g. 10 years) or on a rolling basis; and
  • Generally[footnote 1] permit social housing rents to increase each year by up to CPI plus 1 percentage point (‘CPI+1%’), applying both to Social Rent and Affordable Rent.

3. Subject to the outcome of this consultation, we intend to implement our proposed rent policy by issuing a new Direction on rents to the Regulator of Social Housing. A draft of the Direction is attached at Annex A. Our proposed Direction would require the Regulator, when setting its Rent Standard, to have regard to a policy statement on rents for social housing from 1 April 2026 (‘the Policy Statement’). A draft of the Policy Statement is attached at Annex B.

4. Subject to the outcome of this consultation, we intend to issue the new Direction to the Regulator alongside the new Policy Statement in 2025. This will allow the Regulator to consult on a new Rent Standard ahead of bringing it into effect from 1 April 2026.

5. We invite your views on the questions listed, the draft Direction and the draft Policy Statement by 11.45pm on Monday 23 December.

2. Background

Regulation of social housing

6. The statutory framework for social housing regulation is set out in the Housing and Regeneration Act 2008. In brief:

  • The Regulator is responsible for regulating Registered Providers and the social housing provided by them.
  • The term Registered Providers encompasses:
    • local authorities that are registered providers; and
    • other bodies, such as housing associations, that have registered with the Regulator (known as ‘Private Registered Providers’).
  • ‘Social housing’ comprises low-cost rental accommodation (e.g. homes let at Social Rent or Affordable Rent) and low cost home ownership accommodation (e.g. shared ownership homes). This is the definition of ‘social housing’ used throughout this consultation.
  • The proposed Direction would apply to low-cost rental accommodation, but not to shared ownership homes.

7. The Regulator has the power to set regulatory standards on a range of matters, including rents. Registered Providers are required to comply with these standards. In relation to certain matters (including rents), the Secretary of State has the power to direct the Regulator to set standards and about the content of those standards. The Secretary of State can also direct the Regulator to have regard to specified objectives when setting standards.

Social housing rent and welfare policy

8. Most rented social housing properties are let at ‘Social Rent’. Social Rents are set using a formula specified by government. This creates a ‘formula rent’ for each property, which is calculated in a way that takes account of the relative value of the property, the size of the property and relative local income levels. Landlords have flexibility to set initial rents up to 5% above the formula rent (10% in the case of supported housing) – this is known as the ‘rent flexibility level’. Formula rent is also subject to rent caps, which vary according to the size of the property[footnote 2].

9. In 2011, ‘Affordable Rent’ was introduced. This permits rents to be set at up to 80% of market rent (inclusive of service charges). Landlords can only let homes at Affordable Rent where certain conditions apply.

10. Government rent policy also applies to annual changes in Social Rent and Affordable Rent levels. Since April 2020, Registered Providers have been permitted to increase rents by up to CPI+1% per annum (with the CPI rate taken at the previous September), other than where the rent on a Social Rent property exceeds the rent flexibility level (where the maximum annual increase is CPI). This policy was temporarily suspended in 2023-24 and replaced by a 7% limit on annual rent increases in that year (with the exception of supported housing). This did not affect formula rent or the rent caps, which have increased by CPI+1% and CPI+1.5% respectively each year since 2020.

11. Since April 2015, Registered Providers have been permitted to charge a full market rent where a household has an annual income of at least £60,000.

12. Housing Benefit and the housing element of Universal Credit (‘HB/UCHE’) helps those on low incomes to pay their rent. For social housing tenants, the maximum amount of HB/UCHE is based on actual rents, as opposed to the private rented sector where the maximum is set by the Local Housing Allowance. The maximum amount of HB/UCHE is then subject to deductions, in particular for the Removal of the Spare Room Subsidy[footnote 3] (RSRS) and the benefit cap[footnote 4] . For those subject to the RSRS or the benefit cap, further support is available through Discretionary Housing Payments, which are delivered via local authorities.

3. Our proposed rent policy for social housing from 2026

Context

13. The government’s proposals have been developed with the aims of improving the supply and quality of rented social housing, and ensuring that these homes are affordable to those who need them.

14. The government has committed to the biggest increase in social and affordable housebuilding in a generation. This is essential if we are to tackle what is the most acute housing crisis in living memory. The lack of social and affordable housing has contributed to record levels of homelessness, with over 150,000 children living in Temporary Accommodation. It has resulted in too many households on low incomes in private rented housing that does not meet their needs and paying rents that they cannot afford. Private renters in the lowest income quintile now spend over half of their income on rent. Increasing overall housing supply will help to improve the affordability of housing, and our commitment to deliver 1.5 million homes this Parliament is an important part of our mission to kickstart economic growth. However, we cannot achieve this volume of housebuilding – nor deliver the types of homes the country needs – without a significant increase in social and affordable housing.

15. The government is also determined to ensure that every social and private rented housing tenant can live in a home that is safe, decent and warm. Too often, this has not been the case. In the 18 years since the Decent Homes Standard was last updated, we have learned much more about the problems in our housing stock – including the prevalence and dangers of damp and mould. We have also expanded our ambitions to decarbonise and improve the energy efficiency of our homes, aims which are of increasing importance given the challenges posed by energy security and cost of living issues. We also recognise the need to provide clarity on regulatory requirements to support registered providers with financial planning and give residents certainty about the expectations providers will need to meet.

16. We will therefore consult on a proposed new Decent Homes Standard in early 2025. This will aim to ensure that safe, secure housing is the standard tenants can expect in both social and private rented properties. We envisage that our proposed new Decent Homes Standard would introduce additional requirements relating to the state of repair of homes, new requirements on damp and mould, and new requirements regarding the safety and security of homes. We are committed to ensuring implementation timescales for any additional requirements are reasonable and will seek views on this as part of the consultation. We will also consult shortly on our plans to introduce minimum energy efficiency standards for social rented sector homes that could require social housing to meet Energy Performance Certificate C or equivalent by 2030. Improving the energy efficiency of homes is necessary to reduce fuel poverty and deliver for tenants the safety and security of warmer, cheaper homes that are free from damp and mould. Subject to their final design, these requirements could oblige registered providers to invest more in their existing homes. We will set out further details in the consultations to follow. Over the coming months, the government will work with the sector before consulting.

17. We will bring forward legislation for Awaab’s Law in the social rented sector, so that hazards such as damp and mould must be investigated and remedied to set timescales. We will also direct the Regulator of Social Housing to introduce a new competence and conduct standard, and requirements for providers to meet new access to information requirements, in early 2025.

18. The government believes that the essential purpose of rented social housing is to provide good quality homes that are affordable to those who need them. The affordability of rented social housing to tenants depends on a combination of the rents they are charged and (where they are eligible) the level of HB/UCHE that they are able to claim to help them pay their rent.

19. The number of Social Rent homes – the most affordable form of social housing – has fallen by nearly 205,000 since 2013. We will prioritise the building of new social rented homes, and better protect the stock of existing homes by reforming Right to Buy. Our proposed changes to national planning policy would set a clear expectation that housing needs assessments must consider the needs of those requiring Social Rent homes, and that local authorities should specify their expectations on Social Rent delivery as part of broader affordable housing policies. Our consultation on proposed reforms to the National Planning Policy Framework sought views on whether there is more that could be done to support developments that are predominantly or exclusively affordable tenures, in particular Social Rent. We are currently considering the responses to this consultation. We have also asked Homes England and the Greater London Authority to maximise the number of Social Rent homes in allocating the remaining Affordable Homes Programme funding. At the Spending Review, we will set out details of new investment to succeed the existing Affordable Homes Programme. This will deliver a mix of homes for sub-market rent and home ownership, with a particular focus on delivering homes for Social Rent. Right to Buy discounts will be reduced to protect existing social housing stock to meet housing need whilst ensuring long-term tenants can still benefit, delivering a fairer and more sustainable scheme.

The role of social housing rent policy in supporting these objectives

20. Registered providers rely on income from social housing rents in order to manage and maintain their homes to the required standards. The rent policy set by government must allow sufficient income to be generated to achieve this. The government believes that tenants have the right to expect that this will be the priority use of the rents they pay. As noted above, the government will be consulting shortly on changes to the standards that Registered Providers must meet, and our final decisions about rent policy will need to take this into account.

21. Our rent policy must also be consistent with social housing’s fundamental purpose to provide homes that are affordable to those who need them. Decisions about rent policy affect the affordability of housing to households through the impact on their incomes and through the availability of social housing. The impact on incomes depends on how their rent is paid. Around two-thirds of households living in the social sector in England receive support to pay their rents through HB/UCHE. The maximum amount of support they receive is based on their actual rent, as opposed to the private rented sector where the maximum is based on the Local Housing Allowance. The maximum amount of HB/UCHE is then subject to deductions, in particular for RSRS and the benefit cap.

22. Decisions about rent policy have significant implications for the number of new social and affordable homes that are delivered. Delivery is supported by government capital grant funding, contributions from housebuilders through Section 106 and cross-subsidy from providers. The remaining cost of delivery is typically met by borrowing by registered providers, which is serviced by rental income. Registered providers’ expectations about future rental income, their single biggest source of turnover, underpins their business plans and hence strongly influences the financial capacity they have available to deliver new homes. Expectations about future rental income are also important to lenders and to potential new investors in social housing, and partly determine the terms on which registered providers can raise capital. Given the pressing need to expand the supply of social housing, the government must take these effects into account when setting rent policy. Increased availability of social housing, particularly of the right size, also increases the options to move for households subject to RSRS or the benefit cap.

23. These considerations have informed the development of our proposed rent policy from 2026, which is set out below.

A stable rent policy

24. The government recognises the need to provide a stable social housing rent policy, following a series of sudden and unanticipated changes made by the previous government since 2015 to the multi-year rent settlements it had promised. This is necessary if registered providers, lenders and investors are to have sufficient confidence to commit the level of investment that is now needed in both new and existing social homes.

25. This government is determined to provide the stability that we know is needed to improve the supply and quality of social housing. We know that sufficient long-term investment will only be committed in new and existing homes if the sector is confident that there will not be unexpected changes.

26. We have considered whether there are structural changes that could improve the stability of rent policy. Some have argued that, in order to provide that stability, decisions about rent policy should be taken independently of government. Given the very significant policy and fiscal impacts of these decisions, we do not believe it would be tenable for this role to be performed by an unelected body. It has also been suggested that putting rent policy on the face of primary legislation would improve confidence in its longevity. We are not convinced that this would make a material difference, particularly in light of the previous government’s decision to enact primary legislation in 2016 to implement a rent cut.

27. Whilst we are not proposing structural changes to the way in which decisions about rent policy are made, we are seeking to build confidence by explicitly linking our proposed rent policy to the outcomes that this government is trying to achieve. It is important that everyone involved in social housing – tenants, landlords, lenders and investors – should be able to have faith in the rent policy commitments that this government makes. We recognise how central these commitments are to the delivery of our manifesto.

28. Given the urgent need to improve the supply and quality of social housing, the government is keen to provide clarity about future rent policy as quickly as possible. We recognise that some advocate fundamental changes to rent policy, such as reforming the formula used to calculate the maximum initial rent for Social Rent homes (which is based on 1999 values) or addressing anomalies that may have arisen over time. However, we are concerned that opening up the possibility of wholesale reform – with the potential for large and unpredictable changes to existing rents – would create more uncertainty and instability and delay the point at which we can confirm future policy. Therefore, other than some minor and technical amendments, our proposed changes to existing rent policy focus on the limits that should apply to annual rent changes (i.e. how much, if at all, rents should be permitted to increase each year), and not to the calculation of the maximum initial rent that may be charged when a property is let for the first time or subsequently re-let to a new tenant.

29. We have considered carefully what length of rent policy commitment to propose. In very simple terms, the longer the commitment made by government, the more stable rent policy should become. However, any commitment we make will only build confidence if it is perceived as credible from the outset and then subsequently adhered to. We propose that our rent policy should remain in place for at least 5 years, from 1 April 2026 to 31 March 2031. It is the government’s intention that there will be another 5 year settlement following on from this.

30. We would nevertheless welcome views on alternative lengths of settlement, including a longer 7 or 10 year rent settlement, or a ‘rolling’ 5 year settlement. Under a ‘rolling’ 5 year settlement, we would set an initial rent settlement for the period 2026-31. We would then extend that settlement by a year each subsequent year (so in 2026-27, we would set a policy for 2031-32; in 2027-28, we would set a policy for 2032-33, etc). This could provide stability insofar as registered providers and investors would always know what to expect for at least the next 5 years, which could be helpful for planning investment in new and existing homes.

Question 1

Do you agree with our proposal that the government should set a rent policy that will remain in place for at least the next 5 years, from 1 April 2026 to 31 March 2031?

Question 2

What impact would a longer settlement have, and what alternative length should a settlement be? (e.g. 7 years / 10 years?)

Question 3

Would a rolling settlement of 5 years (where the 6th year is set 5 years in advance) provide additional stability or certainty?

Question 4

What impact would these alternative lengths of rent settlement have on providers’ willingness and ability to invest in new and existing homes?

Question 5

Are there rent policy measures that would provide confidence in the stability of our policy in the event of an inflationary spike?

Question 6

Are there other steps that the government should take to build confidence in the stability of its rent policy?

A rent policy that supports investment in new and existing homes, with the right protections for existing and future tenants

31. As well as the importance of a stable rent policy, the level of income that can be raised under that policy must support investment in both new and existing homes. Rent policy must also provide the right protections for both existing and future social housing tenants.

32. Setting rent policy inevitably involves difficult choices. There is a need to balance the interests of those who would benefit from improvements to the supply and quality of social housing supported by higher rents (including existing social housing tenants and those who are currently homeless or in unaffordable or unsuitable private rented housing) and those tenants whose disposable income would be adversely affected by this.

33. These choices have become even more difficult because of the cost of living pressures that households have been facing and the fact that the overall financial position of registered providers has weakened over recent years. The financial position of providers has been affected by a combination of rising repairs and maintenance costs, increasing interest costs and the real-terms rent cuts imposed by the previous government. In aggregate across all 162 council landlords with Housing Revenue Accounts, spending has exceeded turnover in 3 of the past 4 years, with councils having to use their reserves to plug the shortfall. Private Registered Providers’ aggregate interest cover, a key measure of their financial viability, has declined from 174% in 2018 to 103% in 2023 – and the Regulator of Social Housing recently confirmed that it has since fallen below 100%.

34. As a consequence, registered providers are currently scaling back their planned delivery of new homes in the years ahead – at a time when the need for more social housing is increasingly acute.

35. If we are to achieve the objectives set out earlier in this consultation paper, we must restore the stability providers need to build their capacity and make a greater contribution to affordable housing supply – while also ensuring that they can commit the investment necessary to provide safe, decent and warm homes to tenants.

36. As set out earlier in this consultation paper, our proposed changes to rent policy focus very largely on the limits that should apply to annual rent changes – in other words, how much (if at all) rents should be permitted to increase each year.

37. The government believes that it is essential that the limit on annual rent changes should be index-linked – that is to say, related to the Consumer Price Index (CPI). This is necessary to give providers and investors sufficient confidence that rental income will, over the lifetime of our rent policy, keep pace with the costs that providers must incur. Without this relationship to CPI, providers’ available financial capacity could weaken more rapidly, harming their ability to invest in new and existing homes. We recognise that actual year-on-year changes in registered providers’ costs might vary from CPI in some cases, but we believe that CPI continues to be the most useful (and widely understood) index for these purposes.

38. There is then a decision about whether to set the limit on annual rent changes at, below or above CPI. Setting the limit below CPI would have a positive impact on the disposable income of tenants who pay rent without support from HB/UCHE, and those who are affected by the total benefit cap or the removal of the spare room subsidy. However, this would cause registered providers’ financial position to continue to weaken, as it is unlikely that rental income would keep pace with costs. This would inevitably result in providers investing less, rather than more, in new and existing homes. It would also diminish the appetite of existing and potential new investors to invest in this sector.

39. We have carefully considered the option of setting the limit at CPI (‘CPI flat’). We recognise that there is an argument that social housing rents should not be permitted to increase in real-terms indefinitely, and that setting the limit at CPI could in theory allow registered providers’ rental income to keep pace with costs. Compared to the CPI+1% limit that applies currently, this option would increase the disposable income of tenants who pay rent without support from HB/UCHE and those who are affected by the total benefit cap or the removal of the spare room subsidy, as well as generating welfare savings.

40. However, we do not believe that setting the limit at CPI flat is compatible with the achievement of the objectives set out earlier in this consultation paper. Compared to the current CPI+1% limit, it would further weaken registered providers’ financial capacity to invest in new and existing homes – at a time when there is a desperate need for that investment to increase. We estimate that, compared to a CPI+1% limit, limiting rent increases to CPI flat would result in registered providers receiving £2.7 billion less in rental income over the first 4 years of this policy.

41. We are concerned that, given rising costs, this would leave registered providers with insufficient income with which to undertake necessary improvements to existing homes. Repair and maintenance spend has recently hit record levels. Whereas the OBR has forecast CPI to remain at or below the 2% target for the period to 2028, repair and maintenance spend is likely to need to increase at a significantly faster rate. The Regulator has reported that, in their 2024 Financial Forecast Returns, large Private Registered Providers have projected that expenditure on repairs and maintenance will amount to £50 billion over the next 5 years (an average of £10 billion per annum, compared to reported spend of only £5 billion as recently as 2017-18). Local authority registered providers are exposed to similar repair and maintenance spend pressures. Our rent policy also needs to take account of further increases in interest costs, which will affect the refinancing of existing fixed rate debt and the arrangement of new loan facilities. Private Registered Providers’ June 2023 financial forecasts anticipated interest payments increasing by £3.1 billion (15%) over the following 5 years, compared to the forecasts they had made just one year previously.

42. We consider it highly likely that a CPI flat limit would result in a reduction in the delivery of new homes compared to the status quo. Some providers will have based their current plans on an assumption that the CPI+1% policy would continue beyond 2026, so we can reasonably expect a CPI flat limit to result in the sector’s development plans being scaled back even further. A CPI flat limit would reduce projected rental income from new rented social housing, making it harder to make the economics of proposed new social and affordable housing development stack up. A CPI flat limit could also reduce the valuation of rented social housing compared to the status quo, which would further erode registered providers’ capacity to borrow.

43. The government therefore believes that there is a strong case for setting the inflation-linked limit on annual rent increases above CPI, rather than reducing this to CPI flat. In deciding how far above CPI to set the limit, we must balance the need for increased investment in new and existing homes with the interests of those whose disposable income would be affected by rent increases and with the consequences for welfare spending.

44. On balance, the government believes that continuing to limit annual rent increases at CPI+1% is likely to strike the right balance between these objectives. This would ensure that rents can continue to rise in real-terms, increasing the aggregate financial capacity of registered providers to invest in new and existing homes. It would also avoid imposing financial strain on rent payers and welfare spending in excess of the existing policy.

45. We recognise that our proposed policy would have an impact on the disposable income of some tenants. The government would not choose to ask tenants to pay more in rent if we did not think this was necessary in order to deliver desperately needed improvements to the supply and quality of social housing. In assessing the implications for tenants of our proposal that weekly rents should be permitted to increase by up to CPI+1%, we have taken account of the considerations set out below.

46. The impact on incomes depends on how tenants’ rent is paid. Around two-thirds of households living in the social rented sector in England receive support to pay their rents through HB/UCHE. The maximum amount of support they receive is based on their actual rent, as opposed to the private rented sector where the maximum is based on the Local Housing Allowance. The maximum amount of HB or UC award is then subject to deductions, in particular for RSRS and the benefit cap. The impact on those subject to RSRS would be marginal and in a limited number of cases will impact those on the benefit cap.

47. We estimate that – under our proposals – the average social housing rent across England would remain below 20% of average gross income for working age tenants not receiving HB/UCHE. For pensioners not receiving HB/UCHE, we estimate that the average social housing rent across England would remain below 25% of average gross income. The government has committed to protecting the State Pension ‘Triple Lock’ for the duration of this Parliament, which will increase the full new State Pension by £470 in 2025-26. The extra income comes on top of a substantial increase in 2024-25, which saw those receiving a full new State Pension get a £900 boost.

48. Although a minority of social housing tenants’ disposable income will be affected by our proposals, social tenants would benefit where real-terms rent increases result in higher levels of investment by registered providers to deliver improvements to the quality and energy efficiency of their homes. Our proposed rent policy is intended to support that investment. Where registered providers have the financial capacity to improve the energy efficiency of their homes (for example, co-investing alongside funding from the Warm Homes: Social Housing Fund), tenants may benefit from lower energy bills, resulting in warmer, cheaper homes that are free from damp and mould. Decisions about rent policy must also consider the interests of those who are not in social housing and would benefit from an increase in its supply – such as those who are currently trapped in Temporary Accommodation or unaffordable and/or unsuitable privately rented housing.

49. Lastly, our proposed policy follows a period in which the growth in social housing rents has lagged both CPI and increases in private rents – as illustrated in the chart below[footnote 5].

50. We have also considered whether to permit rents on Social Rent homes that are below formula rent to increase by an additional amount, over and above CPI+1%, through the reintroduction of a ‘convergence mechanism’. This would allow registered providers to generate more rental income, and hence additional financial capacity to invest in new and existing homes. However, compared to limiting annual rent increases to CPI+1%, this would reduce the disposable income of tenants who are affected by rent increases and result in higher welfare spending. These are very important considerations, given the cost of living challenges that households have been experiencing and the significant pressure on the public finances.

51. For the reasons set out above, we consider that permitting rents to increase annually by up to CPI+1% is likely to strike the right balance between our objectives. We emphasise that this limit would be a cap, and registered providers would have the flexibility to apply a lower increase – or indeed to freeze or reduce rents – should they wish to do so. We would strongly urge landlords to consider setting lower increases where possible. The existing rent policy requires that, where the rent for a Social Rent home exceeds the rent flexibility level, the rent may not increase by more than CPI flat. We do not propose to change this requirement.

52. We recognise that the delivery of our objectives will also depend on future levels of government investment, and we have made clear that we will be setting out details of this at the Spending Review. We also recognise that forthcoming decisions about quality standards – particularly the new Decent Homes Standard – will affect the level of investment that registered providers need to make in their existing homes, and we will be consulting on this shortly.

Question 7

Do you agree with our proposal that rents should be permitted to increase by up to CPI+1% per annum?

Question 8

What do you consider would be the impact of our proposed rent policy on affordability for rent payers and the willingness and ability of registered providers to invest in new and existing homes over the next 5 years?

Question 9

Do you have views on other measures, outside rent policy, that could help to rebuild registered providers’ capacity to invest in new and existing homes?

4. Our proposed direction to the Regulator of Social Housing

53. We are proposing to issue a direction from the Secretary of State to the Regulator of Social Housing. A draft of that direction is attached to this consultation paper at Annex A. We are proposing to revoke directions on rents that were issued by the previous government in 2019 and 2023.

54. The proposed direction would require the Regulator to set a Rent Standard that takes effect from 1 April 2026. The direction would also require the Regulator to have regard to a separate MHCLG policy statement on rents for social housing. A draft of the policy statement is attached at Annex B.

55. The draft direction and policy statement reflect the proposed rent policy set out above. They also incorporate some minor and technical changes to rent policy:

  • Clarifying the circumstances in which the rules on initial rent setting apply following a mutual exchange;
  • Specifying how registered providers may convert weekly rents to monthly rents, where they wish to charge rent on a monthly basis;
  • Stating that, where a tenancy agreement specifies the number of bedrooms a property has, this should be the basis for applying the bedroom weighting in the calculation of formula rent;
  • Making clear that registered providers may not at any time charge a rent for a Social Rent property in excess of the rent caps;
  • Clarifying how the relative value of a property should be assessed for the purposes of calculating formula rents;
  • In relation to fair rents, making clear that the limit on annual rent increases set by our rent policy cannot be exceeded even where the maximum fair rent is increased by more than that amount;
  • Allowing registered providers to let homes at Affordable Rent where they have not previously been let at Social Rent, without having to obtain permission to do so;
  • Removing the requirement that the rent for Affordable Rent properties should be no lower than formula rent; and
  • Amending the definitions of intermediate rent accommodation and temporary social housing, including to reflect the government’s intention to abolish Assured Shorthold Tenancies (through the Renters Rights Bill).

Question 10

Do you have any comments on the detail of the draft direction and policy statement that are not covered by your responses to the previous questions?

About this consultation

This consultation document and consultation process have been planned to adhere to the Consultation Principles issued by the Cabinet Office.

Representative groups are asked to give a summary of the people and organisations they represent, and where relevant who else they have consulted in reaching their conclusions when they respond.

Information provided in response to this consultation will be published to comply with section 197 of the Housing and Regeneration Act 2008. Names of individual respondents will not be published. In addition, responses may be published or disclosed in accordance with the access to information regimes (primarily the Freedom of Information Act 2000 (FOIA), the Data Protection Act 2018 (DPA), the General Data Protection Regulation, and the Environmental Information Regulations 2004.

Owing to the legal requirement to publish responses, we cannot guarantee confidentiality in respect of your response. An automatic confidentiality disclaimer generated by your IT system will not, of itself, be regarded as binding on the department.

The Ministry of Housing, Communities and Local Government will at all times process your personal data in accordance with UK data protection legislation and in the majority of circumstances this will mean that your personal data will not be disclosed to third parties. A full privacy notice is included below.

Individual responses will not be acknowledged unless specifically requested.

Your opinions are valuable to us. Thank you for taking the time to read this document and respond.

Are you satisfied that this consultation has followed the Consultation Principles? If not or you have any other observations about how we can improve the process please contact us via the complaints procedure.

Personal data

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Note that this section only refers to personal data (your name, contact details and any other information that relates to you or another identified or identifiable individual personally) not the content otherwise of your response to the consultation.

1. The identity of the data controller and contact details of our Data Protection Officer 

The Ministry of Housing, Communities and Local Government (MHCLG) is the data controller. The Data Protection Officer can be contacted at [email protected] or by writing to the following address:

Data Protection Officer
Ministry of Housing, Communities and Local Government
Fry Building
2 Marsham Street
London
SW1P 4DF

2. Why we are collecting your personal data  

Your personal data is being collected as an essential part of the consultation process, so that we can contact you regarding your response and for statistical purposes. We may also use it to contact you about related matters.

We will collect your IP address if you complete a consultation online. We may use this to ensure that each person only completes a survey once. We will not use this data for any other purpose.

Sensitive types of personal data

Please do not share special category personal data or criminal offence data  if we have not asked for this unless absolutely necessary for the purposes of your consultation response. By ‘special category personal data’, we mean information about a living individual’s:

  • race
  • ethnic origin
  • political opinions
  • religious or philosophical beliefs
  • trade union membership
  • genetics
  • biometrics 
  • health (including disability-related information)
  • sex life; or
  • sexual orientation.

By ‘criminal offence data’, we mean information relating to a living individual’s criminal convictions or offences or related security measures.

The collection of your personal data is lawful under article 6(1)(e) of the UK General Data Protection Regulation as it is necessary for the performance by MHCLG of a task in the public interest/in the exercise of official authority vested in the data controller.  Section 8(d) of the Data Protection Act 2018 states that this will include processing of personal data that is necessary for the exercise of a function of the Crown, a Minister of the Crown or a government department i.e. in this case a consultation.

4. With whom we will be sharing your personal data

MHCLG may appoint a ‘data processor’, acting on behalf of the Department and under our instruction, to help analyse the responses to this consultation.  Where we do we will ensure that the processing of your personal data remains in strict accordance with the requirements of the data protection legislation.

5. For how long we will keep your personal data, or criteria used to determine the retention period

Your personal data will be held for 2 years from the closure of the consultation, unless we identify that its continued retention is unnecessary before that point.

6. Your rights, e.g. access, rectification, restriction, objection

The data we are collecting is your personal data, and you have considerable say over what happens to it. You have the right:

a. to see what data we have about you

b. to ask us to stop using your data, but keep it on record

c. to ask to have your data corrected if it is incorrect or incomplete

d. to object to our use of your personal data in certain circumstances

e. to lodge a complaint with the independent Information Commissioner (ICO) if you think we are not handling your data fairly or in accordance with the law.  You can contact the ICO at https://ico.org.uk/, or telephone 0303 123 1113.

Please contact us at the following address if you wish to exercise the rights listed above, except the right to lodge a complaint with the ICO: [email protected] or:

Knowledge and Information Access Team
Ministry of Housing, Communities and Local Government
Fry Building
2 Marsham Street
London
SW1P 4DF

7. Your personal data will not be sent overseas

8. Your personal data will not be used for any automated decision making

9. Your personal data will be stored in a secure government IT system

We use a third-party system, Citizen Space, to collect consultation responses. In the first instance your personal data will be stored on their secure UK-based server. Your personal data will be transferred to our secure government IT system as soon as possible, and it will be stored there for 2 years before it is deleted.

  1. We are not proposing to change the existing requirement that, where the rent for a Social Rent home exceeds the rent flexibility level (explained at paragraph 8), the rent may not increase each year by more than CPI. ↩

  2. For details of how formula rent should be calculated, please see the policy statement on social housing rents. ↩

  3. The Removal of the Spare Room Subsidy (RSRS), sometimes known as the bedroom tax policy, was introduced in 2013 for working age households and applies to claims for HB/UCHE where the claimant is living in the social rented sector. The deductions are based on the claimant’s eligible rent; there is a 14% reduction for those with one extra bedroom and a 25% reduction for those with 2 or more extra bedrooms. Easements are available in some cases. ↩

  4. The benefit cap limits the amount of social security benefits a working age household can receive and is applied through Housing Benefit and Universal Credit. ↩

  5. PRS rents - Price Index of Private Rents, UK: monthly price statistics, October 2024 Price Index of Private Rents, UK: monthly price statistics - Office for National Statistics

    CPI - Consumer price inflation time series, October 2024 Consumer price inflation time series - Office for National Statistics

    PRP and LARP rents - Registered provider social housing stock and rents in England 2023 to 2024, Registered providers additional tables, October 2024 Registered provider social housing stock and rents in England 2023 to 2024 - GOV.UK. Note that this release includes LAHS (Local Authority Housing Statistics) published by MHCLG ↩

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