The Consultation comprises three papers: the Consultation paper itself; a draft Direction on a new Rent Standard (2018); and a Policy Statement.
The proposals are not controversial. We will see the continuation of formula rents for social rented units and affordable rents continue to be set as before at up to 80% of market rent. One important departure is local authorities being made subject to the new Rent Standard.
In summary, this is what you need to know:
- Annual maximum increases of CPI + 1% restored for at least 5 years (review in 2023).
- Into force from April 2020 unless RPs have not completed rent reduction by then.
- Will apply to local authorities because the current Limit Rent for LAs is not compatible with Universal Credit.
- Calculation of formula rents unchanged; rent caps continue with CPI + 1.5% annual uplift.
- 5% flexibility on formula rents restored (having been removed under rent reduction).
- 10% tolerance for supported housing continues. Flexibilities should not be employed as a matter of course – to be used in a “balanced way”.
- Starting point for rents is “2020 limit” = average weekly rent for a unit in final year of rent reduction plus (upto) CPI + 1%.
- If 2020 limit is above formula (plus flexibility) => increase capped at CPI.
- Re-lets of social rent at formula rent plus flexibility.
- Re-lets of affordable rent as before (80% of market). Can rebase affordable rents on renewal of fixed term tenancy but capped at CPI + 1% on existing rent.
- Relaxation of the rules governing use of affordable rent which widen the scope of the Government, Homes England and/or the GLA to agree the use of AR.
- Exceptions: the same exceptions apply as under the old Rent Standard and under rent reduction (LCHO, IMR, temporary social housing, student, specialised supported, PFI, care homes etc).
- Small but welcome tweak to the exception for IMR extending it to keyworker IMR generally without any other conditions.
- LAs can apply to exempt accommodation with the agreement of Government where application of the rent standard would be financially unviable (to be known as “relevant LA accommodation”).
If you need any more information on issues raised by the Consultation or on rent compliance generally, please contact Nick Billingham.