In 2002, the Government introduced new rules for how we and all other housing associations must set our rents. They did this because they wanted rents to:
- be fairer and less confusing for customers
- reflect the type of property – how many bedrooms it has, where it is, what condition it’s in
- be the same as the rent for any other landlord’s properties that are a similar size and condition, and in a similar area
- be affordable in the future.
The changes affect most customers renting from a housing association or a local council, including people in sheltered and supported accommodation.
The people who aren’t affected are those living in:
- part-rented or part-mortgaged accommodation (shared ownership)
- student accommodation
- market rented schemes (schemes rented out at the same rates as private landlords)
- temporary housing.
How are rents set under the new rules?
The Government has set the ‘target rent’, which is the rent they want everyone to be paying by 2012. The ‘actual’ rent is what you pay now.
The Government’s ‘target rent’ may be higher or lower than the actual rent people now pay. The Government has set out a way for housing associations to reach the target rent so that you are protected from any sudden rent increases.
How we set your target rent
The rules say we must set your target rent based on the following:
- the value of your property, and
- the average income of people living in your area.
So, the higher your property value and the higher the average income in your area, the higher your target rent.
The target rent will go up each year depending on the Retail Price Index (RPI) for that year. The RPI is a list that the Government publishes every September showing how much prices of general goods have risen or fallen in that year. The target rent will go up by the change in the RPI, plus 0.5%.
Your actual rent – the amount you pay
Whether your rent will rise will depend on:
- your rent in 2002, when we started to use the new rules to decide our rents, and
- your target rent.
The most your rent will change in any year until 2012 will be the rate of inflation, plus 0.5%, plus £2 a week.
For example, if your rent is now £61.25 and inflation is 2%, the biggest increase allowed in any year would be:
2.5% of £61.25 = £1.22 0.5% of £61.25 = 31p Plus £2
TOTAL increase = £3.53 a week.
How and when we review (check) your rent
The way your rent is reviewed, and when this happens, depends on the type of tenancy you have. There are two main types of tenancy:
- Secure or fair – these are tenancies that started before 15 January 1989
- Assured – these are tenancies that started after 15 January 1989.
The Rent Service reviews rents for secure and fair tenancies every two years. We will ask the Rent Service what your new rent should be and check that it is within the set guidelines explained above. If so, we will charge this new rent. If it is above the maximum increase that should be charged, we will increase the rent in two stages over the two years, so that you don’t have to pay large increases.
Assured rents are reviewed every year: the exact date will depend on where you live.
We will always let you know in writing four weeks before any rent changes happen.
If you need to know when your rent review date is or you need more information, please call the Charge Setting Team at Harvest Response on LoCall 0845 345 0272.