In the last 6 months we have seen a lot of activity both from the Government, Regulator of Social Housing (RSH) on the subject of social and affordable rent increases, and the National Housing Federation (NHF) on shared ownership rent increases. This all came about in response to the cost of living crisis which saw both Registered Providers of Social Housing (RPs) and then the Government trying to work out how to alleviate excessive increases to social and affordable rent levels in 2023. In some respects the Government’s intervention by way of consultation at the end of last summer was welcome news to RPs as it meant that they did not have to make the decision on a cap themselves. The Government settled on a 7% increase for social and affordable rent tenants which led to the RSH creating a new Rent Standard for increases between April 2023 and March 2024, and amending the Policy statement on rents for social housing to reflect the temporary arrangements.
In reaching this decision the Government liaised with the NHF, who also made a commitment to cap shared ownership rents at 7%. However, this wasn’t quite as straightforward as capping rent subject to the rent regulation (which could just be amended by the RSH) because rent increases for shared ownership leases are dictated by the terms of the lease, with most including a mandatory percentage by which the rent must increase. Therefore, RPs have had to grapple with the intricacies of various versions of shared ownership leases, whether they can justify/mitigate risk related to non-compliance with the strict interpretation of the leases and actually afford to provide a cap to shared owners as well as social and affordable rent tenants. A lot of Boards were comfortable in adhering to the commitment of the NHF but a not insignificant number of RPs took a different approach which provided for the full increase this coming year but an agreement not to recover anything above the 7%. This allowed them to adhere to the lease and avoid compounding loss year after year.
As for next year’s increases, we will have to wait and see what inflation reaches or drops to later this year, and if the Government feels that they need to cap social and affordable rent levels once again and if the NHF issues any further commitments. Watch this space!
For any further information or if you need any advice on rent regulation please contact Samantha Grix, Partner in our Housing Management and Property Litigation team.
