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Affordable rents

This content applies to England

Near-market rents that providers of social housing can charge on certain tenancies granted.

Registered providers of social housing (RPs) in England include local authorities and private registered providers of social housing (PRPSHs). See Terminology for details.

What is affordable rent

Affordable rents are rents of up to 80 per cent of market rent which RPs can charge for certain residential properties.[1] This limit is set by the rent standard, which is one of the regulatory standards imposed by the Regulator of Social Housing in England. The Regulator has issued guidance on how market rent should be calculated, and service charges are included.[2]

Lettings at affordable rents are defined as 'low cost' rental accommodation and as such are 'social housing'.[3] They are therefore regulated by the Regulator of Social Housing.[4]

Allocation of affordable rent tenancies

Only RPs who entered into certain funding agreements with the then regulator of social housing can grant affordable rent tenancies.[5] Some of these agreements allow affordable rent to be charged only for new build properties while others allow conversions of existing stock.[6] However, properties can only be converted to affordable rent when an existing tenant leaves and a new tenancy is granted.[7]

All RPs must have a policy setting out the criteria for the allocation of their properties, including in what circumstances they will grant tenancies at affordable rents levels (see Regulatory standards). In framing their policy, RPs must have regard to the tenancy strategy of the local authority in the area they operate (see Tenancy strategies).

Security of tenure

Affordable rent tenancies are not a separate form of tenure. They are governed by the statutory regime applicable in each case:

Fixed-term and flexible tenancies let at affordable rents must be granted for a minimum term of five years, except in ‘exceptional circumstances’ when they can be granted for a minimum term of two years.[8] Where the social landlord has a policy of using introductory tenancies or starter tenancies and the landlord serves an appropriate notice, the tenant will be granted one of these before 'progressing' to the tenancy type above. [9]

Where no action is taken when at the end of the term of a fixed term assured shorthold tenancy offered by a PRPSH or a flexible tenancy:[10]

  • for assured shorthold tenancies, a statutory periodic assured shorthold tenancy will arise when the fixed term ends
  • a flexible tenancy will automatically be replaced by a periodic secure tenancy.

However, the regulatory framework requires local authorities and PRPSHs to serve a notice of intention before the end of the fixed term stating that they will either grant another tenancy or propose to bring it to an end.[11]

Level of affordable rents

Rent Standard Guidance issued by the Regulator of Social Housing provides details of how initial affordable rents should be set up. The guidance also contains, in Appendix 3, the RICS guidance on valuation for Affordable Rent.

An RP is required to set a new initial affordable rent any time it grants or renews an affordable tenancy of a property, except when the same property is re-let to the same tenant at the end of a probationary period.[12]

From 1 April 2016, local authorities and PRPSHs are required to reduce rents by 1 per cent per annum in each of the following four years.[13]

See the paragraph 'rent increases and variations' on Local authority rents for full details.

Rent review clause

Any provision for the annual review of rent must be set out in the tenancy agreement.

Wales

The information on this page applies only to England. Go to Shelter Cymru for information relating to Wales.

[1] para 2.3(a) Rent Standard, HCA, April 2015.

[2] para 4.4 Rent Standard Guidance, HCA, April 2015.

[3] ss.68 and 69 Housing and Regeneration Act 2008.

[4] s.67 Housing and Regeneration Act 2008 and Housing and Regeneration Act 2008 (Consequential Provisions) (No.2) Order 2010 SI 2010/671.

[5] para 4.3 Rent Standard Guidance, HCA, April 2015.

[6] para 4.3 Rent Standard Guidance, HCA, April 2015.

[7] para 3.9 2011-2015 Affordable Homes Programme Framework, HCA, Feb 2011; para 4.3 Rent Standard Guidance, HCA, April 2015.

[8] s.107A(2)(a) Housing Act 1985 as inserted by s.154 Localism Act 2011; para 2.2.1 Tenancy Standard, HCA, April 2012.

[9] s.107A Housing Act 1996  as inserted by s.155(6) Localism Act 2011; s.124(2) Housing Act 1996; para 2.2.2 Tenancy Standard, HCA, April 2012.

[10] s.5 Housing Act 1988 and s.86(1) Housing Act 1985.

[11] para 2.2.3 Tenancy Standard, HCA, April 2012.

[12] para 4.13, Rent Standard Guidance, HCA, April 2015.

[13] s.23 Welfare Reform and Work Act 2016; Welfare Reform and Work Act 2016 (Commencement No.1) Regulations 2016 SI 2016/394.

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