Rent levels in private registered providers of social housing

Private registered providers of social housing (PRPSHs) must charge rents in accordance with the Rent Standard, as set by the regulator of social housing.[1]

Social rent levels are set by a reference to a formula.[2] The aim of the formula-based approach is to ensure that similar rents are paid for similar properties. The current formula is devised on the basis that social rents take account of:

• the condition and location of a property

• local earnings

• number of bedrooms in a property

Each year the Government and the Regulator of Social Housing publish guidance on how to adjust the formula to the new annual Consumer Price Index and calculate rent increases using the correct annual percentage to inflate their rent:

• limit on annual rent increases for 2021-2022 (from April 2021)

• limit on annual rent increases for 2022-2023 (from April 2022)

Properties let on affordable rents and rents applied to high-income tenants are not covered by this formula.

Affordable rents can be set at up to 80 per cent of the market rent.

From April 2015, a PRPSH can charge a market rent to tenants with an annual household income of £60,000 or more. In calculating household income, only the income of the tenant or joint tenants, and their spouse, civil partner or cohabitee are to be taken into account. In the event that more than two of these members of the household have an income, only the two highest incomes are to be taken into account.[3]

Rents for tenants of PRPSHs are usually increased annually.

Social rent reduction

From 1 April 2016, PRPSHs are required to reduce rents by 1 per cent per annum in each of the following four years.[4] The government has published guidance about social rent reduction.

For social rents the reduction applies to the rent element and not to service charges, for (most) affordable rent properties, the reduction applies to the total rent, inclusive of service charges.[5]

Exceptions to and exemptions from the requirement to reduce the rent are set out in regulations, and include:[6]

• temporary social housing and short-life leasing schemes for the homeless

• residential care homes or nursing homes

• certain specialised supported housing developed in partnership with councils, local health or social services offering a high level of support for clients, for whom the only alternative options are care homes

From 1 April 2017, the following are also exempt:[7]

• shared ownership 

• domestic violence refuge accommodation

• almshouse accommodation

• accommodation provided by a co-operative or fully mutual housing association

• accommodation provided by a community land trust

The protection that PRPSH tenants have regarding rent levels and rent increases primarily comes from the Rent Standard.

However, the framework providing for increases to rents of assured and assured shorthold tenants of private landlords, and the mechanism for challenging rent increases, applies equally to assured and assured shorthold tenants of PRPSHs.

A secure tenant of a PRPSH is subject to the fair rent regime under the Rent Act 1977.