PrintHow Your Rent Is Set?
This depends on whether you are a Secure or Assured Tenant.
ASSURED TENANTS:
It used to be the case that housing associations used many different methods for deciding what rents to charge. Because of this, tenants from different housing associations can pay very different rents, even though their homes are of a similar size, location and condition. The Government decided to end this way of setting rents and in April 2002 a new method of rent setting came into force.
Housing associations now use a single method of setting rents, based on the same rent "formula". These "formula rents" are also known as "target rents". This will mean that the rent for your home, and for all housing association and local authority properties, will be based on a "formula" reflecting the property's value and the average income of people living in the same county.
Because your new rent may differ from your current rent, the Government is giving us up to 2012 to spread the change to the new "target rent". After 2012 your rent should be similar to the Government's new "formula rent".
Why has the Government made this change?
The Government wants housing association rents to...
- become fairer and less confusing to tenants
- reflect the size, location and condition of every home
- become similar for properties of a similar size, location and condition
- remain affordable.
Who is affected by the new "formula rents"?
The new "formula rents" will affect a great many tenants renting from a housing association or a local authority, including those in sheltered and in supported housing.
Will my rent go up or down?
The new approach will mean that some rents will rise and some will fall. But average rents for all housing association properties should increase over the period to 2012 by around the rate of inflation plus 1/2% every year.
The new rent for your home will be based on the value of your property and the average income of people living in your county. The higher your property value, and the higher the incomes of people in your county, the higher your new rent will be. Of course, the opposite will also be true.
Whether the actual rent for your home will rise or fall will depend on what we are charging now, compared with the new "formula rent".
Could this change mean a large increase in my rent?
To protect tenants from large rent increases, the Government has said that no rent will rise by more than the rate of inflation plus ½ % plus £2 a week in any single year.
For example, if you were paying a rent of £61.25 and inflation was 2%, the most that your rent would be allowed to increase would be:
2% + ½ % of £61.25 + £2 = £3.53 a week.
(note over a 48 week collection cycle £2 equates to £2.16 a week).
Could the changes mean a large fall in my rent?
To protect the finances of housing associations, the Government is also limiting the amount that rents can fall. In any single year, the most that any rent could fall would be £2 a week after allowing for an increase for inflation plus ½ %.
For example, if you were paying a rent of £61.25 and inflation was 2%, the most your rent would fall by would be:
2% + ½ % of £61.25 - £2 = £0.47p a week.
(note over the a 48 week collection cycle £2 equates to £2.16 a week).
Will housing benefit continue to pay for all or part of my rent?
Yes. If you are claiming housing benefit, it will continue to pay all or part of your rent in the same way as now.
Will this change the amount I pay for service charges?
Only your rent will change to meet the new formula rent. Service charges should be limited to the cost of providing the services.
SECURE TENANTS
How Your Rent is Set
Your rent is independently set by a Fair Rent Officer not the Council. Every two years, and any increase is added to the rent in two instalments. Half during year one and the other half during year two.
Unlike Assured tenants, Secure tenants have the right to appeal the rent through an independent body known as the Rent Assessment Committee which will look at how your was set. However, rents can go up and as well as down as a result of Appeals.
The committee is not on anyone's 'side', but is there to make sure the rent is set at a level that is fair to you and to your landlord
SECURED TENANTS - Will my rent still need to change?
Perhaps. You will continue to keep your fair rent protection and will never pay more than the rent set by the rent officer. If the rent officer has set a rent that is higher than the formula rent, we will not charge more than the formula rent. If the rent officer has set a rent that is lower than the formula rent we will charge the fair protected rent.
In all cases the same rules apply, rent will not increase, or decrease by more than the rate of inflation + ½ % plus £2 a week in any year.
Your rent is set centrally by the government and not the Council. This rent setting formula was introduced in 2002 and aims to keep your rent at a stable level until 2011 by which time your rent will hit what is called a Target Rent.
The Government wants to make sure that rents paid by tenants remain affordable and that tenants in similar properties in similar areas pay similar rents whether their landlord is a council or a housing association.
How is the target rent worked out?
The target rent for each property was calculated using a set formula that took into account the following: -
- the value of your home as at a set date;
- its size in terms of number of bedrooms;
- average earnings in your Borough; and
- the location of your home.
Once the target rent has been reached, any future rent increases should not be more than ½% over the rate of inflation each year. This increase is necessary to protect landlords from the effects of inflation and to make sure that there is money available to spend on works and services.
To protect tenants against large rent increases, the Government also placed a limit on the increase that any tenant should face in one year of £2 per week over and above the rate of inflation. Likewise, any decreases are limited to the rate of inflation minus £2 per week.
