Regulator launches consultation on 2020 Rent Standard

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Housing & Regeneration Article

17 May, 2019

On 7 May 2019 the Regulator of Social Housing launched a 12 week consultation on a revised Rent Standard that will come into force from the 1st of April 2020, replacing the current guidance which was published in May 2015. This consultation follows the Secretary of State for Housing, Communities and Local Government's Direction to the Regulator of Social Housing, which was issued in February 2019.

The 2019 Direction was the initial instruction where the Regulator of Social Housing set the new rent standard from 1 April 2020 for low cost rental accommodation, and relaxed rules on how to carry this out. The Direction outlines the rules around the management and setting of a new five-year rent settlement. It contains the same exemptions as under the current 2015 Rent Standard, definitions for social rent and affordable rent housing, and the formula rent that social rent properties are subject to. These provisions are broadly aligned with the current 2015 Rent Standard and are key given that government policy over rents, alongside the grant funding for development, are key pillars of the social housing sector.

The 12 week consultation follows the 2019 Direction and will be for registered providers, local authorities, tenants, lenders and all other stakeholders with an interest in social housing to comment on.

Key Changes to Rent Policy

In a shift away from the 2015 Rent Standard, the principal focus of the consultation is four key changes that will brought in from April 2020:

  1. The RSH will now have to apply the rent standard to all Registered Providers (RPs); councils and housing associations alike. This means the regulation of council rents with private RPs will be aligned. Local Authority RPs are to be included in the 2020 Rent Standard due to the introduction of Universal Credit. This is as the Rent Rebate Subsidy Limitation Scheme that formerly served local authority's welfare costs will no longer apply now that Universal Credit is in force.
  2. The level of annual rent increase on social rent and affordable rent properties will be limited to an increase of up to Consumer Price Index + 1% for a period of at least five years. The Policy Statement claims that this will provide a 'stable financial environment to support the delivery of new homes and to enable registered providers to plan ahead', whilst also striking a balance between the interests of landlords, tenants and tax payers.
  3. To help reduce costs for tenants paying all or part of their rent and put welfare spending on a more sustainable footing by locking in the annual 1% reduction in social rents between 2016 and 2020 implemented through the Welfare Reform and Work Act 2016.
  4. To allow RPs to have discretion over the rent set for individual properties, taking into account local circumstances and affordability in consultation with tenants by reinstating the 5% flex for general needs stock and 10% for supported housing providers.

It is important to note that, although the 2019 Direction only serves as guidance to the Regulator of Social Housing, it should be seen as the framework which underpins the regulations that rent standard will be based on, and the standard that Registered Providers will sooner or later be held to.

The consultation closes on 30 July 2019 and responses should be completed via the online portal.

For more information contact Aisha Bhailok in our Housing & Regeneration department via email or phone on 01772 220240. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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