Rent Increase Blow to Landlords

Housing experts are warning that landlords face a costs squeeze under the reformed social rent formula as a result of unprecedentedly low inflation rates. The consumer price index (CPI) for September has been set at a five-year low rate of 1.2%, falling from 1.5% the previous month. For 10 years from April 2015 landlords must use a formula of the September rate of CPI plus 1% to set rents, instead of the current formula of the retail price index (RPI), which was set at 2.3%, plus 0.5%. Because of the low CPI rate, landlords next year will only be able to increase rents by up to 2.2%, compared with 2.8% under the RPI-linked system. Experts said that the 0.6% gap between the two rent formulas was higher than most landlords had anticipated, and would force organisations to find efficiencies.  Read more on Inside Housing.