Wednesday, 12 August 2015

Re-Lets At Formula Rent And 1% Rent Reduction

Some authorities who have properties which have not yet reached convergence to "Formula Rent" may have to reduce some property rents in April 2016 by more than one percent.  The current Guidance on Rents for Social Housing, effective from April 2015, was intended to provide long term certainty and stability to council tenants and landlords. It was expected to stay in place for ten years. The announcement of a compulsory one percent reduction over the next four years represents a complete U-turn on the policy. For some properties the rent reduction could be greater than one percent.  Where local authorities have not achieved 100% "rent convergence" to Formula Rent, the Guidance encourages councils to move the rent of any property not yet at Formula Rent up to the formula rent when the property is re-let following vacancy. Within the Welfare Reform and Work Bill, there is a provision that if social landlords increase rents on any properties "in year", they will have to be reduced back down again to the pre-increase rent minus 1% from April 2016. Read more on the ARCH website.

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