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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