RPI Changes To Hit Rent Levels

Social landlords’ business plans could be hit by mooted changes to the way that the rate of inflation is calculated.  The Office for National Statistics has announced plans to consult on whether the retail price index should be calculated in the same way as the lower consumer price index in an attempt to reduce government borrowing costs by nearly £6 billion by 2016. By bringing the calculation of the two measures of inflation in line, RPI would fall by 0.88 percentage points, meaning that landlords’ rents could be reduced.

Rents are set based on a formula of RPI plus 0.5 per cent plus up to £2.  Read more on Inside Housing.