How We Set Our Rents
The rent we charge covers the occupation of our homes. All the rents we collect are used to pay for repairs, major improvements such as new kitchens and bathrooms, interest payments and the costs of providing valuable services such as dealing with anti-social behaviour, encouraging resident involvement and managing the communal areas around our homes.
How we set your rent
The way we set rents depends on when our homes were built and how it was funded. Before tenants move in, we’ll explain what sort of tenancy they have and how we set the rent. We can’t raise the rent by more than our tenancy agreement allows.
Here are the main types of tenancy we offer.
Some of our homes are let at market rent. This means we charge the same as a private landlord would. In setting these rents we take advice from local lettings agencies who are approved by the Royal Institution of Chartered Surveyors (RICS).
The rents for some of the homes we build are set at 80% of the market rate inclusive of service charges. We work out the rent for an affordable home before tenants move in. Again, the market rent must be based on the valuation methods recognised by RICS (Royal Institute of Chartered Surveyors).
Most of our homes have a rent known as ‘social rent’. We have to use a Government formula when we set these rents. Most of our customers have ‘assured’ tenancies and we apply this formula directly when we calculate their rent changes each year.
The Government’s rent setting formula is designed to make sure the rents of different social landlords are set fairly and consistently and that they reflect more closely the size, condition and location of a property and local earnings, regardless of who the landlord is. When the Government introduced this rent setting formula in 2002, it was first used to set ideal rents for every property. The formula rent for each home was worked out by:
- taking the national average rent; and
- adjusting it to reflect average local earnings; and
- adjusting it to reflect the value of the property including the number of bedrooms
The government have told social landlords that from April 2021 social and affordable rents will be increased no more than September Consumer Price Index (inflation) which was 0.5%, plus 1%, which increases your rent by 1.5%.
Tenants are always given four weeks notice in writing of any changes in their rent. This means for the majority of our tenants that have an April review date specified within their tenancy agreement will receive notice of their service charge and rent decrease or increase issued by the end of the last week in February each year.
If rent is paid in full by housing benefit any changes in rent will be reflected in a change in housing benefit. If tenants are on partial housing benefit they will continue to pay a proportion of the rent even when it reduces.
Residents may pay service charges in addition to their rent. A service charge is a charge made to residents towards the cost of services, works and facilities provided for them beyond the use and occupation of their own home. Service charges relate to the cost of providing and maintaining services specific to a building, estate or area. If a service charge is due this is included in the annual rent review letter.
Where a service charge applies, this charge is calculated each year to only recover the costs of the services provided and we do not make a surplus on any services we provide or service costs we charge.
We aim to provide high quality services that are affordable to people living on low incomes. We are required to meet our financial, legal, health and safety and other commitments, as well as covering our costs and making proper provision for future repairs.