Rent Setting guidelines April 2012

The year before last most of you saw your rent go down, last year it went up.  This year we have again increased the rent and a number of tenants have been in touch to ask why their rent has gone up when things are so difficult with the economy.  We thought a short explanation might help you to understand.
In 2003, the Government decided that all social landlords (such as housing associations and councils) needed to work out their rent charges in the same way. They called this process rent  re-structuring or rent convergence.  Because of this your annual rent increase is set using a formula which considers:

• average manual wages in the area
• property values in the area
• the number of bedrooms in your home

The idea was that, over time, two tenants living in similar properties in the same area should be paying the same rent, whether the landlord is a housing association or a council.

Local earnings:  the local earnings part of the formula compares the average manual wage in Liverpool and Wirral with wages elsewhere in the country.

Property values:  the council in your area were asked to value properties for this purpose.  But it’s not possible for the council to value each property individually. So they identify typical properties (called ‘beacons’) within each area and these have been valued by local surveyors.  These beacon homes are then used to give a value to every other property that is of the same size, type and location.  All properties have been valued at 1999 prices.

Number of bedrooms:  the number of bedrooms in your home is also used to calculate the rent. The more bedrooms there are, the more the rent will be.

What will happen to rent because of this policy?

Taken together these elements make up a target rent for your home.  This target rent increases each year.

If the target rent for your home is higher than your current rent you will see an annual increase until the target rent in reached.  Some rents will increase by more than inflation, others will increase by less than inflation but the Government has stated that no-one’s rent will increase by more than:

• the inflation rate in September of the previous year
• + ½%
• £2 per week

We have to reach the target rent on all of our homes by 2012, and then apply Government specified increases until the scheme termination data of March 2016.  While this doesn’t make things any easier we hope this explanation makes it easier to understand why we’ve acted as we have.