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Update: Re-lets at Formula Rent & 1% rent reduction 20/08/2015

In our last bulletin we highlighted that some authorities who have properties which have not yet reached convergence to "Formula Rent" may face the prospect of having to reduce some property rents in April 2016 by more than 1 percent if the Welfare Reform and Work Bill is passed as drafted. 

 

We've received a response to our representations on this matter from the DCLG which offers some hope that this may not be the case.

 

We contacted DCLG officials to seek clarification on this point and have been advised that they are aware that the way the clauses in the Welfare Reform and Work Bill are drafted will need amendments to allow re-lets at formula rent, new build Social Rent, new build Affordable Rent and conversions to Affordable Rent to happen.

 

We've also been advised that the DCLG are working on amendments to the Bill to add regulation making power to set out circumstances under which rents for new tenancies can be set on a different basis. However, the DCLG advised that this will need agreement from the Treasury and they're not yet in a position to confirm this but hope to be able to clarify these issues shortly.

 

The DCLG have asked if ARCH members can provide some estimates of the percentage of stock that are below Formula Rents. If you have stock that has not yet reached convergence to Formula Rent and wish to feed this information to the DCLG, please email John Bibby, ARCH CEO: john.bibby@arch-housing.org.uk with details.

 

DCLG officials are also interested to learn whether authorities feel there should be any further exemptions from the requirement to reduce rents by 1 percent, for example any Private Finance Initiatives (PFI) schemes or housing outside of the HRA that has not been grant funded. Again if councils feel there are specific cases to be made for exemptions, please email John Bibby with details.


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