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.