In a Ministerial statement on 28 January, Housing Minister Matthew Pennycook announced the Government’s final decisions, following consultation, on rent convergence, the new Decent Homes Standard, and the Minimum Energy Efficiency Standard for social housing.  He confirmed that the preferential borrowing rate of gilts + 40bps for HRA borrowing will continue until April 2027. His statement also gave more information about allocation of the £2.5 billion package of low-interest loans for Private Registered Providers, increased funding for the Council Housebuilding and Capacity Programme and increased the number of homes a local authority can own and manage without an HRA from 200 to 1000 with immediate effect. It promised that the long-awaited Future Homes Standard, applicable to newly built homes would be published and regulations laid to implement it, in Q1 2026. He also announced plans to work with housing sector bodies towards a compact setting out ambitious housebuilding and other delivery targets for the sector.

Rent convergence

Councils and other registered providers will be able to increase weekly rents for social rent homes that are below formula by up to an additional £1 a week above CPI +1% from April 2027, and up to £2 a week above CPI + 1% from April 2028 onwards until formula rent is reached.

Decent Homes Standard

The new Decent Homes Standard remains substantially as proposed in the consultation paper issued last summer, built around 5 criteria.  In summary, it will require:

Criterion A – A home must be free of the most dangerous hazards.

To meet this criterion, properties must be free of ‘category 1’ hazards, as assessed under the Housing Health and Safety Rating System (HHSRS).

Criterion B – A home must be in a reasonable state of repair.

Homes will fail against this criterion if:

• one or more key building components is not in a reasonable state of repair, or
• two or more other building components are not in a reasonable state of repair

Criterion C – A home must provide core facilities and services.

To meet this criterion, flats must provide at least 3 of the following facilities:

• a kitchen with adequate space and layout
• an appropriately located bathroom and WC
• adequate external noise insulation
• adequate size and layout of common entrance areas for blocks of flats

To meet this criterion, houses must provide at least 2 of the following facilities:

• a kitchen with adequate space and layout
• an appropriately located bathroom and WC
• adequate external noise insulation

Homes must also be equipped with child-resistant window restrictors, which can be overridden by an adult, on all windows which present a fall risk for children.

Criterion D – A home must provide thermal comfort.

To meet this criterion, homes must provide a reasonable degree of thermal comfort. This includes ensuring homes meet Minimum Energy Efficiency Standards.

Criterion E – A home should be free of damp and mould.

Homes will be non-decent if a landlord has not remedied damp and mould.

Some proposals canvassed in the consultation paper have been dropped, in particular specific requirements for enhanced home security and floor coverings. MHCLG proposes to work with landlords to identify cost effective ways in which tenants in need can supported to provide floor coverings and basic furnishings.

The new DHS will come into effect in 2035. The Government’s full response to consultation on the new standard can be found here. Guidance will be published “in due course”.

Minimum Energy Efficiency Standard

All social rented properties will be required by 1 April 2030 to have an Energy Performance Certificate (EPC) grade C, using the reformed EPC, in a choice of Fabric Performance, Smart Readiness or Heating System Metric.  Additionally, homes will be required to comply with a second metric by 2039.  A summary of responses to the consultation on MEES for social rented housing is here. The Government’s full response to the consultation will be published “shortly”. Guidance will follow “in due course”.

ARCH reaction

ARCH Chief Executive Janet Sharpe welcomed the Minister’s Statement.  She said:

“This provides the certainty our members have so badly needed for many years to plan long-term to improve their council homes and build the new genuinely affordable homes needed to meet the national homelessness crisis. We now have a clear statement of the standards homes will be expected to meet and by when.  The decision on rent convergence, taken with the ten-year rent settlement announced last year, provides long-term certainty and significant additional income to help close the gap between income and expenditure needs that too many of our members are facing. It will not, however, eliminate those gaps.  We will continue to press for resolution of the difficulties too many councils face, or will face in the next few years, in balancing their HRAs. For that reason we are particularly pleased that the Minister proposes a continued dialogue with the sector leading to a shared compact.”