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Rent and Service Charges

Rent

How is my rent set?

Guidelines were introduced in 2002 which detail the way that rents have to be set.  These guidelines relate to ‘Target Rents'.

What factors are used in the formula?

The formula takes into account:

  1. The national average housing association weekly rent
  2. The average earnings in Greater Manchester in 1999 compared to the rest of the country as they were in 1999 (this is not your personal income)
  3. The number of bedrooms in your home
  4. The value of your home in 1999 compared to the national average value of housing association property in 1999

“The formula”

Weekly rent is equal to:

70% of the average rent for the social housing sector multiplied by relative county earnings multiplied by bedroom weight

plus

30% of the average rent for the social housing sector multiplied by relative property value.

Why are the details as at 1999?

The Government simply wanted to get an idea of the differences in prices in different parts of the country at a point in time.  They chose January 1999 as that point in time.

What does this formula do?

The formula was created to calculate what is called a TARGET rent. This is the rent the Government says should be charged for similar properties owned by different landlords in the same region.

Landlords were required to move all rents to the target level by March 2015. In order to do that, rents could move at a rate of Retail Price Index (RPI) plus 0.5% +/- £2.00 per week over a 52 week period.

This rate of increase no longer and rents will now be increased at a limit of Consumer Price Index  (CPI) plus 1% on an annual basis.

Formula rents will still be used to calculate the rent when a property becomes vacant and is relet unless it is being let under the Affordable Rent programme (more information below). 

When will my rent change?

Any changes to your rent are normally effective on the first Monday in October in any year unless we agree a different arrangement at any other time personally with you.

As detailed above, there is a limit on the amount that rent can increase. The limit is at the rate of Consumer Price Index (CPI) plus 1% on an annual basis. The CPI is based as at September of the previous year before the increase takes place.

How will I be told about any change in my rent?

You will be given a minimum notice period of one month.  You will be served a rent increase notice that is headed: ‘Section 13(2) of the Housing Act 1988.  Form number 4B’.

This notice is the legal notification that your rent is going to change.  It will tell you what your rent is now and how much it will be changing.

In some cases, there is a provision in your tenancy agreement that means that your rent can be increased by sending you a letter.  You need to check your tenancy agreement to see if this affects you personally.

What if I think the increase in my rent is too much?

We would ask that you contact us first so we can explain why your rent is going up. 

If you are not satisfied with the answer, then in most cases you can refer the rent increase notice to a Rent Tribunal which is an independent panel who will compare the proposed rent to similar properties in your area.  They can determine a lower rent or a higher rent. Please note that this only applies if your rent has been increased by the Section 13 notice.

Guidance notes are supplied with the rent increase notice, which advise you how to ask for an independent review. 

Service Charges

Some tenants have to pay service charges for the property they live in.  A service charge is a charge for a service provided to your home that is shared amongst a number of properties in a block or on an estate, or in some cases is personal to you.

Your service charges are called ‘fixed’ service charges and the expected cost of providing the service is split equally between the properties receiving the service on the estate or in the scheme or in the block.

What is a fixed service charge?

A fixed service charge is the amount the landlord ‘fixes’ in any one year.  This is the amount that is expected to cost to cover the cost of the service provided for the coming year.

How are service charges increased?

These charges are increased at the same time as your rent. Service charges that are covered by Housing Benefit or Univeral Credit are generally limited to a maximum increase of CPI plus 1% in any one year.  

Some service charges are not covered by Housing Benefit and can be increased at a different rate. Any increase in rent, service charges and support changes are all included in the rent review notice.

‘Section 13(2) of the Housing Act 1988.  Form number 4B’ or in the letter telling you that the rent is being increased. The breakdown of the services is included in the increase notice so you can see what service charges you are paying for.

Affordable Rents

Some rents are set under the Government Affordable Homes Framework which was introduced to enable the housing providers to build new homes. Affordable rents will be charged on all newly built properties plus some existing properties that we can convert to affordable rent when they are vacated.

How is the rent set?

Affordable rents are set at a level up to 80% of market rent (inclusive of service charges) at the time the property is let. A market rent is the rent a landlord can expect to charge when letting a property for private renting purposes. 

When you make a bid on a home on our waiting list, it will be clear if the property you are bidding on is subject to an affordable rent.

When will my rent change?

The rent will be increased once a year, usually in October, at a maximum rate of CPI (Consumer Price Index) plus 1%. The CPI is based at September of the previous year before the increases take place. You will be informed in writing when the new level of rent takes effect.