Dubman
The Rent Standard sets out how councils and housing associations should calculate the rents on their properties. You cannot go outside of the Standard.
There are two main tenures – social rent (sometimes known as general needs) and affordable rent.
Social rent is what you would expect ‘council’ houses to be charged. It is calculated using a formula that takes into account the number of bedrooms, the average earnings of that area, and the value of the property as at January 1999. The earnings point is key and means that a 3 bed house in London would not have the same rent as an identical house in say Sunderland – because the earnings in the two areas are different.
On average, social rent is between 35% and 50% of the rent that would be charged on the open market. My mum lives in a 3 bed semi-detached housing association property, with a massive garden. Her rent is £132 per week! All repairs covered under that as well. When she passes on, that house will be given to the next person on the waiting list and the cycle starts again (as it should do).
For info – there are not many social rent properties being built as developers just cant afford it. The numbers don’t stack up and the break even point where the rent exceeds the build price is massively extended. So they steer clear.
Affordable rent is a bit different. You are allowed to charge up to 80% of the open market price for a property – so if a property would get £1,000 rent a month on the open market, you can charge a maximum of £800 (you could charge lower if you want, but no-one ever does). As the market moves up, so does the rent (but you can only revise the rent when someone moves out, you cant just put it up every few months as the market goes up)
For both tenures, the rent standard allows you to increase the rent each year by CPI + 0.5%. However for 2023/24 the government overruled that and limited it to 7% maximum. So we are in a situation where all our costs are going up by CPI (11-13% etc) but our income is restricted to 7% only – so your point about maintenance contracts is relevant. The contractor may have built in a CPI increase to their contract with the council, which the council will need to honour.
