Rent Setting Policy

This policy applies to the customers as detailed below: 

Social Housing Tenants (in general needs and supported housing properties) – covered by the Rent Standard and the Policy Statement on Rents for Social Housing (the Policy Statement): 

• Social Rent (including Fair Rents – Secure Tenants)
• Affordable Rent  
• Rents for social tenants with high income.

Other social housing tenants – not covered by the Rent Standard and Policy Statement:

• Shared Ownership (Low Cost Home Ownership)  
• Intermediate Rent (including Rent to Buy & Mortgage Rescue)
• Specialised Supported Housing  
• PFI Social Housing
• Temporary Social Housing
• Care Home.

Non-social housing tenants

• Market Rent (including Student Accommodation and NHS Keyworker)
• Leaseholders (ex Right to Buy & 100% Staircased Shared Owners)
• Leaseholders (Commercial Units)
• Garages.

This Policy does not cover service charges, except in the context of setting of Affordable Rents where the rent is inclusive of the service charge. Service Charges are subject to a separate policy.   

Consultation has taken place as part of the development of this Policy with the Risk and Compliance Group, Customer Connect Panel and Group Board. Consultation has also taken place externally with legal consultants on the technical aspects of the policy.

Since 2001, rents for properties let at ‘Social Rent’ (which constitutes a majority of YHG rented social housing properties) have been based on the formula set by the Government (hence ‘social rent’ is sometimes known as ‘formula rent’).

• In 2011, the Government introduced ‘affordable rent’ which permitted rents (inclusive of service charges) to be set at up to 80% of market rent (inclusive of service charges) 
• From April 2015, the Government made it possible for social landlords to charge a full market rent where a social tenant household has an annual income of at least £60,000 (known as rents for High Income Social Tenants or ‘HIST’) - Ground Rents for these Leaseholders are dealt with in a separate policy
• From April 2016, the Welfare Reform and Work Act 2016 required social landlords to reduce their social rents and affordable rents by 1% each year for four years
• In October 2017, the Government announced its intention to set a long-term rent deal for both local authority landlords and housing associations. This would permit a maximum annual rent increase on both social rent and affordable rent properties of CPI plus 1% from April 2020, for a period of at least five years. CPI means the general index of consumer prices (for all items) and this shall be the annual change in the CPI figure for September of the preceding financial year
• From April 2020, rent setting and rent reviews were required to be in line with the Regulator of Social Housing’s (RSH) Rent Standard and the Policy Statement on Rents for Social Housing issued by the Ministry for Housing, Communities and 
  Local Government (MHCLG). This new regulatory framework for social housing rents recognised the need for a stable financial environment to support the delivery of new homes and to enable registered providers to plan
• In November 2022 the Chancellor of the Exchequer announced that social housing rents had been capped at 7% in 2023-24. (Under current rules, rents could have risen by up to 11.1%). There is an exemption from the rent cap for supported housing
• YHG applied “rent forgiveness” to shared ownership rents for FY 2023-24, whereby rents were set at the level allowed in the lease but a reduction agreed by Board was applied for affordability at the discretion of YHG. This same reduction was applied for FY 2024-25 however for 2025-26 YHG discontinued rent forgiveness. 

Social Housing Tenants (in general needs and supported housing properties) – covered by the Rent Statement and the Policy Statement.

• Social rents for general needs and supported tenancies created by Your Housing Group will automatically be set at formula rent levels in line with regulatory requirements, and then follow the annual guideline limit set by the Rent Standard. This approach will ensure that similar rents are charged for similar social rent properties
• Rents will not be increased for individual tenants following the completion of major works to their homes. However, Your Housing Group will still be subject to Government guidelines relating to formula rents, which state that any increase in the capital value of a property as a result of any major works has to be taken into account when setting the rent on any re-letting of a property. This means that if the capital value of the property increases significantly due to major works, then the Government’s formula rent for the property can be increased following re-let to reflect this
• Rent caps apply as a maximum ceiling on the formula rent. Therefore, where the formula rent would be higher than the rent cap for a particular size of property, the rent cap will be applied. The rent caps are set by the RSH each year and increase by CPI + 1.5% annually
• The Rent Standard and Policy Statement recognise that registered providers should have some discretion over the rent set for individual properties, to take account of local factors and concerns.  As a result, there is flexibility for registered providers to set general needs social rents up to 5% above formula rent (10% for supported housing). This will be applied across all YHG’s social rent properties subject to an annual assessment of affordability as part annual rent review
• Affordable rents will be set in line with the Rent Standard and Policy Statement at no more than 80% of the market rent (inclusive of service charges) and will then follow the Rent Standard annual guideline limit.  An affordable rent should be no lower than the potential formula rent for a property - the formula rent therefore constitutes a floor for the affordable rent to be charged.  Valuations for affordable rents are compared to the formula rent to ensure the rent charged exceeds this. To ensure that affordable rents remain at no more that 80% of the gross market rent (inclusive of service charges), the rents will be rebased on each occasion, subject to a property valuation, when a new affordable rent tenancy is issued
• Local Housing Allowance (LHA) rates will be considered as part of the annual rent review however it is not proposed as a general rule to cap rents at this level unless this is as part of a Development Scheme appraisal approved by Board. If there is an issue on a particular property or scheme impacting on the ability to let then this may be considered but would require sign off from the Director of Finance and the Director of Housing
• Fair Rents (secure tenancies) – these rents are capped at the lower of the social (formula) rent or the fair rent registered by the Valuation Office Agency (Rent Officer) whichever is the lower.  A request to change the fair rent on these properties must be made via the Valuations Office Agency and can only be made once every 2 years. If these properties become vacant and are relet, then they will no longer be classed as secure or fair rent units and will revert to the standard 
  formula rent in line with other social housing rents (or affordable rent if the property had been previously let as affordable rent) 
• YHG does not operate a policy for charging High Income Social Tenants market rents (as permitted by the Rent Standard – see above). Tenants on high incomes will not be charged a market rent due to the lack of availability of information about income levels within each household or a mechanism for compelling tenants to share this information.  There is a risk that any policy to charge a higher rent for tenants with higher incomes would be unequally applied. The potential additional revenue from such a policy is likely to be offset by additional administration costs. This policy will be kept under review.
• Annually, the Finance Department (Charge Team) will calculate the rent change for the coming financial year based on the Rent Standard and Policy Statement and any additional government and regulatory guidance, and prepare a report for the Your Housing Group Board setting out the: 
  - Methodology used to set the rent increases for different property types including the rates of inflation applied; and
  - Financial and non-financial implications of applying the proposed rent increase
• The Finance Team review relet rents across tenures on a monthly basis based on exception reporting. This is reviewed by the Rent and Service Charge manager. The Finance Team may review this frequency and amend if required. Other Social Housing Tenants – not covered by the Rent Standard and Policy Statement
• Shared ownership (LCHO) – rent will be set at the recommended level included within the Capital Funding Guide. For ‘resale’ homes, the starting rent will be based at the same level as the previous shared owner was paying, unless the rent is subject to review and the assignee (new owner) will be notified of the revised rent as part of the resale process. Annual uplifts will be determined by the individual lease agreements, but this may be capped as part of the annual review process
• Intermediate Rent (IMR) (e.g. Rent to Buy) – for grant-funded IMR the rent will be set in accordance with the Capital Funding Guide, usually at 80% of the market value inclusive of service charges, following an open market valuation report. The maximum annual rent increase will be as detailed in the Capital Funding Guide or in line with any subsequent Regulatory Guidance
• Intermediate Rent (Mortgage Rescue) – this scheme is no longer available. On any void, an appraisal is to be completed for consideration as to whether the property should be sold or relet on a social rent basis. Thereafter, rent increases will follow the Rent Standard
• Specialised Supported Housing - rent charged complies with the agreement or arrangement with a local authority or health service (within the meaning of the National Health Service Act 2006). Uplifts will follow the agreements in place and will be considered as part of the annual rent review
• PFI Agreements – rent setting and any changes to rents will be in line with the individual PFI agreements
• Temporary Social Housing – rents set based on the formula plus tolerance. Uplifts will follow the Rent Standard
• Care Homes - rents applied will be set out in the annual rent review for approval by Board. Relets will be at the rent prevailing. 

Market Rent / Non-social housing tenants 

Rents are generally set based on open market value taking into account the desirability of the premises on the open market. Some of these units are within Retirement Living Schemes where there is a limited client base and the commercial businesses would make 
little profit, therefore in some circumstances no rent or a lower rent is charged. Garage rents are increased annually by CPI for both YHG tenants and non-tenants. Non-tenant garage rents are subject to VAT.  

Communicating with Tenants and Leaseholders

All customers (Tenants & Leaseholders) will receive notification of any rent changes in line with the terms of their lease or tenancy and any statutory requirements specific to their agreement e.g. for assured periodic tenants, one calendar month for a monthly charge or where section 13 of the Housing Act 1988 applies (whether the tenancy is weekly or monthly); or where the tenancy contains a contractual rent review clause, the period will normally be 28 days’ notice for a weekly charge.  For secure tenants, the period is normally 28 days but dictated by the tenancy agreement; for fixed term assured shorthold tenants, the period is determined by the tenancy, usually 28 days. In practice in order to ensure compliance one month’s notice is normally given. 

Where rents are reducing we will usually apply the same timescales even though rents can usually be reduced on shorter notice.    
Garage tenants will receive a notice in line with their individual agreement, usually a minimum of one week’s notice prior to any increase.  

Support to Tenants and Leaseholders

Your Housing Group promotes a positive payment culture which expects all customers to maintain a clear rent and service charge account irrespective of whether they have benefit entitlements as a payment method.  

Whilst we adopt an approach of early intervention to reduce the likelihood of arrears accruing, Your Housing Group recognises that from time to time a customer’s circumstances may change unexpectedly. In these instances, we will attempt to work with the customer and all appropriate support functions to reach a positive outcome.    

Payment Methods

Your Housing Group’s preferred payment option for customers is direct debit and all customers will be encouraged to pay by this method.  Other payment methods such as standing order, debit/credit card or payment card will be considered if it is not possible for the customer to pay the charges due by direct debit. Rent and service charge must be paid in advance as per the tenancy agreement or in accordance with any other occupancy 
agreement e.g. lease. Your Housing Group does not encourage customers to use methods of payment that may lead to greater debt but, while respecting that this is the customer’s right of choice. 

Record Keeping

It is essential that all information pertaining to the tenancy and payment history of the resident (including history and record of charges raised) is accurately recorded and maintained primarily within the Groups housing system. This is to ensure that the Group’s income is maximised and correctly accounted for and reported on. The methods and procedures of record keeping that will be followed are contained within the Charge Setting Procedures. 

The Board has approval responsibility for the Rent Setting Policy.  

The Board receives regular updates on the implementation of the Rent Setting Policy and its impact upon the Business Plan so that they can have assurance that it is operating effectively in practice.  The Audit & Risk Committee will also monitor this assurance. 

The Chief Financial Officer has overall responsibility for this Policy. 

The Head of Finance (Reporting and Controls) is responsible for the review and update of this policy within agreed timescales.  

The Rents and Service Charge Manager is responsible for overseeing the timely implementation of this policy and the maximisation of income recovery. 

YHG Business Plan reflects that Income Collection is a key landlord responsibility. YHG will seek to mitigate business risk by increasing income streams where it can by maximising income recovery, whilst paying due regard to our obligations to our customers as a provider of affordable social housing. 

Internal and external factors on rent reviews could impact the loan covenants on YHG finances. The business will work closely with Treasury to ensure the financial impacts of rent reviews on the financial viability of YHG are monitored in a timely manner. 

This document is stored in the YHG’s intranet for internal customers 
YHG recognises that confidentiality is important to customers and will treat all information relevant to each customer in the strictest confidence, as will all contractors, under the Data Protection Act 2018, including the UK-GDPR provisions. 

Staff recognise that information must be recorded in writing and may be requested for disclosure in court. 

Information sharing agreements will be put in place where necessary in order to facilitate the lawful sharing of information with third parties.  

This Policy is applied in a way which ensures equality of treatment for all customers without discrimination, or victimisation on account of any protected characteristic as defined within the Equality Act 2010. In drafting this policy YHG has had regard to its public sector equality duties under s149 of the Equality Act 2010, namely the need to:

• Eliminate discrimination, harassment, victimisation and any other conduct that is prohibited under the Act
• Advance equality of opportunity between people who share a relevant protected characteristic and persons who do not share it
• Foster good relations between persons who share a relevant protected characteristic and persons who do not share it. 
  The policy pays regard to diversities around enabling access to and delivery of any services. 

An Equality Impact Assessment (EIA) has been undertaken on this policy and copies of the EIA are available upon request. 

Upon request, YHG provides translations of all its documents, policies and procedures in various languages and formats including computer disc, braille, large print and tape.   

This policy is available internally to all staff on our Intranet and to all customers on our website.

YHG ensures that employees with charge setting responsibility are appropriately trained in calculating rents in line with this policy. Charge team members are assigned rent standard training in Helix, and are expected to complete this every 2 years.  

In addition to training, it is expected that all staff involved in the rent setting process are to have an understanding of the regulatory standards and legislation that apply to this policy.  

YHG maintains a suite of exceptions reporting and a dashboard for management assurance will be available to ensure compliance with the Rent Standard and Policy Statement. 

YHG provides assurance on the exceptions reporting and other relevant rent and relet information to the Risk and Compliance Group. 

YHG reviews the Rent Setting Policy every two years, or sooner if required by statutory, regulatory, best practice, emerging developments, or circumstances arising from reviews of other Group-wide policies. 

The Head of Finance (Reporting and Controls) has the responsibility for updating the Policy.