Explaining your rent increase
12 March 2021
If you’re one of our tenants, you’ll have received your annual rent review from us recently and seen we are increasing our rents by 1.5% from April this year. We want to be open with you about why we’re doing this.
Government Rent Standard
Social rents are set by government legislation. Between April 2015 and March 2020 social housing providers like Network Homes had to decrease rents by 1% each year. Since 1 April 2020, the Government has allowed social landlords to increase rents in line with its 2020 rent standard.
The 2020 Rent Standard allows social housing providers to increase their rents every 12 months from April 2020 until March 2025 by 1% plus the Consumer Price Index (CPI). The Government expects us to follow this specific formula to calculate and set our rents. The relevant CPI measure is taken from September the previous year, and in September 2020 the CPI was 0.5%. This is why your rent will go up by 1.5 % from April (1% plus 0.5% CPI).
Impact of COVID-19
The coronavirus (COVID-19) pandemic has created financial pressures for people and businesses everywhere, including Network Homes.
Because of the increased financial risks facing Network Homes, our Board agreed that we should increase our rents in line with the Government’s Rent Standard.
If we don’t do this, there is a higher risk that we may face tougher financial challenges in the future, making it harder for us to deliver services to residents and build new homes for people who need them.
We know that the pandemic has also seriously affected many residents, so the Board decided to increase our charitable fund from £50,000 to £100,000. This is a fund which residents can apply to if they are struggling financially and need one-off help.
How has the pandemic impacted Network Homes?
The pandemic has meant that:
- There has been an increase in the amount of time it takes us to let empty homes, which means we have missed out on rental income for longer periods.
- It has been more difficult for us to sell shared ownership and private sale homes for the prices we expected to be able to sell them for.
- Our housebuilding programme has slowed down, which leads to increased costs (e.g. more interest payments on the loans we take out in order to build homes).
Like many housing associations, we are also facing extremely high building safety costs. We are applying to the government’s building safety fund to help us meet these where possible, but funding may not be available for all our buildings that need work, and there is currently no funding available for buildings under 18m.
As a not-for-profit housing association, every penny of the surplus we make from rent and new homes sales each year is reinvested into delivering our social objectives, delivering more homes, maintaining our existing ones and seeking to improve our services year on year. All the factors above have put extra pressure on our income which enables us to do these things, and this is why our Board has decided to increase rents in line with the Government’s Rent Standard.
You can find out more about how we use your rent in our Annual Report for Residents 2019/20