Alongside the Budget, the Ministry of Housing, Communities and
Local Government (MHCLG) has announced a
consultation on a new rent settlement that would cap council
and housing association rent increases at CPI + 1% for the five
years from 1 April 2026 to 31 March 2031. A rent increase of
CPI + 1% has already been confirmed for 2025/26. Based on the
September CPI rate of 1.7% this would allow for increases next
April of up to 2.7%.
Although the basic proposal is for a five-year settlement at CPI
+ 1%, the consultation paper states that "it is the Government's
intention to set a further 5-year settlement for the period beyond
this". However, views are sought on variations to this approach,
such as a ten-year settlement, or a rolling commitment.
The CPI + 1% limit would apply to both social and affordable
rents.
The consultation paper states: "We have considered whether to
permit rents on Social Rent homes that are below formula rent to
increase by an additional amount, over and above CPI + 1%, through
a reintroduction of a 'convergence mechanism'. But this
proposal is rejected because "it would reduce the disposable income
of tenants affected by rent increases and result in higher welfare
spending".
The rent settlement would be implemented as a direction to the
Regulator of Social Housing requiring amendment of the Rent
Standard. The consultation paper lists a number of 'minor and
technical' changes to the rent policy that it also proposes to
include in the Direction.
The consultation closes on 23 December.