Government announces consultation on how to reintroduce rent convergence
As part of the Government’s new five-step plan for social and affordable housing, published on 2nd July, the Ministry of Housing, Communities and Local Government (MCHLG) have launched a new consultation on how to implement rent convergence.
The Government recently confirmed, as part of the Spending Review, that social housing rents will be permitted to rise by the Consumer Price Index (CPI) +1% for ten years from 2026. In addition, the Spending Review confirmed that there would be a new consultation on how to implement rent convergence as part of the ten year rent settlement.
Reintroducing rent convergence will be optional for landlords, but it will allow rents for properties which have never reached target formula rent to rise by an additional level each year, in addition to CPI+1%. Once the property’s rent reaches the target level, convergence will cease and rents will only be permitted to rise in line with CPI+1% thereafter.
The consultation is running until 27th August 2025, and is seeking views principally on:
- whether convergence should be permitted at £1 or £2 per week in addition to CPI+1%.
- whether convergence should be permitted throughout the entirety of the ten year rent settlement or for only a portion of the period.
The consultation documents note that the potential impact of rent convergence would be felt differently across the country, with the average gap between actual rent being charged and target rents being by far greatest in London. In all three northern regions, this gap is lower than the English average, for both housing associations and local authority landlords, but the impacts of rent convergence will impact different providers in unique ways.
In our Spending Review submission and our submission to the Government’s previous consultation on rent policy, the NHC called for both a ten year rent policy of CPI+1% and the reintroduction of rent convergence at either £2 or £3 per week. The NHC highlighted that the reintroduction of rent convergence, alongside a long-term rent policy of CPI+1%, was the only way that social housing finances could return to a financially sustainable position in the long term, opening up additional capacity to invest in new and existing homes.
We will be working with our members between now and 27th August on our response to the new consultation, which can be accessed here. All views and perspectives on this consultation from members are welcome. Please contact Senior Policy and Research Manager, Tom Kennedy, to discuss these issues further at tom.kennedy@northern-consortium.org.uk
If you want to find out more about the recent announcements and contribute to the NHC’s response to the consultation, the NHC Policy team will be speaking at our Policy Network which is due to take place on the 6th August.
