In Dudley your rent is set centrally by the government and not the council. This rent setting formula was introduced in 2002 and aims to keep your rent at a stable level until your rent reaches a Target Rent.
This 'National Rent Formula' takes into account basic things like the number of rooms in your home, average earnings in the region, and the market value of your property.
The government also sets a maximum rent increase for each property within the formula. This is to ensure that there is a smooth transition to the Target Rent and that all increases are in line with government formula rent instructions.
Rent setting 2012-13
The rent increase fon average this year will generate an increase of 7.7%, equivalent to £5.54 per week. Letters will be sent to tenants from 17 February onwards.
Frequently asked questions
Why is the percentage rent increase so high when interest rates are so low at the moment?
The Government issues an annual statement containing a formula for calculating rent increases. The formula that the government uses is set out below:
The rent increase is set using a September 2011 inflation figure called the Retail Price Index which was 5.6%. This is applied to all rents but there is an additional amount on individual rents of ½% of the rent + £2.
Why are rents being increased so much in this current economic climate?
To understand the current situation we need to start by understanding how much Government policy dictates what happens at a local level.
The Government decided in 2002 that it wanted the rents of housing association properties and council properties to be the same. This was based on the need to make as many homes affordable and accessible to those in need of housing. People would then have a greater choice of properties to pick from. This is known as rent convergence.
It is expected that the rents on council and housing association homes will be the same in 2015/16 and until that time the Government will set the rent increases that Councils will have to make.
Dudley has, since 2002, increased rents in line with government guidance.
Why doesn’t Dudley freeze its rents given the current financial climate?
If Dudley didn’t increase its rents in line with the Government guidelines, it would be storing up a problem for the future as larger increases would have to be applied to ensure that rents match with those of housing associations by 2015/16.
You may have read that councils have been given more control over its funding for council housing. This is true but councils still are expected to increase the rents at a level set by central government. We need our rents to maintain, manage and improve our housing stock.
Was there any consultation on the level of increase?
Yes, in so far as government firstly tells us of its proposed intentions and the council can comment. This is part of a document called a draft determination. The cabinet member, Councillor Adrian Turner, in responding to the proposed rent increase, whilst understanding the Government policy, expressed his concern over the level of increase in the current economic climate and in particular made reference to our tenants who are not supported by housing benefit.
We consult annually with Dudley Federation of Tenants and Residents Associations on the rent increase and report verbally to the Cabinet meeting where the rent increase is determined (8.2.12). This takes place in January and in the past, the views of the federation have mirrored the concerns as expressed by the cabinet member.
Will Government control rents in the future?
As far as we can tell the Government will look to control rent until council and housing association rents are comparable.
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