Rent setting for 2019/20
In July 2015 the Government asked housing associations to reduce rents by 1% each year for four years. This year is the final year of this rent reduction which ran from the years 2016/17 to 2019/20.
From 2020/21 the Government has announced that there will be a five year period of up to CPI + 1% increases for general needs and independent living rents. Nearly all of our supported living rents however, fall outside of these restrictions and so rent increases will be decided by the board, as they are now. Note, CPI is Consumer Price Index, which is a measure of inflation.
For this year’s rent setting process the main highlights are:
- All general needs and independent living tenants will see a one percent reduction in their core rent. However, as 2019/20 is a leap year, to ensure there is a 1% reduction on the annual rent of 2018/19 to 2019/20, most tenants will see a 1.28% reduction in their weekly core rent.
- Most of our supported living core rents will be increased by CPI + 1% which totals a 3.4% increase.
It is important to remember that most of our tenants pay a service charge in addition to their core rent. Our service charges are reviewed each year in line with costs. Because of our service reviews and some very effective service and contract management by the Group, service charges for the majority of our tenants have fallen over the past few years (although this has varied from one scheme to another).
For the 2019/20 year, it is expected that the picture will be slightly more complex:
- General needs service charges will reduce by an average of approximately 1%
- Independent living service charges will increase by an average of approximately 5% the main driver being an increase in heat and light costs (based on the costs incurred in the current year)
- Supported living service charges will increase by approximately 13%, the main reasons being an increase in:
- heat and light costs
- gardening costs
- the cost of fixtures and fittings replacements.
So, in summary, most general needs tenants will see an overall reduction in their core rent and service charges when combined, most independent living customers will see a small increase in their combined charge (an average of less than 1%), whilst most supported living tenants will see an increase.
Overall, with all of these impacts factored into our long-term plan, we remain financially strong and are well placed to meet the challenges of the coming year.