The government has finally announced its long-awaited decision on the rent convergence rate for social housing properties.

Originally expected as part of last year’s Budget but delayed until now, the announcement means that providers will be able to increase rents on social housing properties that are below formula by up to an additional £1 on weekly rents each year over and above CPI+1% from 1 April 2027, and by up to an additional £2  on weekly rents each year over and above CPI+1% from 1 April 2028, until formula rent is reached.

Last summer, government consulted on how to implement rent convergence to address the disparity between actual social rents and formula rents. This would allow rents for social rent properties that are currently ‘below formula’ (i.e. lower than the usual maximum that may be charged when a property is let to a new tenant) to increase by an additional amount, over and above the CPI+1% limit, up to formula level.

The government says this will increase providers’ financial capacity to invest in new and existing homes.

In its response to the consultation, published today, the government said: “The government remains committed to providing a stable rent policy for social and affordable housing that supports investment in new and existing homes, with the right protections for existing and future tenants and for public spending.

“Having reviewed submissions to the consultation, government has now published its response, confirming that providers will be able to increase weekly rents for their social rent properties that are below formula by up to an additional £1 on weekly rents each year over and above CPI+1% from 1 April 2027, and by up to an additional £2  on weekly rents each year over and above CPI+1% from 1 April 2028, until formula rent is reached.

“This decision has taken careful account of the impact on rent payers and the implications for public spending, as well as the benefits to the supply and quality of social and affordable housing.

“Convergence will only result in a tenant paying more where their rent is below formula rent – i.e. below the maximum that could be charged if their social rent property was re-let to a new tenant. Around two-thirds of households living in the social rented sector in England receive support to pay their rents through Housing Benefit or the housing element of Universal Credit.

“The approach to implementing convergence restricts increases to an extra £1 to £2 on weekly rents each year, which will provide a gradual path for rents to converge over time. Tenants will benefit where convergence results in higher levels of investment by providers to deliver improvements to the quality and energy efficiency of their homes.

“We have also considered the interests of households who would benefit from more social and affordable homes being delivered – such as those who are currently trapped in temporary accommodation or unaffordable and/or unsuitable privately rented housing.

“We believe this outcome strikes the right balance overall.”