Housing Minister Matthew Pennycook has provided more detail on the 10-year rent settlement for social housing providers, announced in last week’s spending review.

In a letter to registered providers, Pennycook confirmed that social landlords will be permitted to increase rents by CPI+1% every year for 10 years from April 2026. He said the move would give registered providers, lenders and investors “greater long-term certainty”.

He also confirmed that the government had agreed to a rent convergence mechanism, following pressure from landlords.

In the letter, the minister writes: “The government is committed to setting a rent policy for social housing that enables providers to borrow and invest in new and existing homes, while also ensuring that existing and future social housing tenants are appropriately protected.

“With those objectives in mind, we are confirming that we will permit social housing rents to increase by CPI+1% each year from April 2026.

“In order to give registered providers, lenders, and investors greater long-term certainty, and in light of the responses to the consultation we carried out last Autumn, we are doubling the length of the settlement from five to 10 years.”

He adds: “In response to the consultation carried out last autumn, providers were clear that the level of investment in new and existing social housing that is needed to deliver on the government’s ambitions would not be unlocked unless a rent convergence mechanism is reinstated.

“Such a mechanism would allow rents on 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.

“This would be far fairer than a higher across the board rent increase, as it would only ask those who currently pay lower rents to pay a bit more.

“The government is therefore announcing that it will implement a convergence mechanism as part of the new rent settlement. The details of precisely how, and at what level, this mechanism will be implemented will be confirmed at Autumn Budget later this year, taking account of the benefits to the supply and quality of social housing, the impact on rent payers and the impact on the government’s fiscal rules.

“To inform this, we will shortly be publishing a focused consultation on how convergence will be implemented, with options for this being capped at £1 or £2 per week. The final decision will be announced at Autumn Budget.”

The announcement on future rent policy has been welcomed by the sector.

Steve Partridge, Director and Head of Affordable Housing Consultancy at Savills, said: “The government has listened to the calls of the housing sector, delivering more support for social and affordable housing and starting to address the housing crisis.

“A 10-year rent settlement at CPI +1% is a positive move. It’s a step towards meeting the challenge of building 1.5m homes in England, providing stability in the event of any future political change and confidence for housing providers and investors to commit to increasing the supply of new affordable homes.

Greg Reed, chief executive of Places for People, said: “A decade-long rent settlement brings much-needed certainty for our sector, encouraging long-term investment and enabling sustainable financial planning. Alongside a new expanded Affordable Homes Programme, this will drive real momentum to meet the government’s 1.5 million homes target.

“We also welcome government’s consultation on social rent convergence and believe that even more can be done to further strengthen the sector’s financial capacity. “

Nicholas Harris, chief executive at Stonewater, added: “The new rent settlement at CPI+1 gives us much greater financial stability and certainty, which will be vital when planning our long-term investments and goals.

“This gives us an assured income stream and will unlock significant capital investment that will help us to deliver new homes and support existing customers. We sincerely hope that the government stands by this settlement to provide much-needed certainty for the sector.”