After the Government announced in June that rent convergence would be reintroduced in the upcoming rent settlement, the consultation on how to implement this has now been published (How to implement Social Rent convergence). The final decision will be announced in the Autumn Statement, so this is going to be a quick turnaround.
Here's a breakdown of the key points all RPs need to know:
What is rent convergence?
Rent convergence is the process of aligning Social Rent levels gradually over time to provide consistency across the country. This is to deal with historic variation in Social Rents which currently means that some rents are significantly below formula rent. Reintroducing convergence will allow Registered Providers of Social Housing (RPs) to increase rents up to the permitted level to achieve a more equitable system for tenants and increase much needed income for RPs to survive and all being well, begin to develop much needed homes once more.
The consultation seeks views on how this should be practically achieved.
What are the options?
The consultation is asking five questions relating to the amount, impact on RPs and tenants and how long convergence should be available.
The questions are:
- At what level should Social Rent convergence be permitted?
- £1 per week
- £2 per week
- How would the benefits for the supply and quality of social and affordable housing differ depending on whether convergence was permitted at £1 or £2?
- How would the impacts on households differ depending on whether convergence was permitted at £1 or £2?
- Should convergence be implemented from 1 April 2026 or from a later date, and what would be the implications of implementing it from a later date?
- How long should convergence be in place for, and what would be the implications of different durations of convergence?
Given the variation in property values, incomes and other financial disparity across the country it seems sensible that convergence should be permitted at the higher level with RP discretion applied if they feel that a lower amount is appropriate for their residents in a particular area. The sector, particularly RPs in the south of England are keen for convergence to be permitted up to £3 a week given the significant financial pressures being felt, and although this isn't an option in the consultation, RPs may wish to consider including that option in their responses too.
The last period of convergence lasted 13 years and the idea was that RPs should have been able to catch up with formula rent within that time. That did not materialise and given the significant disparity in rents, convergence for the entire rent settlement this time around seems the only option. This being in the knowledge that convergence may only be applied for those with rents tracking formula rent, and as soon as it catches up, the status quo for that resident is resumed.
Practical considerations
RPs will need to prepare for the practical implementation of convergence. Systems will need adapting, communication updated and tenants engaged in the journey so that they understand the reasons for convergence being adopted. Affordability will be an important consideration and tenancy sustainment and revenue teams are going to be important in managing the risk of higher arrears.
The consultation closes on 27 August 2025 so RPs will need to move quickly to get their responses in before the summer holidays hit.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
