By Linda Waterman
Problems with the de-regulation of rents and service charges first started in 1989 when social landlords in England (councils and housing associations) ceased to issue ‘Secure’, ‘Fair Rent’ and ‘Regulated Tenancies’, all of which afforded tenants a number of rights and safeguards.
Limiting Social Rent Increases
The change took place at around the same time that new legislation allowed councils to transfer huge quantities of housing stock to housing associations, often well below the true value of the properties.
Prior to this, rents and service charges were set and regulated by the Rent Officer Service which determined the figures for social housing. These were recorded as a ‘Rent Registration’ for every social rent property.
Rents and service charges could not exceed these limits unless a new Rent Registration was granted. Re-registration could only take place once every two years, and of course, the whole process involved very close scrutiny of what was being charged.
Any old tenancies issued under this regime still continue as such today, but there are now very few of these left. Instead, annual rent increases are applied in accordance with the current Rent Standard, as long as the rent and service charges combined do not exceed the Registered Rent. These were the good old days!
Valuation Office Agency Rent Officers determine ‘Local Housing Allowance’ rates and maintain a register of fair rents for regulated tenancies in England.
In 2001, the ‘Choice Based Lettings’ (CBL) system introduced a public listing of vacant social homes that prospective tenants could ‘bid’ for. This exposed the vastly differing rents being charged for similar or identical properties under different landlords. Just a year after the introduction of CBL therefore, government introduced ‘target rents’ using a formula under the Social Rent Regime. It was aimed at introducing consistent rents for comparable properties.
Rent Convergence Falls Apart
Government expected the inconsistencies in rents to be ironed out over a 10-year period. The theory was that all social rents in England would converge to meet the target social rent rates at the end of a decade, addressing the huge inequities that had evolved since 1988.
However, the fly in the ointment is that many landlords haven’t implemented rent convergence in accordance with policy, despite this being a regulatory requirement.
So why are rents still not synchronised, consistent, or fair?
There are still to this day vast differences in the rents being charged for similar or identical properties in the same location, even between those owned by the same landlord.
Such anomalies should not be evident two decades after a policy was introduced to eliminate them. But the Target Rent Regime was never properly implemented, meaning that many rents have still not converged.
Many landlords continue to set rents for new tenancies at levels way above where they should be.
Many landlords increase rents by amounts that exceed the permitted regulatory limits.
And many landlords have no clue whatsoever about the Rent Standards and how to implement them.
There were some very obvious, glaring errors with the Target Rent Regime. Firstly, at some point, responsibility for checking compliance was handed over to the landlords themselves to self-report and self-regulate.
Secondly, there was absolutely no provision made for the regulation of service charges. Unsurprisingly, and not unexpectedly, the result is that the very same naughty children who behaved so badly when left to their own rent-setting devices between 1989 and 2002, very soon added obscene and extortionate service charges to their list of misdemeanours.
So this is where we are today, and we are all very well aware of the catastrophic consequences. The irony is that not only are individual residents being extorted to the hilt, but so too is the public purse which merrily hands over vast sums of money to landlords each year in the form of Housing Benefit.
The benefits system is changing from Housing Benefits (HB) to a less differentiated Universal Credit, so the most recent reliable figures we have are for 2018. These reveal that councils received £5.14 billion for more than 1.7 million of their tenants on HB that year. Housing associations received even more, raking in almost £9 billion from the taxpayer to cover the rents and service charges for 1.9 million tenants.
Nor do these payments receive any scrutiny by Department for Work and Penions; the government department which oversees them.
As tenants and residents affected by these structural fissures in the social housing system, we must keep on lobbying and campaigning until we force government to improve the regulation of social rents, extend it to cover service charges, and give us the power to hold our landlords to account.
This is especially true of the housing association sector where, unlike council housing, we don’t even have the facility (yet) to vote for those we want to be in charge.
15 August 2022
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