As part of our bid to increase the supply of social housing in the borough, we applied to the Regulator of Social Housing (RSH) for permission to build new homes starting in 2011. As part of this bid, the RSH gave permission for us to increase rents to an ‘affordable rent’ which is currently calculated as 80% of the market rent for a similar property in the same area.
From September 2011 to March 2015 we set affordable rents whenever a 2,3 or 4 bed house became empty. We continue to convert properties to affordable rent, restarting in January 2016. Annual changes to affordable rents are currently covered by the 4 year rent reduction of -1% per annum starting in April 2016.
How target rents are calculated
Target Rents are calculated using a formula that takes into account the value of a property as it would have been in 1999 and the relative level of local earnings. Rents will therefore be lower in areas where property values and earnings are low and higher in areas where property values and earnings are higher. A bedroom factor is also included to ensure that larger properties have a higher rent than smaller properties.
Finally, the ‘Target Rent’ rules allow us to increase rents to 5% above the target rent level. We implemented this flexibility for the first time in April 2015 in order to achieve a more consistent pattern of rents relative to the market.