There are two different rent types for our social-rented homes. These are called formula rents and affordable rents. Formula rents are sometimes referred to as ‘social rents’.
It depends on how your homes purchase/build costs were funded as to which rent is used. If your home is purchased or built using social housing grant, we agree the rent levels with Home England (a government department).
As the name suggests, we use a government formula to set these rents. This is a complex calculation and takes into account the following:
– How much the home would have been worth in 1999 (even if it wasn’t built then)
– The average earnings in the county or local government area
– The number of bedrooms the property has
– A percentage increase/decrease for every year since 1999 as set by the government
– We can add an additional 5% for general homes and 10% for sheltered housing designated for older persons.
If you’d like to see the exact calculation, it is available on the government website in the ‘Rent Standard’ – you can find it here
There might be an additional service charge, separate from your rent which funds services like communal areas in flats, grounds maintenance and cleaning.
Affordable rents are set at a percentage of the market rent (what the average price of homes in the area is on the open market). This is often 80% of the market rent – so if the average three bedroom property in your area was rented for £1000, the affordable rent would be £800.
Rent to buy homes
Rent is set the same way as affordable rents – a percentage of the market rate – usually 80%. These are called intermediate rents.