Rent Convergence Proposal Could Unlock Investment in Housing Quality
The government has launched a consultation on rent convergence, proposing that below-formula social rents be allowed to rise incrementally above the CPI+1% cap until they align with formula rent.
The goal is to unlock investment in housing quality and supply without compromising affordability.
Key Details
- Mechanism: Properties currently let below formula rent could increase by £1 or £2 per week above CPI+1%, subject to final policy decisions.
- Consultation Deadline: Open until 27 August 2025, with final details expected in the Autumn Budget.
- Policy Context: Part of the 10-year rent settlement announced in July, offering financial certainty to housing providers.
- Sector Feedback: Housing associations have long argued that rent convergence is essential to fund repairs, upgrades, and new builds.
The proposal follows feedback from earlier consultations indicating that investment in new and existing homes cannot be unlocked without addressing rent disparities.
What It Means for the UK Social Housing Sector
Rent convergence could be a financial game-changer, enabling:
- Greater borrowing capacity for providers
- Accelerated delivery of new homes
- Improved maintenance and retrofit programmes
It also reflects a more nuanced approach to affordability, balancing tenant protections with the need to sustain and grow the housing stock. If implemented carefully, it could help the sector move from survival mode to strategic growth—delivering better homes, faster.
