Most housing associations on track to meet 2012 rent convergence targets
Rents climb by 5 per cent
Housing association rents rose by 5.1 per cent in 2008/09, a study for the Tenant Services Authority has found.
The average rent of a housing association general-needs property increased from £69.96 a week in 2008 to £73.50 a week in 2009.
Housing associations have until 2012 get their real rents to within 5 per cent of target rents as part of the rent convergence process designed to reduce the difference in rents between landlords for similar properties in the same areas.
The study, which only covered housing associations, found that the gap between real and target rents had narrowed throughout 2008/09 from £2.70 to £2.29 per week. Average association rents in 76 per cent of local authority areas were within 5 per cent of target rents in 2008/09 compared with 63.6 per cent in 2007/08.
London had by far the greatest gap - 7.7 per cent - between real and target rents. This is because it had a relatively large number of properties where target rents were higher than the permitted maximum rent increase, which is 0.5 per cent above the retail price index plus £2. In the capital, 13.6 per cent of average target rents reported by housing associations were above this rent cap. High property values in the capital push up its target rents.
In the south east, only 2.9 per cent of average target rents were above the rent cap. In other regions, the proportion was below 1 per cent.
Connie Tang, research associate at the Cambridge Centre for Housing and Planning Research, which carried out the study, said she believed average rents for most housing associations would be within 5 per cent of target rents by 2012. But she said landlords with homes that are well below target rents - mainly in London - might not feel able to increase rents quickly to reach the target because of concerns about tenant affordability. They are also constrained by rent caps. She speculated that higher values of new build properties might also push up their targets.
Landlords can choose not to implement the maximum allowable rent increases to bring properties up to target if they can cross subsidise them from other resources.
Stuart Robkey, head of investment policy and strategy at the National Housing Federation, said: ‘The vast majority of rents will reach target [by 2012]. While the goal was for all rents to reach target, there is a realisation that some rents won’t.’
He added that the NHF was beginning a research project on the future of rents after 2012. It will cover what might be included in a rent formula, such as income or property values.
Average rents within 5 per cent of target rents
59.2 per cent
Of associations with more than 10,000 properties
64.8 per cent
Of large housing associations (5000 to 9999 properties)
54.1 per cent
Of small housing associations (less than 1000 properties)
66.8 per cent
Of stock transfer associations
54.4 per cent
Of black and minority ethnic associations
62.1 per cent
Non BME housing associations
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