The Trust
Rent Setting and
Charges Policy
Service
Finance Team
Draft: August 2014 revision
Effective
2014
Date:
September
Affected Teams: All
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CONTENTS
1.
2.
3.
4.
5.
6.
7.
8.
9.
Policy Statement...................................................................................... 3
Policy ........................................................................................................ 3
Service Charges Policy ........................................................................... 5
Implementation ........................................................................................ 6
Garage Rents ........................................................................................... 6
Equality and Diversity Implications ....................................................... 7
Responsibility .......................................................................................... 7
Monitoring and Review ........................................................................... 7
Associated Policies and Documents ..................................................... 7
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1.
Policy Statement
1.1
This policy sets out how Peaks & Plains Housing Trust (the Trust) sets its
rents and service charges.
1.2
The Trust is committed to the following objectives in how rent and other
charges are set.
 To ensure that its rents and other charges are affordable to people in
housing need.
 To set rents which meet the needs of the business and ensure the
Trust continues to be financially viable.
 To meet the statutory, regulatory and contractual obligations in
setting rents and service charges.
 To ensure that all tenants are advised clearly at the start of their
tenancy what their rent is and any service charges that apply.
 That any change to rent is clearly communicated to customers
ensuring that proper notice is provided in line with our statutory,
regulatory and contractual obligations.
 To take in to account the ability of customers to pay their rent,
particularly those on low incomes or welfare benefits.
 That as part of effective governance, the Trust’s Board will agree
details of all rents and service charges and how they are calculated
on an annual basis.
2.
Our Policy
2.1
Rent Setting
2.1.1 The Trust's Policy is to provide quality social rented housing that is
affordable to a range of income groups, which includes people on modest
incomes. This will be a mix of social and affordable rented properties as
defined by the HCA.
2.1.2 Financial and organisational efficiency is important to the Trust, its
regulator and its funders. It will therefore ensure that it will take all
appropriate steps to provide good value for money or all our customers.
2.1.3 The Trust will charge rents in accordance with the needs of its Business
Plan and the rules of the regulator. The rent setting policy will comply with
the government guidance on the calculation of rents. This applies to all
general needs and sheltered accommodation.
2.1.4 There are two main models that we will use to set our rents in accordance
with guidance issued by our regulator. These are described below as
social and affordable rents.
2.2
Social rents
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2.2.1 In line with government policy the Trust sets a target rent for social
housing properties based upon the rent standard in the regulatory
framework. The Government’s “target rent” formula is based on three
factors



Average earnings in Cheshire compared with the national
average
Property valuations
Number of bedrooms
This seeks to ensure that all registered providers calculate their social
rents in the same way and that rents for similar homes are affordable and
fair.
2.2.2 All new social rented lettings, including a proportion of re-lets, will be set
to achieve target rent. All social rents will be within the allowance in the
guidance that rents may be charged at 5% higher or lower than target
levels, or 10% for sheltered housing but subject to the maximum rent
levels specified in that guidance (‘rent caps’.)
2.2.3 Rents subject to target rent will be increased using the formulae
prescribed by the current direction from the regulator.
2.2.4 From April 2015 for a period of 10 years this involves social rents
increasing by no more than CPI1 + 1%, (based on the published headline
CPI rate from the previous September.)
2.3
Affordable Rents
2.3.1 In Autumn 2010 the Government and the Homes and Communities
Agency (HCA) announced a new social housing product called Affordable
Rent. This product requires Housing Association to use greater flexibility
in rents and tenancy terms.
2.3.2 Homes may be let on Affordable Rent terms only where a delivery
agreement for new supply of social housing has been agreed under a new
supply agreement entered into between a Housing Association and the
HCA. Affordable rents form part of the agreement to fund the building of
additional new homes via the affordable homes programme.
2.3.3 Affordable rents are usually higher than social rents as the rents are set at
a maximum of 80% of market rent and are inclusive of property related
service charges. This figure will, wherever possible, take account of and
be within the relevant Local Housing Allowance.
2.3.4 The valuation of market rent will be in accordance with a RICS2
recognised method, as per guidance from the regulator. This involves
1
Consumer Price Index
2
Royal Institute of Chartered Surveyors
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adopting a consistent and transparent approach to the valuation of market
rents, by using comparisons with similar properties available to rent in
local areas.
2.3.5 The Trust will seek to rebase Affordable Rents up to 80% of market rent
upon re-issue or re-let. New tenancies under the Affordable Rent product
will be offered on a 12 month starter tenancy followed by a 5 year fixed
term for the purpose of reviewing the rent.
2.3.6 Rent increases for Affordable rent properties will follow guidance from the
regulator. From April 2015 for a period of 10 years this involves affordable
rents increasing by no more than CPI + 1%, (based on the published
headline CPI rate from the previous September.)
2.3.7 Properties will be selected for conversion from social rent to affordable
rent based on their market rent value as determined by the approved
method.
2.3.8 The Trust will set targets to monitor its progress towards achieving the
number of properties on Affordable Rent in a controlled way through
regular reviews and assessment by the Housing Management and
Finance teams. The allocation of properties to Affordable Rent will be
constrained by the Trust’s business plan and its commitment to develop
new homes in a fair and reasonable apportionment.
2.4
Shared ownership rents
2.4.1 The rent for shared ownership properties is based on a percentage of the
unsold equity in the property. The Trust plans to charge 2.75% and
cannot exceed the maximum percentage set out in the HCA Capital
funding guidance (currently 3 %.)
2.4.2 Annual rent increases for shared ownership properties will be based upon
contractual obligations set out in the lease agreements.
2.5
Intermediate rents
2.5.1 The Trust may choose to charge an intermediate rent for some properties
where there is a business case to do so. The rent will initially be set at
80% of market rent. Annual rent reviews will be based on the annual
increase of CPI as at September plus 1% but capped at 80% of market
rent is the latter is lower. A RICS approved method or valuer will be used
to assess market rents.
3.
Service Charges Policy
3.1
This section of the policy deals with service charges for tenants. The
Trust has a separate policy for Leaseholders.
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3.2
The Trust is committed to providing effective quality services. It will raise
the necessary income to achieve these aims whilst ensuring at all times
that it remains cost effective and viable in its provision of services.
3.3
Prior to and since transfer rent has been charged which includes an
element for services provided. This type of service charge is "fixed" and
"pooled" across the whole stock.
3.4
With effect from 1st September 2011 all new tenancies at social rent will
be charged for the services relevant to the property and services
received. These will be charged on a variable basis. This means that the
charges will be based on actual cost with any under or over recovery of
cost being carried forward to the following year’s charges.
3.5
The Trust will clearly communicate which service charges are eligible for
housing benefit.
4.
Implementation
4.1
Rents and service charges will be increased on an annual basis in
accordance with the Trust’s Rent Plan, taking effect from the beginning of
each financial year and will be agreed by the Board. We will ensure that
rent increases are clearly communicated to tenants within the statutory
notice periods. This notification will include the new rent and any service
charges which apply. We will also include how the rent increase has been
calculated.
4.2
The Trust will calculate the annual rent due to be collected over the course
of the year. Four ‘Nil charge’ weeks (currently known as non-rent weeks)
will occur throughout the course of the year. We will advise customers
annually of the ‘nil charge’ weeks.
4.3
The rent and service charges are to be paid in advance and become due
on the Monday of each week.
4.4
The Trust will ensure that, subject to the agreement of individual tenants,
Housing Benefit currently paid by Cheshire East Council or Universal
Credit housing costs paid directly by the Department of Work and
Pensions will be credited direct to the tenant's rent account.
5.
Garage Rents
5.1
There is no guidance or specific formula for the calculation of rents for
garages or designated parking places.
5.2
The Trust will review charges in line with market rates and affordability to
tenants.
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5.3
Charges for non-tenants are the same level as for tenants but we have to
add Value Added tax (VAT).
6.
Equality and Diversity Implications
6.1
In implementing this policy and the procedures, the Trust will not
discriminate against any tenant on the grounds of their race, ethnic origin,
gender, sexuality, disability, age or religion. The Trust will monitor the
effectiveness and implications of this policy to ensure that statutory
requirements are met and that all tenants are treated equitably and fairly.
7.
Responsibility
7.1
The Trust's Director of Resources is responsible for the effective
implementation of this policy.
7.2
The Trust's Director of Resources is also responsible for ensuring that all
appropriate staff are aware of and are trained in the Trust ‘s Policy and
associated procedures.
7.3
It is the responsibility of the Board of the Trust to take the appropriate
decisions in relation to rent setting in accordance with recommendations
from the Director of Resources and the Chief Executive.
7.4
The Assistant Director of Housing is responsible for arranging the rent
assessment of all tenancies at Affordable rent.
8.
Monitoring and Review
8.1
This Policy will be reviewed every three years, unless legislation or sector
developments require an earlier review. This is to ensure that the policy
continues to reflect best practice and the objectives of the Trust.
9.
Associated Policies and Documents
The Trust’s Rent Plan
Rent Collection and Arrears Policy
Corporate Debt Policy
Debt Write Off Policy
Rent Collection Arrears Management Policy
Former Tenant Arrears Collection Policy
Tenancy Management Policy
Garages and Parking Policy
Resident Involvement Policy
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Policy Name:
Status:
Approved by:
Drafted by:
Date Approved:
Next Review date:
Rent Setting and Service Charges Policy
Revision August 14
Audit & Risk Committee
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