1. It is policy to set Assured Social Tenancy rents and Affordable Fixed Term Assured Tenancy rents in accordance with HCA (Homes & Communities Agency) guidelines affecting these tenancy types and which are sufficient to meet NCHA s financial commitments, maintain stock and continue to be financially viable whilst meeting our obligations to our tenants. 1.1 Risks This policy covers a number of significant business risks that could jeopardise NCHA s rental income. These include rents set at a level that does not maximise income within the regulatory constraints imposed by the HCA and the significant risk that rent increases are made invalid through the use of incorrect increase letters, notices and notice periods. This policy sets out how Assured tenancy rents must be set and the processes and procedures that must be used to minimise the risk of setting invalid rent increases. 1.2 NCHA use 2 main types of Assured Tenancy: Assured Social Rent Tenancies including Starter, Assured and Assured Shorthold Tenancies These are Assured Tenancies established under the Housing Act 1980. These tenancies are used are used for the majority of existing NCHA properties and relets. Affordable Rent Fixed Term Tenancies These are Assured Fixed Term Tenancies established under the Localism Act 2011 and use rents based on 80% of private rented sector gross market rents of similar sized properties in a local area. Affordable fixed term tenancies are generally used for first lettings and relets on designated new developments, on properties acquired as part of the Mortgage Rescue Scheme and the Empty Homes Initiative. For further information on the use and management of Assured Social Rent tenancies and Affordable Rent Fixed Term tenancies, please refer to the Tenancy Policy. 2. Assured Social Rent Tenancies From April 2002 to 2012 NCHA has operated a rent restructuring and convergence programme for attaining target rents. NCHA will charge Assured Social Tenancy Rents or increase rents to the Target Rent plus 5% level (See 2.3 below for criteria for establishing Assured Tenancy Target Rents). NCHA will also ensure in accordance with HCA guidelines that Assured Social Rent Tenancy rents do not exceed the Target Rent plus 5% level. In February 2012, the Government revised and extended the Rent Restructuring guidelines for Social Rent tenancies with a revised target Page 1 of 9
convergence date of 2015/16 subject to a maximum annual rent increase for individual tenancies of September inflation (RPI) plus ½% plus 2 per week. In June 2013, the Government issued new rent guidelines for social rents for the period 2015/16 to 2024/5 with a revised maximum rent increase formula of September CPI inflation rate plus 1%. Rent increases in 2014/15 will still be issued at RPI inflation rate plus ½% plus or minus 2. 2.1 The majority of NCHA tenancies have now reached the Target Rent (plus 5%) and will be subject to standard Assured Tenancy Rent increases based on the formula of September inflation rate (RPI) plus ½% in accordance with guidelines issues by the HCA. 2.2 A small number of tenancies have not yet reached the Target Rent plus 5% and these will continue to be subject to annual increases of September RPI plus ½% plus 2.00 per week until they have been brought into line with the Target Rent plus 5% for the property. Where the rent is above the Target Rent plus 5% level, the rent can be reduced by a total of 2 per week on each annual rent review until it has reached the Target Rent plus 5% level. 2.3 Target Rents for Assured Social Rent properties will be set using the formula within the Rent Restructuring Programme that takes into account the following: Relative property value at January 1999 Relative local earnings Number of bedrooms See NCHA s Capita Open Housing Rent Restructuring Manual (as maintained by the system Administrator) 2.4 Assured Social Tenancy Rents will normally be increased/decreased annually on the first Monday in April in line with the terms and conditions of NCHA. s Assured/Assured Shorthold and Assured Starter tenancy agreements. 2.5 NCHA will comply with the following constraints when increasing or decreasing Social Assured Tenancy rents: To ensure that no change in rent in any one year will result in a change that is greater than the September RPI (as issued by the Government annually no later than November) + ½ % + 2 That at the end of the implementation period a property s actual rent be no more than +/-5% of the target rent 2.6 Appeals to Rent Assessment Panel Assured Social tenants with tenancy commencement dates prior to the 1 st December 1999 have the right to appeal to the Rent Assessment Panel if they feel the rent increase to be unfair. The Rent Assessment Panel will Page 2 of 9
establish a market rent for the property which must be implemented by NCHA. 2.7 The tenant must lodge an appeal on the prescribed form with the Rent Assessment Panel before the increase is due to take effect. Copies of the prescribed form are available from the Rents Officers at each Regional Office. 2.8 On receipt of the appeal notice the Rent Assessment Panel with notify the Association. The proposed rent increase cannot then be implemented until the Rent Assessment Panel has met and considered the appeal. The Association will provide any information requested by the Rent Assessment Panel and will normally attend the Rent Assessment Panel hearing, being represented by the Regional Housing Manager or the Allocations and Rents Manager. 2.9 On receipt of the Rent Assessment Panel decision the Association will: (a) (b) (c) Implement the decision of the Rent Assessment Panel in the event of them deciding upon the market rent which is below the proposed rent. The amendment will be put onto the Capita Open Housing system and be effective from the Monday immediately following the effective date as determined by the Rent Assessment Panel. Implement the Association s proposed rent if the Rent Assessment Panel decision upon the market rent is higher than the proposed rent. The amendment will be put onto the IBS system and be effective from the Monday immediately following the effective date as determined by the Rent Assessment Panel. If the Rent Assessment Panel decide the rent proposed is the same as their decision upon the market rent the proposed rent shall be implemented as in 2.9(a) and 2.9(b). 3. The Association will not seek to backdate increases or decreases (following the Rent Assessment Panel appeal) to the original rent review date. The April rent review date however remains as the trigger date for future increase. 3.1 Social Rent Assured Tenancy Rent Appeals to NCHA In the event of the tenant appealing on this basis, which should be either formally in writing or with the assistance of a member of staff, the Rent Plan and calculation of rent will be checked for accuracy by the Rent Officers in liaison with IT staff. 3.2 If an error is identified, a correction will be made and the tenant notified. If no error in calculation is identified the tenant will be informed and if they are still unhappy, advised to proceed via the Association s Complaints Procedure. Page 3 of 9
An appeal under this process must be made by the tenant before the proposed increase date and unlike appeals to the Rent Assessment Panel will not defer the proposed increase. However, if an error is identified after the increase date any subsequent adjustment will be backdated. 4. Affordable Rent Fixed Term Tenancies Affordable Rent Fixed Term tenancies are based on 80% of gross market rents for similar properties in a local area at the commencement of a tenancy and at the commencement of each renewal of the Fixed Term Period. These rents are set by NCHA s Official Valuer, (Currently Rupert David Ltd contact Nick Bacon on 01332 680 025 or email nick@rupertdavid.com). Affordable Rents may in exceptional circumstances exceed 80% of market levels in areas where an Affordable Rent would otherwise be lower than the Target Rent for the property. The Target Rent therefore constitutes a floor for the rent to be charged. However, Registered Providers are required to document such decisions together with supporting evidence for audit purposes. (Homes & Communities Agency CFG AR Rents) 4.1 Service Charges for Affordable Rent Tenancies Affordable Rents are inclusive of Service Charges which must not be stated on either the tenancy agreement or rent increase letters. Where services are provided, tenants must only receive a statement of the services provided. 4.2 Rent increases during each Fixed Term Period must be increased by the September rate of inflation (RPI) plus ½%. 4.3 At the end of each Fixed Term Period or on relet, the Affordable Rent must be rebased according to an updated valuation based on 80% of market rents for similar properties in the local area. This may result in a increase or decrease in the rent set depending on changes in the level of private sector rents. 4.4 Affordable Rent Assured Tenancy Rent Appeals There is no right of appeal against the level of Affordable Rent set except where an error is alleged to have been made in the calculation of the Affo0rdable Rent. 5 New Builds/Acquisitions Rents for new build properties or acquisitions will normally be Affordable Rent Fixed Term Tenancies based on the 80% market rent formula. A small number of new build properties may be let on Assured Social Rent Tenancies depending on the grant funding model used for the development. The Development Team will confirm both the type of tenancy and rent level for a new development to the Allocations and Rent Service Managers. Page 4 of 9
5.1 Rents and Service charges where applicable must be input by the Lettings Officer from the handover date of the property. 6. Relets Assured Social Rent Tenancies Rent/Lettings Officers will use the Relet Rents provided given in the NCHA Relet Rents spreadsheet when setting new Assured Social Rents on all relets. NCHA Relet Rents are based on the Target Rent for the property plus 5%. The System Administrator is responsible for ensuring that the Relet Rent spreadsheet is updated annually according to the approved formula and will be effective from 1st. January annually. 6.1 Allocations Department staff will ensure that the correct relet rent is used on the tenancy agreement and sign-up pack, and for advertising of any void properties where applicable. 6.2 NCHA need at least 6 weeks to prepare, implement and provide legal notice of the annual rent increase to tenants whose tenancies have recently started. Properties offered and let during the period beginning week 46 (3 rd week in February) to the end of the last week in March must use the relet rent and service charge calculated for the new financial year. A report must be run by the Service Manager to show clearly those properties let between the download of properties used for automatic updating of rent increases and the uploading of this information to the Capita system. For this small number of properties, a manual rent increase process will need to be used and 4 full weeks notice to be given to the tenant before the first Monday in April. An audit of new tenancies let in January and February must be undertaken by the Service Manager to ensure that no potential rent increases have been missed. 6.3 The relet rent and updated service charge should normally be charged against the void property from the termination of the former tenancy. However, where the void property undergoes major relet works, the rent and service charge must be zeroised for the period of the works and the relet rent reinstated on the completion of the major relet works (this may or may not be the same as the completion of all relet works). 7. Relets and Renewals of Fixed Terms Affordable Rent Tenancies 7.1 Rent Officers will need to apply for a rebase of the Affordable Rent on all relets and renewals of Fixed Term periods of Affordable Rent Tenancies. This must be requested by the Rent Officer from NCHA official Valuer (See 4 above) on notification that a tenancy is being surrendered or notice of Intention to Renew the fixed term to ensure minimum delays in the process. Page 5 of 9
7.2 Where an Affordable Rent property is let in January/February of each year, the property must be offered at the rebased Affordable Rent. These properties must also be subject to an annual rent increase applied from the first Monday in April based on the September inflation (RPI) plus ½%. Allocations staff must inform the Rent Officers so that a manual rent increase to the updated rent for the new financial year can be implemented allowing for 4 full weeks notice to be given before the first Monday in April. An audit of new tenancies let in January and February must be undertaken by the Service Manager to ensure that no potential rent increases have been missed. 8 Annual Rent Increase for Assured Social Rent Tenancies 8.1 Assured Social Rent increases will be increased in accordance with guidance issued by the HCA. The HCA guidance up to 2015 states that rents at the Target Rent Level as calculated using the formula in 2.3 should increase annually based on the September inflation rate (RPI) plus ½%. Any properties under or over the annually adjusted Target Rent can be increased or decreased at the rate of 2 per week until the annually adjusted Target Rent has been achieved. 8.2 In June 2013, the Government issued new rent guidelines for social rents for the period 2015/16 to 2024/5 with a revised maximum rent increase formula of September CPI inflation rate plus 1%. 8.3 The Service Manager Customer Contact & Rents is responsible for producing a timetable for the annual Service charge and Rent increase process before the end of July. This plan should detail deadlines and responsibilities for all aspects of the rent increase and service charge process. 8.4 The IT System Administrator will be responsible for producing a rent and service charge increase spreadsheet which should be uploaded to the Capita Open Housing management system before the middle of January. 8.5 The Director of Housing notifies the IT Department System Administrator of the September RPI increase each year as provided by the Department of Communities & Local Government as soon as the information is published. This should normally be no later than the end of October. 8.6 The updated rents uploaded to the Capita Open Housing system should be audit checked using the Rent Increase report against the current rent and any anomalies checked before the printing of rent letters is commenced at the beginning of February. 8.7 All Assured rent increases should be effective from the first Monday in April to ensure that there are a minimum of 52 week between rent increases. Page 6 of 9
9. Annual Rent Increase for Affordable Rent Tenancies 9.1 Affordable Rent Tenancies within the fixed period will be subject to an automatic annual uprating based on the September inflation (RPI) plus ½%. The IT Department System Administrator is responsible for uploading the annual rent increase for these properties to the Capita Open Housing system. 10. Rent Letters, Notices and Information 10.1 The Regulatory Framework for Social Housing in England from 2012 states that Registered Providers shall provide clear information to tenants that explains how their rent and any service charge has been set, including reference to the RPI benchmark to which annual changes to rents are linked. 10.2 Rent letters, notices and information for each tenancy type must therefore be updated annually to ensure that they meet all current regulatory and legal requirements to ensure that the rent increase process is not open to legal challenge. This is important because incorrect rent increase notices may render any rent increase invalid. 10.3 The Service Manager Customer Contact and Rents must check all letters and information with NCHA s solicitors (currently Anthony Collins solicitors) for any necessary regulatory and legal changes, proof read all documents to ensure accuracy and consult CAP groups about any changes to the layout of rent increase letters and any information provided to ensure that these are clear and easy to understand. 10.4 The notice/letters must be signed off by the Director of Housing/Assistant Director before being forwarded to the IT System Administrator for mailmerging before the end of December..10.5 Arrangements must be made between Housing Services Regional Office Rents Officers and the IT System Administrator for printing of rent increase letters and notices. This must be completed no later than the second week in February each year. 10.6 Rent Officers must ensure that Service Charge Schedules and Service Provision Schedules plus additional information sheets are included with rent letters. 10.7 Rent Officers must also undertake a manual checking process and correct any rent letters where errors are found. Any corrected rents or service charges must also be updated on Capita Open Housing and on spreadsheets supplied to Housing Benefit Departments and for Direct Debit increases. 10.8 The Service Manager Customer Contact and Rents are responsible are responsible through the Rent Officers for ensuring that the legal notice of Assured rent increase is served on the tenant four clear weeks in advance of Page 7 of 9
the agreed rent renewal date. There is no need to keep a copy of the notice on file as electronic copies can be produced when required. 11 Housing Benefit and Universal Credit 11.1 The Service Manager Customer Contacts and Rents must ensure that information is provided to support claims for Housing Benefit and Universal Credit. In particular, it should make sure that tenants understand their responsibilities, which payments are eligible and ineligible for universal credit and what actions they need to do following receipt of their rent and service increase notice. Where possible any rent and service charge information should be provided by spreadsheet for automatic uprating of tenants claims. 11.2 The Rent Officer must ensure that where late changes to rent and service charges have been made these are forwarded to Housing Benefit Departments or the Department of Work and Pensions. 12 Direct Debits Allpay system The NCHA System Administrator must provide all the Income Team with a spreadsheet identifying all tenants who pay their rent by Direct Debit. 12.1 Income staff should calculate the revised payment required for each tenant to meet the new full rent and service charge payment plus any repayment agreements/court Orders are calculated and input online into Allpay and into Capita Open Housing taking into account the appropriate payment period and date from which the uprated Direct Debit will be effective. Staff must also ensure that the notification of revised Direct Debits must not be received by tenants until after tenants have received their formal rent increase letters. 12.2 Allpay need to give customers at least 10 days notice before direct debit payments can be changed. This means that information on direct debit changes need to be communicated to allpay at least 14 days in advance of the effective date for the new assured tenancy rent. 12.3 Allpay are responsible for giving the tenant 10 day legal notice period of the change to their direct debit changes and are also responsible for notifying tenant s banks of changes to direct debit payments. 13. Appeals to Rent Assessment Panel 13.1 Assured tenants with tenancy commencement dates prior to the 1 st December 1999 have the right to appeal to the Rent Assessment Panel if they feel the rent increase to be unfair. The Rent Assessment Panel will establish a market rent for the property which will be implemented by NCHA. Page 8 of 9
13.2 The tenant must lodge an appeal on the prescribed form with the Rent Assessment Panel before the increase is due to take effect. Copies of the prescribed form are available from the Rents Officers at each Regional Office. 13.3 On receipt of the appeal notice the Rent Assessment Panel with notify the Association. The proposed rent increase cannot then be implemented until the Rent Assessment Panel has met and considered the appeal. The Association will provide any information requested by the Rent Assessment Panel and will normally attend the Rent Assessment Panel hearing, being represented by the Regional Housing Manager or the Allocations and Rents Manager. 13.4 On receipt of the Rent Assessment Panel decision the Association will: (d) (e) (f) Implement the decision of the Rent Assessment Panel in the event of them deciding upon the market rent which is below the proposed rent. The amendment will be put onto the IBS system and be effective from the Monday immediately following the effective date as determined by the Rent Assessment Panel. Implement the Association s proposed rent if the Rent Assessment Panel decision upon the market rent is higher than the proposed rent. The amendment will be put onto the IBS system and be effective from the Monday immediately following the effective date as determined by the Rent Assessment Panel. If the Rent Assessment Panel decide the rent proposed is the same as their decision upon the market rent the proposed rent shall be implemented as in 5.4(a) and 5.4 (b) 13.5 The Association will not seek to backdate increases or decreases (following the Rent Assessment Panel appeal) to the original rent review date. The April rent review date however remains as the trigger date for future increase. 14 Assured Tenancy Service Charges 14.1 Rent Officers must ensure that details of new service charges are forwarded to IT on the spreadsheet provided before the end of January each year. 14.2 IT department staff must load the service charge data onto the Capita Open Housing system in preparation for the annual rent increase notification and effective date of increase. 14.3.1 Rents Officers must ensure that Service Charge schedules and Service Provision sheets are attached to all relevant Annual Rent increase notices and letters. Page 9 of 9