Government to consult “shortly” on convergence mechanism for new rent settlement

In a letter to registered providers, Housing Minister Matthew Pennycook said the options were for convergence being capped at £1 or £2 per week.

He said: “The details of precisely how, and at what level, this mechanism will be implemented will be confirmed at Autumn Budget later this year, taking account of the benefits to the supply and quality of social housing, the impact on rent payers and the impact on the government’s fiscal rules.”

Pennycook said that the Government was “committed to setting a rent policy for social housing that enables providers to borrow and invest in new and existing homes, while also ensuring that existing and future social housing tenants are appropriately protected”.

Social housing rents will be permitted to increase by CPI+1% each year from April 2026. The Government is also doubling the length of the rent settlement from five to ten years, “in order to give Registered Providers, lenders, and investors greater long-term certainty”.

A rent convergence mechanism would allow rents on social rent properties that are currently ‘below formula’ (i.e. lower than the usual maximum that may be charged when a property is let to a new tenant) to increase by an additional amount, over and above the CPI+1% limit, up to formula level.

“This would be far fairer than a higher across the board rent increase, as it would only ask those who currently pay lower rents to pay a bit more,” the minister suggested.

The letter also discusses the confirmed £39 billion for a successor to the Affordable Homes Programme over 10 years of starts from 2026-27 to 2035-36.

It reveals as well that for the first time give social landlords equal access to government remediation funding (the Building Safety Fund and Cladding Safety Scheme). 

Pennycook said: “We will invest over £1 billion in social housing remediation and make it significantly easier for social landlords to secure upfront capital for remediation through government schemes.”