Welsh Government Rent and Service Charge Standard 2020 – 2025 (Agenda Edition 15)

Subjects for Tenant Groups to discuss with their landlord

Some tenant groups have asked us for topical agenda items/subject briefings for their tenant group to discuss with their landlord.  TPAS Cymru have created a briefing series that we call ‘The Agenda’ which provides tenant groups with an overview of a subject and suggestions of questions you might want to ask in your engagement with your landlord

What is the Welsh Government’s Rent and Service Charge Standard?

Social Landlords* in Wales need to set their rent and service charges in accordance with rules and guidance set out in Welsh Government’s Standard for Social Housing Rents and Service Charges (Rent and Service Charge Standard 2020 - 2025).

The Rent and Service Charge Standard was agreed to  recognise that having a long-term agreement on how social rents and service charges can be set each year, will provide certainty to tenants about rent levels, and also to social landlords to support the financial borrowing they require to help deliver more affordable homes.

*The rent standard is for social landlords with general needs and sheltered housing. It does not apply to:

• Extra care housing
• supported housing
• any housing which is not self-contained
• housing let at intermediate or market rent levels
• other specialised housing

What are the main Rules in the Welsh Government’s Rent and Service Charge Standard?

Under the five-year Rent and Service Charge Standard, which came into effect from April 2020 there are several rules which landlords need to comply with when setting rents and service charges. Many of the rules are based on the Consumer Price Index (CPI)*

*The CPI is published by the Office for National Statistics. It measures the average change from month to month in the prices of goods and services purchased by most households in the UK. The government uses the CPI as the basis for its inflation target and for uprating of state pensions and state benefits.

The following rules need to be complied with:

• CPI+1% is the maximum overall increase allowable in any one year but CPI+1% must not be regarded as an automatic uplift to be applied by social landlords.
• Individual tenants’ rents can be reduced, frozen or rise by “up to an additional £2” per week on condition that the social landlords overall increase in rental income is no greater than CPI+1%.
• Should CPI fall outside the range of “0% to 3%”, the responsibility will rest with the Welsh Ministers to determine the appropriate uplift to be applied for that year.
• Social landlords must advise the Welsh Government as soon as is reasonably practicable if there are concerns about the impact of the rent standard on their business plan, financial viability, or in their ability to meet their obligations to tenants and lenders.
• Social landlords are expected to set service charges which are reasonable and affordable. Landlords are required to review service charges annually; ensure they provide value for money for tenants and are affordable. Landlords are required to list their service charges separately to the rent to allow for transparency to tenants.
• As part of their annual decision on the level of rent uplift/reduction to be applied social landlords should make an assessment of cost efficiencies, value for money and affordability for tenants which should be discussed at the Board/Cabinet/Council and reported in the self-certification monitoring form which is submitted to Welsh Government.

What about affordability?

Affordability is at the heart of the standard and there are clear expectations of Housing Association/RSL Boards and Local Authority members to show how they would deal with the impact of rent and service charges changes on their tenants’ incomes.

Social landlords will have to demonstrate how they are mitigating and managing risks to tenants’ income, and these will be closely monitored by officials.

What else do social landlords need to do under the standard?

Service charges need to be listed separately to Rent charges so that tenants can see clearly what services they are paying for.

Monitoring returns will need to be submitted to Welsh Government in February every year to demonstrate compliance with the Standard: the returns are due in February each year.

To comply with the standard, Welsh Government need to be assured that the landlord has:

• Conducted effective tenant engagement and consultation including the methodology and outcome/responses
• Demonstrated that affordability is at the centre of the decision-making process for setting rent and charges for services, Boards and Local Members need to provide assurance their charges are not placing tenants in hardship
• Considered options and the rationale for the rent and service charge setting decision

https://gov.wales/sites/default/files/publications/2021-12/welsh-government-rent-and-service-charge-standard-2020-2025.pdf

Examples of questions to ask your landlord:

1. How and when will consultation with tenants on Rent and Service Charges take place?
2. What are the plans to let tenants know about the consultation and how they can have their say?
3. What assessment of cost efficiencies of you as a landlord will be carried out as part of the Rent Setting process?
4. How will tenants be made aware of changes to rents and services?  How will this information be accessible for all tenants?
5. What plans are in place to support tenants who are struggling to pay their rent?

We hope you have enjoyed reading this edition of the Agenda. We would love to hear about any conversations you’ve had with your landlord regarding this topic, so please email [email protected] with any feedback or further questions.