Rent Convergence – Government Consultation

There’s been a flurry of government consultation announcements and this concerns the implementation of rent convergence as part of the governments 10 year rent setting strategy affecting both council and housing association tenants.

As part of the Spending Review the government announced that there will be a 10 year rent settlement for social housing from 1 April 2026 in which rents will be permitted to increase by CPI+1% per annum.

In response to previous consultation the view was expressed that the level of investment in new and existing social housing that is needed to deliver the government’s ambitions will not be unlocked unless Social Rent convergence is implemented.

Convergence would allow rents for Social Rent properties that are currently below ‘formula rent’ to increase by an additional amount each year, over and above the CPI+1% limit, until they ‘converge’ with formula rent. Formula rent refers to the formula that is used to calculate the rent that may be charged for a given property when it is let to a new tenant. A convergence mechanism was originally introduced in 2002 but was scrapped in 2015.

The government therefore confirmed at the Spending Review that it will implement a convergence mechanism as part of the new rent settlement. 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. To inform that decision, this consultation focuses on how convergence should be implemented.

Once that decision has been made, the Secretary of State intends to direct the Regulator of Social Housing to set a standard on rents that will apply to Registered Providers of social housing.

You can respond to the consultation on the governments website here. This consultation closes on 27th August 2025