September 2026
The government has now confirmed the introduction of Social Rent convergence, giving housing associations and local authorities in England the ability to gradually bring Social Rents that are below formula rent back towards the correct formula rent.
For landlords, that creates an opportunity to increase rental income and support investment in existing and new homes. But it also raises a big question: Are you confident your formula rents are right?
Let's start from the top: what is Social Rent convergence?
Social Rents are calculated using a government formula which takes account of factors including property values, property size and relative local income levels. Over time, however, the actual rent being charged for some properties has fallen below the formula rent. Convergence is designed to allow that gap to gradually close.
The government's new 10-year rent settlement permits annual increases of up to 𝗖𝗣𝗜 + 𝟭% 𝗳𝗿𝗼𝗺 𝗔𝗽𝗿𝗶𝗹 𝟮𝟬𝟮𝟲 𝘁𝗼 𝗠𝗮𝗿𝗰𝗵 𝟮𝟬𝟯𝟲. For Social Rent properties where the actual rent remains below formula rent, landlords will then be able to apply an additional increase of:
𝗙𝗿𝗼𝗺 𝟭 𝗔𝗽𝗿𝗶𝗹 𝟮𝟬𝟮𝟳: up to an additional £𝟭 𝗽𝗲𝗿 𝘄𝗲𝗲𝗸, above CPI + 1%.
𝗙𝗿𝗼𝗺 𝟭 𝗔𝗽𝗿𝗶𝗹 𝟮𝟬𝟮𝟴: up to an additional £𝟮 𝗽𝗲𝗿 𝘄𝗲𝗲𝗸, above CPI + 1%.
That additional increase can continue each year until the property reaches its formula rent. Landlords are not required to apply the maximum permitted increase and can choose to increase rents by less, freeze them or reduce them.
Does this matter?
For landlords with significant numbers of properties sitting below formula rent, convergence could represent meaningful additional income over the coming years. The government has explicitly linked the policy to increasing providers' financial capacity to invest in existing homes and new social housing. But there is an important prerequisite, you need to know what the correct formula rent actually is.
If the underlying property data or historic formula rent calculation is wrong, using that figure as the target for convergence risks perpetuating, or potentially increasing, an existing error, and across thousands of properties, relatively small errors can quickly become significant.
So our advice is before April 2027: check the numbers, there is still time before convergence begins.
For housing associations and local authorities, we think this is a good opportunity to review the formula rent calculations across your stock and establish:
→ Are the formula rents calculated correctly?
→ Which properties are currently below formula rent?
→ What could convergence mean for our rental income?
→ And are we confident enough in the underlying calculations to act on them?
Our 𝗙𝗼𝗿𝗺𝘂𝗹𝗮 𝗥𝗲𝗻𝘁𝘀 𝗥𝗲𝘃𝗶𝗲𝘄 independently reviews your rent calculations to help identify errors and give you greater assurance that the numbers you're relying on are correct.
Because before you start moving rents towards formula rent, it's worth making sure you're moving them towards the right number. Social Rent convergence is coming, so we ask you... are your formula rents right?