The Department for Transport, Local Government and the Regions guide
Government policy then required that rents set from October 2004 must comply with a mandatory formula which would ensure that rents in an area would be of similar amounts for similar properties. This rent would be known as the target rent.
The DTLR’s guide to social rent reforms states that the basis of the rent calculation should be
- 30% of a property’s rent should be based on the relative property values
- 70% of a property’s rent should be based on relative local earnings
- A bedroom factor should be applied so that, other things being equal, smaller properties have lower rents
The formula for an original target rent is therefore
- 70% of the average rent for the housing association sector
- Multiplied by relative county earnings
- Multiplied by the appropriate bedroom weighting
- Plus
- 30% of the average rent for the housing sector
- Multiplied by the relative property value
These target rents are then subject each year to an increase in line with the formula RPI + 0.5%.
At Ashton Pioneer Homes, we must charge the appropriate target rent (+/- 5%) by March 2012 and may only amend rents by a maximum of RPI + 0.5% (+/- £2) in a year.
