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Government reforms shared ownership rents

Government reforms shared ownership rents
Anna Sagar
Written By:
Anna Sagar

The Department for Levelling Up (DLUHC) has brought out a series of reforms to shared ownership rents including how much they can increase by each year.

The government confirmed the changes would apply to the leases of new shared owners.

Rent for new shared owners can now only be increased once a year by the Consumer Prices Index (CPI) measure of inflation plus 1%.

This means shared ownership rents will be brought in line with the limit that applies to annual rent increases in other kinds of social housing.

Prior to this, shared ownership rents could be increased once a year by the typically higher Retail Prices Index (RPI) measure of inflation plus 0.5%,.

The Department for Levelling Up, Housing and Communities (DLUHC) said it acknowledged that RPI is an “outdated measure of inflation” and has committed to phasing out its use by the end of the decade.

Meanwhile, Homes England is changing its Rent Review schedule for its model shared ownership lease to clarify that registered providers of social housing have “discretion” to up rents by less than CPI plus 1%.

“This ensures that providers have greater flexibility to protect new shared owners from particularly high rent increases during periods of high inflation,” it noted.

The DLUHC is lowering the floor for shared ownership rent increases from 0.5% to 0% so rents cannot be increased if CPI is less than 1%.

However, the government said it was exempting select new shared ownership homes from the reforms, including new homes that are in contract to be delivered through the Affordable Homes Programme. This is to ensure that providers can continue to deliver these homes, it added.