The potential standard would apply to private registered providers, including housing associations, as well as local authority registered providers.
The consultation seeks views on the proposed standards, which puts forward introducing a three, five or seven per cent ceiling from 1 April 2023 to 31 March 2024. It closes on 12 October at 11:45pm.
This would act as an upper limit on the maximum amount by which social housing providers can increase rents during that period.
The government said that its preferred option was a five per cent ceiling.
For social rent housing, this means that a registered provider would not be allowed to increase the weekly rent of an existing tenant by five per cent or Consumer Price Index plus one per cent, whichever is lower.
The amount is the same for affordable housing but refers to gross weekly rent.
Balancing renter protection and provider cost pressures
In its impact assessment, the government said that as inflation is expected to rise then “very significant nominal terms rent increases” would be allowed in 2023 and 2024 under the current policy.
It said that this would be “put significant pressure” on budgets of some social renters, and the government was consulting on action to “protect these households from such a large increase”.
The government said that the five per cent cap aimed to balance the need to protect social renters while recognizing that registered providers were facing cost pressures.
Based on recent CPI forecasts, the report estimated that the cap would leave registered providers of social housing receiving £7.4bn less in rental income over the period between 2023 and 2029. This is £4.9bn for private registered providers and £2.5bn for local authorities.
However, it said that social housing tenants who pay their rents without housing support, or with a limited level of housing support, would pay £3.8bn less in rent over the same period.
The benefit to taxpayers would also be £4.6bn in lower welfare spending.
