Rents capping maintenance overview
The concept of rent capping is to make the calculation of rents fairer and more affordable, particularly in high-cost areas, therefore placing a ceiling - or cap - on the proportion by which they can be increased, year on year. The concept of a cap removes a great source of uncertainty for tenants, particularly the elderly, who would otherwise face potentially escalating rent rises. Tenants are therefore not liable for any rent over the capped level. Rent caps are typically applied to uphold the principles and legislation surrounding fair rents and target rents.
Fair rents are a form of rent control, employed predominantly for private sector rented accommodation. Rules for setting fair rents are set out in the Rent Act 1977 (and associated amendments) and limit the amount of rent that can be charged by linking increases to the Retail Price Index (RPI). Fair Rent is defined as the maximum rent that a social landlord may legitimately charge, designed specifically to stop tenants paying high rents simply because of a general shortage of the type of property they occupy. Therefore a fair rent is based on what a tenant would pay and what a landlord would accept if there were no shortages of letting properties in the area i.e. it is based on the size, condition and usefulness of the property but not its scarcity value.
Target rent is a formula for rent restructuring and is derived from the Government's vision for all social landlords to use the same method for working out rent. Whilst all properties should theoretically have been transferred over to their target rent by March 2012, in practice historical variations in tenant payments impose a justifiable restriction on the amount by which the rent can be increased in one year. The rent is therefore capped at a specific level to manage the convergence towards the target rent in a fair and incremental way.
In Civica Cx Housing, a rent cap is configured as a percentage value and linked to a charge type parameter e.g. Standard Rent Charge, Protected Rent Charge, Affordable Rent Charge, etc. Any number of rent caps can be maintained across different charge types and then assigned to individual charge elements - components of the charge e.g. Basic Rent. The end user can also control how the rent cap difference - the variation between the actual base charge value and the capped value - is apportioned across these components.
Separate help articles have been created for each key aspect of rents capping maintenance, including: