What is rent convergence and what impact will it have on the social housing sector?
11th February, 2026
The Government has announced the long-awaited return of rent convergence as part of a raft of new funding and financial flexibilities coming into effect from April to accelerate social and affordable housebuilding.
The Regulator of Social Housing has also confirmed the 10-year rent settlement – which stipulates the maximum amount Registered Providers can increase rents– of Consumer Price Index (CPI) plus 1% year on year from 1 April 2026. This, combined with the rent convergence announcement, goes some way to helping Registered Providers plan for the longer term.
What is rent convergence?
Rent convergence is a mechanism used to align social rent levels across the country so there is a more of a level playing field between Councils and the varying social landlords. It was initially introduced in 2002 with the aim of levelling up social housing rents across the country, seeking to bring everyone in line with the ‘formula’ rent for social rented housing set by the Government. Formula rent is based on a combination of factors including local income levels in relation to the national average, the value of the properties in question and the number of bedrooms they contain.
However, the rent convergence policy was later abandoned by the coalition government in 2015, meaning that many homes are still not at the set formula rents.
Rent convergence aims to ensure social housing customers pay similar rents for similar properties. In London specifically, this helps social landlords bridge the gap between actual and formula rents which can be as high as £914 per week for general needs homes and better reflects the costs of managing the stock in the Capital.
As a result of the recent rent convergence announcement, social housing rents that fall below the formula rent will be able to increase by an additional £1 on weekly rents each year from 1 April 2027 towards convergence with formula rent. From 2028 this can rise to £2 a week until formula rent is reached. It therefore isn’t a surprise that the return of the policy after a 10 year hiatus has largely been welcomed by social landlords and by the sector generally.
What does it mean for Registered Providers?
The benefit of this announcement is undoubtedly the certainty it brings to Registered Providers who can better plan ahead and build more accurate forecasts of income and spend into 10-year strategies. It should allow for increased quality and supply of affordable homes and higher levels of investment in order to provide improved energy efficiency and decent homes for customers.
The Ministry of Housing, Communities and Local Government has estimated rent convergence of £2 per week would result in Registered Providers receiving £6bn more in rental income between 2026 – 2036, which is welcome news for the sector. However, the National Housing Federation, the G15 and London Councils had been pushing for a rent convergence level of £3 per week in order to make a real difference in London. It is also noted that the increases in rent cannot actually be implemented until 2027, another year of lost revenue.
While Registered Providers in London and the South East in particular are set to benefit from the rent convergence, it is expected to be less impactful in terms of rental increases in the North. Northern-based Registered Providers and Councils will, however, still be able to use any increases available to enable reinvestment into aging stock and Council housing.
What does it mean for customers?
The Regulator of Social Housing has been clear that the rent convergence levels set are trying to strike the balance between increased rents and parity across the country for social landlords versus the impact on rent paying social housing tenants who will see an increase in the amount they pay. It will in the longer term at least improve the energy efficiency and quality of the homes.
If you are a social landlord and have any questions in relation to rent convergence, please get in touch with Natalie Owen.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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