Policy background Social housing rents
Prior to the Act, Government rent policy for social rented properties was generally set based on a formula (a model known variously as "social rent", "formula rent" and "target rent"), which was uprated annually at a rate of RPI + 0.5%.This policy was mandatory for private registered providers, but discretionary in relation to local authority providers. The policy included a limit on annual rent increases of RPI + 0.5% + £2 where rents were below formula rent. In 2011, the Government introduced a new form of social housing, Affordable Rent, whose rent can be set at up to 80% of market rate, inclusive of service charges (or at formula rent where that is higher). Affordable Rent was also subject to rent policy and the limit on annual rent increases. A new rent policy was published in May 2014 (with effect from April 2015) limiting annual rent increases to CPI + 1% for the next ten years. The underlying social or ‘formula’ rents were also uprated annually at a rate of CPI + 1%.
	Through the new provision in this Act the Government reduces rents of social housing in England by 1% a year for 4 years from April 2016. The Government intends these reductions to reset the levels of rents in the social housing sector, which over recent years have become out of kilter with private rents. This will help protect taxpayers from the rising costs of subsiding rents through housing benefit, and protect tenants from rising housing costs.  This will reduce average rents for households in the social housing sector by around 12% by 2020 compared to current forecasts.