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How is social housing rent calculated?

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Interested in becoming a social landlord? Or maybe you’re a DSS tenant searching for a more affordable abode? Whatever your reason for being interested in the way social housing rent is calculated, we have all the information and advice to answer your questions. However, before we take a look at how social housing rent is determined, we describe what social housing is and why it’s a more affordable housing option.

What is social housing?

Social housing is a more affordable alternative to private renting and can be provided to eligible households by any landlord (known as a social landlord) that’s registered with the social housing regulator. Often, a social landlord will be your local council or Housing Association which is why social housing is sometimes referred to as council housing.

There are also different types of social housing tenancies that can help to provide a sense of social, as well as financial, stability. An assured tenancy, for example, allows tenants to live in their home for the rest of their life, providing peace of mind that they have a secure and affordable home – something that private renting can’t guarantee. Other types of social housing tenancy include starter and fixed-term tenancies.

Not to mention, social housing is also more accommodating to those with mental or physical disabilities like elderly persons that require accessible living space. This type of housing is therefore often adapted to meet their specific mental or physical requirements, but at what price? Below, we explore how much you can expect to pay for social housing and how social housing rent is calculated.

How to calculate social housing rent

Unlike private rented housing where the prices are generally fixed by landlords, social housing is more affordable because landlords don’t set the prices. The Government does. According to the official consultation paper ‘Rents for social housing from 2020-21’, “‘social housing’ comprises low-cost rental accommodation (e.g. homes let at social rent or affordable rent) and low-cost home ownership accommodation (e.g. shared ownership homes)”.

Ultimately, this provides social housing tenants with the opportunity to either rent or buy their own property in a financially viable way, but how low is the ‘low cost’ of social housing? Typically, social housing rent is anywhere between 50 and 60 per cent of the private market rent, making it a more affordable avenue of rental housing to explore.

To accurately calculate the rent for social housing (also referred to as social rent), the Government uses a set formula that can be applied to any given property. It takes into consideration the size, location and relative value of the property, as well as local income levels, to produce a ‘formula rent’. This formula also applies a weighting based on the number of bedrooms so that properties with a smaller number of bedrooms can enjoy lower rents.

Once formula rents have been calculated, landlords have flexibility to increase rents by up to five per cent. This is intended to grant them discretion when dealing with local factors. For supported housing, the flexibility is up to 10 per cent above formula rent.

However, to prevent social landlords from raising these prices too high, social housing rent is restricted by rent caps that apply a limit on social rents.

For example, a three-bed property on the private rental market may achieve a monthly rental income of £1000.

A similar property available for social housing, however, would therefore cost in the region of £500-£600 per month – providing the tenant(s) with a considerable saving. Even with the additional flexibility landlords can apply to raise this amount, the tenant would still stand to save anywhere between 30 and 45 per cent on their rent based on the above figures.

If you’re interested in applying for social housing or want to find out whether you’re eligible, you should check out your local council’s allocation scheme rules and regulations. Alternatively, you can always get in touch with a DSS-friendly estate agent like Pick My Pad to find out more information. Offering unmissable opportunities for landlords and tenants alike, we’re just a phone call or an email away!

Get in touch today!

If you’re searching for a DSS-friendly home or a property investment opportunity in the Walkden, Salford or Greater Manchester area, we can help. The knowledgeable team at Pick My Pad has decades of valuable experience and plenty of local expertise to ensure both DSS and no-income tenants have access to accurate, free and no-obligation advice.

To help our clients find the perfect home within their budget and in an ideal location in the North West, we have dedicated teams for selling, buying and letting properties. Regardless of whether you’re looking for a property close to the best schools or one conveniently located on the doorstep of public transport routes, our bespoke service aims to match your housing requirements to your ideal abode.

For more information regarding our DSS-friendly properties, feel free to get in touch. You can either give us a call on 01617903999 or fill in our online contact form to discuss your housing preferences with one of our friendly and professional team members.

However you decide to reach out, we’ll be in touch shortly to help find the right property for your family.