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Your rent and service charges
The government introduced a new policy on how rents should be set by local authorities and registered social landlords in April 2002.

The government stated that the objectives for this policy are:

• rents should remain affordable in the long term
• rents should be fairer and less confusing for tenants
• there should be a closer link between rents and the qualities which tenants value in properties
• unjustifiable differences between the rents set by local authorities and by registered social landlords should be removed over ten years

Why is there a need to reform rents in Guildford?
The housing rent structure contains inconsistencies. For example, some rents for two bedroom properties are higher than those for three bedroom properties.  Because of this, the need for rent reform was recognised some time ago.  For this reason, we commenced rent restructuring for most properties in line with the government’s guidelines in April 2002.

How are the new rents calculated?
The government requires all local authorities to calculate the rent for each of their properties according to a set formula. This formula takes into account:

• the market value of the individual property in January 1999 compared to the national average property value
• the number of bedrooms in the property
• average earnings of manual workers in the county 
  compared to national average earnings

 This rent is referred to as the formula rent. 

 There are four points to note about formula rents:

1. they will be adjusted every year by an amount set by the Government.  The 2007 formula rents have been increased by 4.4% for 2008
2. maximum weekly formula rents for 2008 have been set by the Government as follows:
   • Bedsits and one bedroom dwellings £107.33
   • 2 bedroom dwellings £113.64
   • 3 bedroom dwellings £119.96
   • 4 bedroom dwellings £126.67
   • 5 bedroom dwellings £132.58
   • 6 bedroom dwellings £138.90
3. they exclude service charges, Council Tax, water charges and rent for garages
4. the Government reviewed the scheme in 2005 and made some adjustments to the calculation of formula rents

The sections below explain how the formula rent has been taken into account in calculating rents from April 2008.

Will rents be adjusted to the formula rent straight away?

No.  The government expects most rents to be gradually brought in line with formula rents by March 2017.

For most properties the adjustment to rents started from April 2002.

Is there a limit on how much rents can be increased or reduced in a year?

Yes. The government has suggested that a limit should be applied to the amount that individual rents are increased or decreased. Guildford has adopted these limits, which are:

Maximum rent to be charged from April 2008  - rent for 2007 plus 4.4% plus £2. 

There is no limit to decreases (applies from April 2006)

How have rents for April 2008 been calculated? 
Rents for April 2008 have been calculated according to government guidelines:

• current rents have been increased by 4.4%
• the resulting rent has then been compared to the formula rent for the property.

If the rent is the same as the formula rent then no further adjustment has been made.

For properties where the rent resulting from the 4.4% increase was less than the formula rent:

• the rent has been further increased by one ninth of the difference between the two rents. This is because there are nine years left to restructure rents. (See question on 'limit' above for maximum increase.)

For properties where the rent resulting from the 4.4% increase was more than the formula rent:

• the rent has been reduced by one ninth of the difference between the two rents. This is because there are nine years left to restructure rents.

What will happen to rents in the future?

A similar calculation will be carried out each year. This calculation will take into account:

• changes in inflation
• the percentage by which the government advises formula rents should be adjusted 
• the number of years remaining until the end of the fifteen year period allowed for bringing in formula rents.

Will ability to pay be taken into account?
Not in calculating the rent due but:

• Housing Benefit entitlement will be adjusted to cover any increase or decrease in rent provided the tenant’s circumstances do not change.
• tenants not currently receiving Housing Benefit may find they qualify for assistance if the rent increases.

For further information, please contact the Housing Benefit team:

Housing Benefit Team
Revenues and Benefits Services
Guildford Borough Council
Millmead House
Millmead
Guildford
Surrey
GU2 4BB

Tel: 01483 444884
Email: benefits@guildford.gov.uk

How will shared owners be affected?
Rents for shared ownership properties have been calculated on a similar basis to other properties but adjustments have been made to the formula rent to take in to account:

• the shared owner’s responsibilities for repairing the property
• the percentage owned by the shared owner.

For any further advice, please contact the Housing Income team:

Housing Income Team
Neighbourhood and Housing Management Services
Guildford Borough Council
Millmead House
Millmead
Guildford
Surrey
GU2 4BB

Tel: 01483 444004
Email: rent@guildford.gov.uk