Rent and Service Charge Setting Policy

Affordable rent

Accommodation provided under an agreement with Homes England or the Secretary of State. The rent for affordable rent housing (inclusive of service charges) must not exceed 80% of gross market rent. See also section 6 of the policy document.

Average manual earnings

The figures specified in the government policy statement on rents for social housing (opens new window) which are taken from the New Earning Survey (produced by the Office for National Statistics). These figures are based on the average gross weekly earnings of full-time manual workers over the 1997 to 1999 period, uprated to 1999 prices.

Consumer Price Index (CPI)

The CPI measures the change in prices UK consumers pay for everyday goods and services, like groceries, fuel and clothing. It compares the prices of goods and services now with how much they cost a year ago. The Office for National Statistics (ONS) calculates and releases an updated figure each month.

Formula rent

Since 2001, rents for properties let at Social Rent have been based on a formula set by the government. The formula is set out in both the Government Rent Policy Statement (opens new window) and the Regulator of Social Housing (RSH) Rent Standard (opens new window).

The formula creates a 'Formula Rent' for each property (not including service charges), which is based on the location, relative value of the property at January 1999, relative local income levels, and the size of the property. A main aim of this formula-based approach is to ensure that similar rents are charged for similar properties (see also section 5.3).

General fund

This is the council's main revenue account which includes day-to-day income and expenditure that can be used for the provision of services.

Homes England

The government's housing and regeneration agency.

Housing Revenue Account (HRA)

The Housing Revenue Account is a separate statutory account to record expenditure and income on running a council's own housing stock and closely related services or facilities which are provided mainly for the benefit of the council tenants.

Integrated Impact Assessment (IIA)

An Integrated Impact Assessment (IIA) is a process which helps the council to consider the actual or potential impacts of council strategies, policies, services or budget proposals on people and their surroundings. It is a key document in ensuring the decision-making process is transparent, any potential negative impacts are mitigated and opportunities to evidence how a proposal will contribute to the delivery of Making Gateshead a Place Where Everyone Thrives are captured.                   

Intermediate rent

Low-cost rental accommodation which satisfies either (a), (b) or (c) below:

(a) The accommodation:

i. was built or acquired by the private registered provider without public assistance;

ii. is provided on an assured shorthold tenancy (other than an assured shorthold tenancy that is expressed to be a probationary or starter tenancy) or licence, either:

• to a tenant who is not a person nominated by a local housing authority under section 159(2)(c) of the Housing Act 1996, or
• to a tenant nominated by a local housing authority under section 159(2)(c) where any conditions set by the local housing authority regarding the circumstances in which the registered provider may grant a tenancy of intermediate rent accommodation are satisfied in respect of that accommodation,

iii. has not previously been let on a social rent basis, and

iv. is not affordable rent housing.

(b) The accommodation is low-cost rental accommodation which was funded wholly or in part by public assistance under a programme identified by the Regulator as an intermediate rent accommodation enabling programme and any conditions under that programme regarding the circumstances in which the accommodation may be let as intermediate rent accommodation are satisfied.

(c) The accommodation is key worker housing.

Local Housing Allowance (LHA)

The Department for Work and Pensions (DWP) use Local Housing Allowance (LHA) (opens new window) rates to calculate Housing Benefit for tenants renting from private landlords. LHA rates relate to an area in which a claim is made - these areas are called Broad Rental Market Areas (BRMA). A BRMA is where a person could reasonably be expected to live taking into account access to certain facilities and services. The Valuation Office Agency (VOA) Rent Officers collect rental information from letting agents, landlords, tenants and other sources. LHA rates are based on private market rents being paid in the BRMA which can differ from advertised rents.

Gross market rent

Gross market rent means the rent (inclusive of any applicable service charges) for which the accommodation might reasonably be expected to be let in the private rented sector. Property size, location type and service provision must be considered when determining what gross market rent a property might achieve if let in the private rented sector.

Private Finance Initiative (PFI)

This is a long-term contract between a private party and a government one where the private sector designs, builds, finances and runs a public asset and related services. In a PFI contract the private party bears the risks associated with construction, maintenance and management responsibility. Examples of PFI can include new housing, schools and waste facilities.

Regulator of Social Housing (RSH):

The RSH ensures that social housing providers operate in an ethical, efficient way which directly benefits vulnerable individuals and families who need access to affordable housing options. The RSH sets standards and carries out robust regulation focusing on driving improvement in social landlords, (including councils) and ensuring that organisations are well-governed, financially viable and offer value for money. If standards are not being delivered and poor-quality housing and outcomes are identified, the RSH has powers to take appropriate action. Their powers were expanded from 1 April 2024 to include regulatory inspections of social landlords.

Relative county earnings

This means the average manual earnings for the county in which the property is located divided by national average manual earnings, both at 1999 levels. The policy statement on rents for social housing (opens new window) specifies the data to be used in the calculation of rents.

Relative property value

This means an individual property's value divided by the national (England) average property value, as at January 1999 prices. The policy statement on rents for social housing (opens new window) sets out the data to be used to calculate rents.

Relevant local authority accommodation

Accommodation is 'relevant local authority accommodation' if it is provided by a council and the Secretary of State has agreed that it would be inappropriate to apply the rent policy to the accommodation because this would cause the council unavoidable and serious financial difficulty.

Royal Institution of Chartered Surveyors (RICS)

This is a global professional body for those working in the built environment, construction, land, property and real estate. RICS works in the public interest to uphold standards and protect the natural and built environments ensuring they are sustainable and inclusive for everyone.

Service charges

Usually reflect additional services which may not be provided to every tenant, or which may relate to communal facilities rather than being particular to an individual home. Service charges are subject to separate legal requirements and are limited to covering the cost of providing the services.

Shared ownership

This allows a buyer to purchase a share of the home and to pay an affordable rent on the remaining part. The buyer has the option to increase their share during their time in the property via a process known as 'staircasing' and can staircase all the way to 100% ownership.