Social Rent –7% restriction on rent increases for social housing tenancies in 2023 Here at Support Solutions UK, we like to keep our followers and clients up to date with latest industry news. Our December briefing takes a look at Social Rent and the Regulator's recent decision to apply a 7% restriction on rent increases for social housing tenancies in 2023. Importantly supported housing is exempt from the 7% rent increase and can still apply CPI + 1%, which is 11.1% in total. What is Social Rent and how does it work? Around four million families live in the social rented sector. This is almost one-fifth of households in England. Social housing is provided by either housing associations (not-for-profit organisations that own, let, and manage rented housing) or the local council. As a social tenant, you rent your home from the housing association or council, who act as the landlord. Social housing aims to be more affordable than private renting and provide a more secure, long-term tenancy. Social homes are the only type of housing where rents are linked to local incomes, making these the most affordable homes in most areas across the country. Rents for social homes are significantly lower than private rents. Rent increases are also limited by the government, which means homes should stay affordable long-term so people aren’t priced out of their communities by rising rents. Social housing should be there for anyone who needs it. At present, the law states who is entitled to social housing and should get preference on the waiting list. But councils have lots of flexibility on who qualifies locally and social landlords can refuse to let to people if they so choose. People in social housing usually have secure tenancies, giving them greater protection from eviction and enhanced rights compared to those renting privately. They provide the foundation people need to get on in life, meaning families can put down roots, plan for the future and make their house a home. How is Social Rent set? In 2019, the government set a rent policy for social housing that would permit rents to increase by up to CPI plus 1 percentage point (‘CPI+1%’) per annum, and made clear its intention to leave this policy in place until 2025. We are however living through exceptional times and when the current rent policy was set in 2019, inflation was forecast to be around 2% in 2022 and 2023. In July 2022, CPI was 10.1%. If CPI remained at or above this level in September, this would permit social housing rent increases from 1 April 2023 to 31 March 2024 of 11.1% or more. This is much higher than expected rate of inflation and is already placing considerable pressure on many households, including those living in social housing. Registered Providers of social housing (‘Registered Providers’) were obviously concerned about these pressures on their residents and came together on how the sector should respond. In the face of these exceptional challenges, the government thought that there was a strong case for making a temporary amendment to the CPI+1% policy for 2023/24 in order to provide a backstop of protection for social housing tenants from significant nominal-terms rent increases. The government decided to consult on a new Direction from the Secretary of State to the Regulator of Social Housing (‘the Regulator’) on social housing rents. This Direction would operate alongside the Direction on the Rent Standard 2019 issued on 26 February 2019 (‘the 2019 Direction’). The intention of this new Direction would require the Regulator to amend its Rent Standard so that the current CPI+1% limit on annual rent increases would be subject to a ceiling from 1 April 2023 to 31 March 2024. Registered Provider is allowed to implement. Registered Providers would be permitted to increase rents by 5% or CPI+1%, whichever is the lower. However, within this consultation, we are seeking views on 3%, 5% and 7% as ceiling options, and we are also 7% Social Rent Cap 2023/24 The Department for Levelling Up, Housing and Communities (DLUHC) had floated that social rent increases could be capped as low as 3%, however, setting the rent cap at 7% will come as a huge relief to registered providers and prevents a potentially apocalyptic scenario for some.
The Leasehold and Freehold Reform Act 2024 (LFRA 2024) received Royal Assent on 24 May 2024, officially becoming law in England and Wales. Although the Act is now law, most of its provisions are not yet in effect, since they depend on secondary legislation, consultations, and resolution of legal challenges.
WHAT PROVISIONS ARE ALREADY IN EFFECT?
31 January 2025: The “two-year rule” was abolished—leaseholders can now extend a lease or buy the freehold immediately upon purchase of a leasehold property .
3 March 2025: Key changes to the Right to Manage took effect including leaseholders in buildings. Up to 50% is non-residential can now claim this right (previously capped at 25%).
Leaseholders no longer have to cover the freeholder’s legal costs when exercising the Right to Manage—costs now fall on each party unless ordered by a tribunal .
24 July 2024: Section 113 came into effect, imposing new rules on owners of historic rent charges (pre-1977). It restricts enforcement powers and removes certain remedies like forced entry .
WHAT PROVISIONS ARE STILL PENDING ?
Many of the more extensive reforms such as long lease extensions (up to 990 years), abolition of marriage value, capping of existing ground rents, and reforms to service charges and leasehold enfranchisement have not yet been implemented.
WHAT CAN WE EXPECT ?
- Secondary legislation and further consultations (ongoing throughout 2025) .
- A draft Leasehold and Commonhold Reform Bill expected later in 2025, and a White Paper that has already been published on commonhold reform.
- Legal challenges (Judicial Reviews) are currently underway concerning key provisions like lease extension valuations and the marriage value mechanism. These hearings took place around July 2025 and may further delay implementation.
WHAT IS THE TIMELINE FOR THE REST OF THE PROVISIONS TO COME INTO EFFECT?
Most remaining provisions are not yet in force. The government has signalled that key parts will roll out gradually through 2025 and possibly into 2026, subject to:
Completion of necessary secondary legislation, outcomes of public consultations, resolution of legal challenges, and progress of the draft Leasehold and Commonhold Reform Bill in Parliament.
THE EXPECTED TIMELINE
24 May 2024 – Act received Royal Assent
24 July 2024 – Section 113 (historic rent charges) enforced
31 January 2025 – Abolition of the two-year qualifying period
3 March 2025 – Expanded Right to Manage; change in cost responsibility
Late 2025 / Early 2026 – Further reforms contingent on consultations, secondary legislation, and legal resolution