On 22 January, I announced a package of initiatives to help alleviate affordability pressures faced by households, particularly in areas of high housing demand and high accommodation costs. This includes a new affordable rental scheme, to be based on a cost rental model. Further details on the suite of initiatives announced on 22 January can be found at
The cost rental model, currently under development through a pilot initiative, provides that rents will be set at levels to recover the construction costs and to facilitate the management and administration of developments, but with only a minimal profit margin included. This provides greater certainty around the rent, regardless of what is happening in the market. This scheme will be targeted at low- to moderate-income households who do not qualify for social housing support. My Department is currently considering eligibility criteria for access to this scheme, taking account of broader policy on affordable housing.
As regards the system of differential rents particular to social housing tenants, local authorities charge rent for dwellings under section 58 of the Housing Act 1966, on a basis related to household income, with lower-income households paying a lower rent. Local authorities are also empowered under section 58 to include charges in the rent relating to the costs of works and services provided to dwellings under the Housing Acts. If income changes, the rent will change to reflect this. Local authority rents, however, are not standardised on a national basis, as each local authority operates its own scheme. A review of the system of differential rents is nearing completion.