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Fair Rent

Who pays fair rent?

If you moved into an L&Q home before the 15 January 1989 you are likely to be paying a fair rent, which has been registered with the Valuation Office Agency. Once it is registered, this is the maximum amount that the landlord can charge until the rent is reviewed or cancelled. A fair rent is generally much lower than the rent that could be charged as a market rent for a similar tenancy. Those paying a fair rent will have signed a secure tenancy agreement and have many rights in line with local authority tenants, set out in the Housing Act 1985.

How does the valuation office set a fair rent?

When deciding the amount to register as a fair rent, the rent officer will consider the:

  • Property's age, character, location and condition
  • Quantity, quality and condition of any furniture provided

The rent officer will ignore:

  • Disrepair the tenant has caused to the property
  • Unnecessary improvements made
  • Personal circumstances of both the landlord and tenant

The rent officer must assume that the rent would not be forced up by excessive demand for similar property in the area. If a fair rent has previously been registered, there is a limit to how much the rent officer can increase it. The rent set by the Valuation Office is the maximum L&Q can charge.

How does L&Q set your rent?

With effect from April 2002, the Government determined how rents should be set for both Housing Association and Council properties, by setting out a formula that determines a target rent. These use a separate formula to set the net rent (not including any service charge) that uses -

  • Property value as at January 1999
  • The number of bedrooms
  • Earning levels in the London area for manual jobs (to promote affordability)

Each year the Fair Rent charged is compared to target rent and increased to move towards it at a rate restricted to RPI 0.5% plus £2 per week in any one year. When the target rent is reached, annual increases must not exceed RPI +0.5%.

As before, the rent set by the Valuation Office Agency is the maximum we can charge. However, if target rent is less than this, then it becomes the maximum that we will charge. There is also a restriction on annual rent increases means that we may not be able to increase your rent fully to target rent or to the rent set by the Valuation Office Agency straight away and may have to phase the increase over two years.

The last check made is to ensure that the new rent does not exceed the government-defined rent cap; the value of which varies according to the number of bedrooms in the property.

Moving home

If a mutual exchange happens between an assured tenant and a secure tenant they will exchange tenancies and the current rent they are paying.

If a tenant paying a fair rent transfers within L&Q then they will keep the secure tenancy. However, if the property they are moving to has never been registered the landlord will have to register the property for a new rent with the Valuation Office.