G15 wants £3 convergence
The Local Government Association (LGA) is the latest organisation to share its submission to the government’s consultation on rent convergence.
The consultation on reintroducing the policy – which would allow cheaper rents to rise more quickly to ensure alignment between similar properties – closed last week.
The paper asks the sector for views on whether the cash limit on rent increases should be set at £1 or £2 per week.
LGA, citing Savills research, said “only convergence at £2 per week will return the national Housing Revenue Account projection to a cumulative surplus in 10 years.”
It said that conversely, convergence at £1 per week would mean that local authorities would still remain in cumulative deficit after 10 years. It cited analysis showing almost double the number of additional homes could be delivered if convergence was permitted at £2 a week (17,764 homes) compared to £1 a week (9,214 homes).
However, the LGA said even a £2 per week convergence over 10 years would still result in properties being below formula rent in many local areas. Therefore it is calling for ministers to consider allowing councils additional flexibility to either increase rents by £3 per week or go beyond the fixed time limit to ensure all properties are converged.
Meanwhile, the G15, which represents the largest housing associations in London, said the government’s proposed level of £1 or £2 per week are both “too low to restore financial capacity at the pace required to meet both immediate and long-term challenges.”
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It said that in London, only 9.3% of homes are currently at formula, compared with a national average of 35.4%.
The G15 submission said: “This highlights the particular challenge for London providers, who face significantly larger shortfalls in rental income while also operating in the highest-cost environment in the country.
“A £3 per week convergence mechanism from April 2026 would therefore represent an essential step in narrowing this gap and ensuring that rental income better reflects the cost pressures in the capital.”
The National Housing Federation, as reported by Housing Today yesterday, is also calling for a £3 per week convergence.
By contrast the Northern Housing Consortium says £2 “strikes the right balance between enabling greater investment by landlords and ensuring that rents remain affordable for residents.” The Chartered Institute of Housing is calling for £2, but only if it is alongside government support to help the sector meet new regulatory requirements
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