Rent convergence will be phased in with £2 uplift from 2028, Pennycook confirms

Matthew Pennycook has today revealed social housing rent convergence levels, with weekly rents permitted to rise by £2 above CPI plus one per cent from 2028/29.

The housing minister confirmed in a ministerial statement today that convergence will not be implemented for the 2026/27 financial year.

In 2027/28 weekly rents will be permitted to rise by £1 over and above CPI plus one per cent and then by £2 from 2028, until “formula rent” is reached.

Pennycook said: “We believe this approach strikes a fair balance between the need for increased investment in new and existing homes, the interests of existing and potential social housing tenants, and the consequences for public spending and our fiscal rules.”

Under convergence, scrapped in 2015, cheaper social housing rents are allowed to rise more quickly to ensure alignment between similar properties. The social housing sector has called for the policy to be re-introduced, with the G15 group of housing associations in London saying it has cost its members £2bn in lost income.

The level of uplift to weekly rents has been a debating point in the sector in recent months. The National Housing Federation, London Councils and the G15 group of housing associations have all previously called for convergence with a £3 uplift, but the Northern Housing Consortium has called for a £2 uplift. The Chartered Institute of Housing has called for £2, but only if it is alongside government support to help the sector meet new regulatory requirements.

Reacting to the news, Gavin Smart, chief executive of the CIH, said: “We welcome the government’s announcement to re-introduce rent convergence for social housing, which strikes a balance between the needs of landlords to invest in existing homes and affordability for tenants. This, coupled with the social rent settlement announced last year, will provide the sector with the certainty it needs for long-term financial and business planning. We will be analysing what those figures mean for the sector’s capacity to deliver on the government’s priorities in due course.”

Greg Reed, chief executive at Places for People (PfP), said: “Setting convergence at £1 per week initially, rising to £2, gives providers like PfP the certainty needed to plan confidently towards shared priorities: delivering 1.5 million new homes, boosting growth, and improving living standards for existing customers.”

The government has announced several policies in the last 24 hours, including details of its £2.5bn low cost loans fund for registered providers and changes to section 106 and Housing Revenue Account thresholds.