Most of Hexagon’s homes are let based on rents set in accordance with government guideline ‘target rents’. Rents were restructured in 2002 with the aim of converging the rents of all social landlords so that tenants in similar properties and similar locations paid similar rents.
A target rent has been set for each Hexagon property based on a formula that takes into account property value, number of bedrooms, and local average earnings. The government placed a cap (by number of bedrooms) on the upper limit that can be charged, even if the target rent is higher. The cap increases annually by the rate of inflation (RPI) + 1%.
Rents are increased annually and increases follow rules set out by the Homes and Communities Agency (the government agency that regulates Housing Associations). The current rules allow increases of no more than the RPI + ½%. In addition, an increase of a further £2 may be applied if the rent for that property is currently lower than its target rent.
These rules are changing with effect from April 2015, when rents will be capped at the consumer price index (CPI) + 1%.