A new policy for fairness

The Government’s reintroduction of a 10‑year rent convergence mechanism marks a significant moment for councils with social rent stock. While convergence policy has existed previously, the new framework creates refreshed opportunity and complex decisions for social landlords.

The new policy aims to ensure fairness in the rents charged; at present rents can differ due to historic rent freezes or other factors that cause some social tenants to pay less than formula rents, which sets the expected social rent levels. Reduced rents are often provided to protect tenants during periods of economic uncertainty but have had an undesired prolonged cumulative effect. Over time, rental increases have left some social rent homes materially behind formula rent due to factors such as the periods in which the tenancies were entered.

The updated policy aims to correct these disparities, creating more equality amongst social tenants while supporting councils’ ability to fund new housing delivery. This approach looks to better balance the needs of residents that are currently in a social rent homes, with those that are still on waiting lists. Understandably so, affordability of these increases for tenants should be front-of-mind during councils’ decision making and carefully balanced with the policies’ intention of fairness.

How the new convergence mechanism works

Under the new framework, councils are permitted to increase rents for properties that are currently sitting below formula rent at a higher rate than the standard CPI + 1%. The additional uplift cap is set at £1 per week in 2027/28, rising to £2 per week in subsequent years, for a maximum of ten years.

Over time implementing the additional uplift will address historic inequalities between tenants in similar homes, taking a gradual path toward standardised social rents.

From policy to portfolio reality

The new policy creates new strategic questions that need to be answered when carrying out business planning.

We are increasingly seeing councils ask the same fundamental questions:

• What does convergence mean for borrowing headroom and revenue capacity for a councils Medium Term Financial Strategy (MTFS)?
• To what extent will tenants feel an impact, and how does impact vary by area and property type?
• Would additional support be required for tenants?
• How many homes will actually converge within the 10‑year window?
• Where are the largest rent gaps, and how long will they persist?
• How sensitive are convergence outcomes to changes in inflation?

These are not questions that can be answered through high‑level assessment alone, they require detailed, property‑level analysis. Authorities that rely on legacy assumptions risk mis-estimating both opportunity and risk, while those that carry out asset‑level analysis are better positioned to respond and accurately plan future housing provisions.

Robust convergence analysis in practice

In recent work supporting a local authority with a significant number of homes below formula rent, 31ten was engaged to model the financial and tenant‑level implications of different convergence approaches.

Rent convergence analysis should be a collaborative process with the council, combining rent roll data and policy assumptions to build a robust forecast, and testing scenarios both with and without the additional convergence uplifts. This analysis provides clear insight into convergence timelines, the proportion of stock converging within the 10 year policy window, and the implications for long‑term revenue account and borrowing headroom impacts.

Crucially, the analysis went beyond finance, assessing how different convergence approaches would affect distinct tenant cohorts and recognising that rent movements do not land evenly across residents.

Seeing the impact spatially

One of the most insightful elements of the work was the use of spatial analysis. By mapping convergence timelines geographically, the council could see clearly whether particular neighbourhoods or wards were disproportionately affected. Overlaying this with property attributes such as bed size, typology, tenancy vintage, this visualisation revealed clear underlying trends:

• Certain property types tended to converge far slower than others
• Groups of homes linked to specific historic lettings policies stood out
• Particular locations showed a higher concentration of impacted tenants

This spatial view helped shift the conversation from abstract policy compliance to place‑based decision‑making thereby supporting more nuanced discussions with the council. This identified where support mechanisms such as a hardship grant could be used to support the impacted tenants, thereby mitigating the financial impact they feel from the convergence.

From modelling to decision support

The outcome was not a single prescribed answer, but a clear evidence base to support confident decision‑making. The council gained a detailed understanding of convergence timelines across the housing stock, the financial trade‑offs between faster and slower approaches, and how impacts would fall across different tenant groups. This included those on universal credit, self‑funders and pensioners.

This evidence is now informing strategic discussions, enabling leadership to balance fairness, affordability and delivery ambitions with confidence. Understanding this now allows councils to put in place strategies to expand affordable housing programmes with the additional resources from convergence.

How 31ten can help

At 31ten, we specialise in translating complex housing policy into clear, decision‑ready insight. We support councils to move from high‑level assumptions to robust, transparent evidence that aligns finance, housing strategy and asset management.

If your authority wants to plan for the impacts from the policy change or are considering the implications of the updated policy, we would be happy to explore how we can support you – please get in touch.