What is rent convergence?
At the end of January 2026, the UK Government confirmed how rent convergence will be implemented for Registered Providers (RPs). From April 2027, RPs can increase rents by an additional £1 per week, and from April 2028, by £2 per week, on top of the standard CPI + 1% annual increase. The purpose is to allow rents that sit below formula rent to gradually reach that benchmark. Convergence can continue for up to 10 years or until the property reaches formula rent.
Differences in rent levels have emerged between similar properties depending on when they were let. For example, in 2023, while annual rent increases were capped at 7%, formula rents still increased by CPI + 1% (11.1%), causing actual rents to fall further behind formula rent. The new convergence allowance aims to help reduce these disparities.
Convergence can only be used to reach formula rent it cannot be used to increase rents to formula rent with the flexibility.
Example of rent convergence
Assuming CPI is 2%
| Rent before increase | CPI+1 increase | Convergence factor | Rent After Increase | Formula Rent no flex | |
| Apr-26 | 100 | 3.00 | 1 | 104.00 | 108.15 |
| Apr-27 | 104 | 3.12 | 2 | 109.12 | 111.39 |
| Apr-28 | 109.12 | 3.2736 | 2 | 114.39 | 114.74 |
| Apr-29 | 114.3936 | 3.431808 | 0.35 | 118.18 | 118.18 |
Key actions for organisations before December 2026
- Model the impact of rent convergence on your stock and determine the extra income that can be achieved. Consider if it can all be collected and if the bad debt rate.Â
- The Board will need to agree on priorities for this extra finance. How much should be invested into existing homes and new developments? Are there other priorities for this funding?Â
- Update your rent policy and consult with your tenantsÂ
- Check your rent increase processes workÂ
