The financial pressures facing registered providers (RPs) are well known, with the rent cap and previous rent reductions leaving a lasting impact. Today, around 61% of social rent homes let by housing associations are below formula rent levels, an unsustainable position for many providers. 

Against this backdrop, the sector has long called for rent convergence. The Government’s announcement at the Spending Review, to implement convergence as part of a new rent settlement, was therefore a welcome development. The consultation on how to deliver this policy was published on 2 July 2025 and runs until 27 August. 

To support sector engagement, Capsticks, hosted a roundtable with senior leaders to explore the consultation, its implications, and the broader strategic context. 

“While this measure represents a relatively small part of the Government’s broader support package, we were eager to hear directly from registered providers. Early modelling by several housing associations we spoke to indicated potentially significant benefits, especially if rent convergence can be achieved swiftly,” said Capsticks, Partner and Head of Governance, Darren Hooker. 

Balancing revenue and resident impact 

While convergence offers a vital opportunity to strengthen RP finances, participants were clear that its implementation must be carefully managed to avoid adverse impacts on residents, particularly those not receiving housing benefits or Universal Credit. 

Soha Housing, Chief Executive, Kate Wareing, highlighted the urgency, but also flagged that other residents weren’t factored into the consultation: 

“Those on affordable rents are struggling, and we need to do something about that.” 

The consultation acknowledges the potential impact on residents, but sector leaders stressed the importance of localised analysis. Southern Housing, Public Affairs & Research Manager, Lillian Lovatt, advised: 

“When formulating your consultation response, it's worth checking the housing benefit status of residents paying below formula rent, as it might not tally with the assumptions in the impact assessment.” 

Some participants wondered whether boards would sign off on the highest possible levels of increase, given the affordability impact for residents.   

A first step toward a broader rethink? 

A recurring theme was the need for a more fundamental review of the rent framework.  Participants also reflected on the structural differences between the housing sector and other regulated industries. Unlike utility companies, for example, housing providers cannot simply pass rising costs directly onto residents, making financial resilience and strategic planning far more complex in the face of inflation and economic volatility. Curo Group, Chief Executive, Victor Da Cunha, called for a public review to address key questions: 

“To consider rents properly, we need to review: (a) who we house; (b) what is affordable; (c) what rents are used for; and (d) how capital subsidy fits in.” 

Campbell Tickell, Director, Helen Routledge, echoed this sentiment: 

“Rents are very complicated; a back-to-basics reframing will be needed at some stage.” 

There was also discussion around devolving rent-setting powers away from Government and to the Regulator of Social Housing or the boards of RPs themselves. Kate Wareing argued: 

“I would like to see an end to Government micromanagement of rents and for Boards, who know their local areas best, to have the freedom to set appropriate rent levels.” 

Is flexibility being overlooked? 

One critical detail in the consultation, , was that convergence is proposed to apply strictly to target rents, with no provision for applying rent flexibility. This could significantly constrain financial capacity. VIVID Homes Ltd, Chief Finance Officer, David Ball, warned: 

“If convergence is to target rents without any flexibility, it will adversely impact the increased development we had hoped to deliver.” 

The absence of flexibility could limit RPs’ ability to respond to local market conditions and strategic priorities, undermining the potential benefits of convergence for long-term investment and growth. 

Unlocking Development: What more is needed? 

While convergence is a step forward, it alone won’t unlock the scale of development needed to meet the Government’s 1.5 million homes target. Broader economic factors, particularly interest rates, were seen as more influential. 

“Rent convergence will make a huge difference, but it is dwarfed by the impact that a change in interest rates has for most RPs,” said Kate Wareing. 

With legacy borrowing expiring and new debt being taken on at higher rates, some RPs are now borrowing simply to deliver core services and to service interest payments. This financial strain is limiting capacity for new builds and investment in existing stock. 

Timing and scale: What does the sector want? 

There was strong consensus that convergence should be implemented swiftly. Peabody Trust, Group Treasurer, Tariq Kazi said: 

“We’d welcome a swift outcome of the consultation, and we'd like to see rent convergence in place by April 2026. This would give both residents and social landlords greater certainty over rents, helping to restore fairness, rebuild capacity, and stabilise financial planning for the future.” 

Southern Housing, Head of Financial Planning, Stuart Hall added: 

“The quicker rents converge, the greater the long-term benefit for housing associations because it has a compounding effect on revenues.” 

A positive step with delivery front of mind 

Overall, participants expressed strong support for the Government’s direction and acknowledged the breadth of measures introduced to support the sector. While the consultation signals meaningful progress, it’s clear that the detail will determine the extent of its impact. RPs are ready to demonstrate their ability to deliver, provided the framework enables them to do so effectively. 

The roundtable made clear that rent convergence is a critical step toward restoring financial sustainability for RPs, enabling investment in homes and services, and potentially unlocking future development. There was also recognition of the Government’s efforts to address a complex issue. 

“It is evident, from our discussions, that convergence at the earliest opportunity, at a minimum of £2 per week, will make a significant impact for RPs, ensuring the best outcomes for residents,” said Capsticks, Partner, Susie Rogers. 

Capsticks will now use the insights from this roundtable to inform its response to the consultation, reflecting the views and priorities of the sector. 

How Capsticks can help 

Our team provides a full governance and regulatory service to our housing clients; from supporting the daily operations of housing organisations to, leading on unique large-scale projects. Our leading governance experts understand your business, and the complex legal and policy environment in which you operate. 

The team has a wealth of experience advising on amalgamations, transfer of engagements, mergers and business transfers, restructuring, and joint ventures with both profit and not-for-profit organisations.  

If you have any queries around what's discussed in this insight and the impact on your organisation, please speak to Susie Rogers and Darren Hooker to find out more about how Capsticks can help.