Housing Minister Kris Hopkins has offered a deal which the Government claims will give a decade of strong protection for social tenants with the cost of living.
The minister highlighted how this will also give greater stability for landlords, as they will be able to use this certainty to predict their likely revenues and invest in new homes.
The proposals would come into effect from April 2015, and offers a fair deal for tenants and landlords alike.
For tenants, annual rent increases will be linked to inflation – using the more stable Consumer Price Index as a measure rather than the Retail Price Index as has been used in previous years.
In turn, it will give councils and housing associations the stability they need to plan investment in new homes in their area, supporting £23billion public and private investment in affordable homes planned from 2015.
This will also help towards achieving the fastest rate of affordable housebuilding for two decades.
But ministers also want to ensure landlords have the powers they need to charge tenants on higher incomes a rent closer to the market rate.
From 2015, these limits on social rent levels would be lifted for instances where tenants earn at least £60,000.
And when possible, new rules would be introduced requiring those social tenants earning above this threshold to declare their income to their landlords.
Hopkins said: “Today’s proposals offer a fair deal on rents for tenants, helping with their cost of living and ensuring those who can afford to pay more do and those on lower incomes know what to expect.
“But it also offers the certainty and stability councils and housing associations need too, to plan ahead and invest their revenues to build more affordable homes in their area.
“This and the £23billion of public and private investment planned in the three years after 2015, means we’re on track to deliver the fastest rate of affordable housebuilding for two decades.”
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