In late 2023 we identified a number of possible errors in how we historically calculated rent for some of our tenants, based on policies that were introduced in 2004 and 2016.
Unfortunately, some of our tenants were overcharged as a result, for which we sincerely apologise.
Since 1 April 2024, all rents charged are correct. We are working on refunding any overpayments tenants have made during the affected period.
Why this happened
Our intention has always been to make what tenants pay transparent and to set rents as low as possible for tenants. These errors were both made due to misinterpreting government guidance related to setting rents.
How this was discovered
During a review of our policies and procedures, we identified potential errors in our policies. We took legal advice to clarify whether we had interpreted government guidance correctly.
Unfortunately, we were advised we were not compliant and needed to correct these errors and refund the affected tenants accordingly.
We referred ourselves to the Regulator for Social Housing when we identified these issues and worked through the matter with them. The regulator published their judgement on 9 July 2024.
We have continued to engage with the regulator as we worked through this whole process.
The regulator is now satisfied we are compliant with the rent standard. They have removed the judgement they published in July 2024.
Social housing rent types
There are two forms of rent charged in social housing.
Social rent is the rent most people will be more familiar with. People on the housing register can pay rent at around 35% to 40% of the local market rent.
Affordable rent is a newer form of social housing rent. It can be set at no more than 80% of the local market rent. In Cambridge, in recognition of housing affordability challenges, we have until now only been setting affordable rents at up to around 60% of market rent.
Social rents error
From April 2002, councils were encouraged to show service charges separately from rent, to make it easier for tenants to see how their overall housing costs were being calculated. Different tenants would have been being charged different amounts due to paying for different services, such as grounds maintenance or cleaning in communal areas.
As not all homes had gas central heating or electrical and mechanical services, we separated these service charges out on tenants’ accounts in April 2004. However, we now know both gas and electrical service charges should have been left within the amount charged for rent.
Although we showed these charges separately, they have always been part of the rent. When we first separated these charges out, we reduced the amount of rent being charged by the same amount of the service being charged. This meant when the new rent figure and service charges were added together, the overall amount being charged for the property was the same as it was before we separated out the charges.
However, in subsequent years as any annual rent increases were applied, the calculations would not have been correct because one or both service charges were separate to, rather than included within, the core rent. As a result of these charges being shown separately, we could not be certain some tenants were not accidentally overcharged.
Therefore, we had to put these charges back into the rent where they should always have been. The new total was then compared to the ‘formula’ rent for the property, which is the maximum we are allowed to charge for your social rent.
Formula rents, sometimes also referred to as ‘target rents’, are individually calculated rents for each property that follow a formula dictated by the government. The formula rent is what we intend to charge our tenants, and anything charged above would mean the tenancy had been affected by this error.
If we have charged an overall amount above the formula rent, we will refund the difference. This will apply to any tenant who has been in their home since April 2004, or who has moved into a property which already had these charges applied.
Tenants who have not overpaid will not be due a refund, but we still needed to correct rent accounts from April 2004 to April 2024 to ensure the service charges were incorporated back into the amount shown for rent, rather than displayed separately.
We have also added separate gas maintenance charges to properties when gas central heating has been installed since April 2004. If this installation was carried out during someone’s tenancy, they will have had this charge added on top of their rent, and we will need to refund the full value of this service charge, regardless of whether it breached the formula rent or not.
Affordable rents error
When we created the policy for setting affordable rents for council properties in 2016, we wanted to set first-time rents as low as possible in our new-build homes, at around 50 to 55% of market rents. Around the same time, the government advised councils that they would need to bring affordable rents down by 1% per year for four years, from 2016 to 2019.
When creating our policy, we needed to make sure we did not set rents so low that when we reduced them by 1% per year the scheme was no longer financially viable for us.
We could have set new rents a little higher for the first three years – at up to 80% of market rent, which would have been compliant with government guidance – to end up with rents from year four that were as low as we could afford to charge.
But artificially inflating rents in this way did not feel like the right thing to do because it would have been less affordable for tenants at the outset. We chose instead to set rents as low as possible from the outset, increasing them annually, thinking this would be better for tenants, making rents more affordable.
We now know that misinterpreting the guidance in this way means the policy was non-compliant and we had also implemented this policy incorrectly. So, we have corrected affected tenants’ rent accounts to recognise the 1% reduction on the affected tenancies.
How we have been addressing the error
In early 2024 we wrote to all current tenants who were affected by the error, to inform them of this issue and to apologise.
All council tenants received a rent notification letter in the week commencing 26 February 2024 confirming their new, corrected rents, which have now been in place since April 2024.
Any tenants who were financially affected by the historical errors also received a second letter the same week, explaining which issue they were affected by. Subsequent updating letters have been sent in July and November 2024, and in May and August 2025. We will continue to update current tenants periodically as we progress.
The refund process
Before making any refunds, we need to consider how much of your rent payments may have been paid by Housing Benefit or Universal Credit.
If you have received Universal Credit, we are required by statute to repay the Department of Work and Pension (DWP) directly, regardless of whether you received your payment directly or not, as a mistake has been made.
Universal Credit came into effect in October 2018 and was applied to people of working age. Consequently, some tenants will be affected by both the Housing Benefit and the Universal Credit process.
Also, any refund amount would need to be reduced by the amount owed if the affected tenant’s account is in arrears, has housing benefit debt, has received a discretionary direct payment, or owes for rechargeable repairs.
Likewise, if former tenancy arrears have been written off or clearance costs were not able to be reclaimed, these would also need to be deducted from the refundable amount.
Housing Benefit
We process Housing Benefit claims on behalf of the DWP. Subsequently, we have identified the tenancies affected by this process, as a ‘Housing Benefit reference number’ is automatically added to our housing management database when the benefit is applied to the tenancy.
However, presently we are unable to confirm if the claim was successful, or to what period it applied. Hence, the current Housing Benefit system is being adapted and modified by the council to reprocess all the affected tenancies with a Housing Benefit reference number attached. This is currently in the test stage, and we hope to be able go live with this shortly.
Universal Credit
The DWP processes Universal Credit claims and is responsible for recalculating any Universal Credit overpayments.
We have identified the affected tenancies in our system as a code must be applied to confirm a rent amount for the DWP to process a claim.
We cannot say if the claim was successful or how much the DWP contributed. The Universal Credit system needs adaptation, as it was not designed to reopen previous financial year’s claims or to deal with a recalculation of claims of this magnitude.
We are in regular contact with the DWP and will update the current tenants as soon as we know more from them. This will need to be resolved before any refunds can be made to those affected by this element of the refund process.
No benefit contribution towards rents
Some affected tenancies will not have received any benefit contribution towards their rent. By process of elimination of the above Universal Credit code and Housing Benefit reference number missing from the account, these tenants have been identified.
Accordingly, we grouped the affected current tenants into four processing groups.
Group 1
These current tenants have no housing related benefits claim numbers or codes applied to their tenancy.
They have been further split into three sub-processing priorities:
- Tenants paying by direct debit and bank details verified
- Tenants not paying their rent by direct debit requiring verification
- Tenants who have terminated their tenancy after 1 April 2024
We will start to write to these tenants by the end of October 2025 to discuss their refund amounts. This information will not be given over the telephone. Read the ‘avoiding scams’ section below for further information.
Group 2
These tenants have a Housing Benefit claim reference number on their account but no reference code for Universal Credit. Once the Housing Benefit system has been adequately adapted to re-process the claims, and all the refund letters have been sent to those in Group 1, we will write to those in this group next.
Group 3
These tenants have a Housing Benefit claim reference number on their account but also have a reference code for Universal Credit. Once the Housing Benefit system has been adequately adapted to re-process the claims, we will include these tenants within this too. However, we will need to wait for the decision from the DWP before we can address the Universal Credit element of the benefit claim towards rent.
Group 4
These tenants have a Universal Credit code on their account only. Therefore, we cannot address any of these tenancies’ refunds until we have the decision from the DWP. We continue to keep in touch and work with the DWP to find a resolution to this matter and will keep all affected tenants up to date as the outcome transpires.
If you need immediate financial advice or have a question about your rent that is not related to these rent corrections, contact us to reach the correct team who can assist you further.
Former tenants
Some former tenancies will have been affected. Initially we are contacting current tenants and trying to capture any former tenancies for them as well within the refund process.
When these have been addressed, we will work through the remaining former tenancies. At this time, we will contact those we have contact or forwarding details for to advise they have been affected by these errors as well.
Tell us if you are a current tenant who has lived at another address within Cambridge City Council housing, or have moved out of the area.
Privacy Policy
We have now created a specific privacy policy dedicated to the Rent Regulations Project processes only.
Avoiding scams
When we start to process refunds, we will write to affected tenants to request payment details.
We will not ‘cold call’ tenants to request payment details and we will never ask tenants to make a payment of any amount to receive a refund. If you are in any doubt, please contact us.
In the interest of GDPR and safeguarding, we will not be able to give any information on the amount of the refund over the telephone. This will only be provided as part of your individual tenancy letter.
