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.
Rents being charged from April 2024 onwards have been corrected. We are now working towards refunding any overpayments tenants have made.
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 – this confirmed tenants’ 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 that same week, explaining which issue they were affected by.
We are updating all current tenants who were financially affected by the errors every three months. We sent subsequent letters in July and November 2024, and in May 2025.
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 to repay the Department of Work and Pension (DWP) directly, regardless of whether you received your payment directly or not.
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. We can identify 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. Therefore, we are working on the interface of the Housing Benefit recalculation.
Due to the amount of data involved, this work is still in progress – we hope to complete it as soon as practically possible. This will need to be in place before any refunds can be made to those affected by this element of the refund process.
Universal Credit
The DWP processes Universal Credit claims, and is responsible for recalculating any Universal Credit overpayments.
We can identify these tenancies in our system. However, the DWP needs to confirm whether the tenancy has received a contribution from Universal Credit towards their rent. The DWP has not yet confirmed whether we can do this or how they will recalculate any Universal Credit that may have been overpaid towards rents. They will also need to provide a process for any repayments we need to make to them.
We are in regular contact with the DWP and will update 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. We are reviewing the data to see whether those who have not received any benefit towards their housing costs can be determined before the outstanding queries with the DWP are resolved.
In the meantime, we will continue to work through the refund calculation checks for the affected current tenancies to allow us to start refunding as soon as possible after we have clarity from the DWP.
We cannot currently tell you how much any refund will be. Contact us if you need immediate financial advice or have a question about your rent that is not related to these rent corrections.
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.
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.
When we separated service charges out on tenants’ accounts in April 2004, this included separating gas maintenance from electrical and mechanical maintenance charges, because not all homes had gas central heating or electrical and mechanical services, so not all tenants were being charged for these services.
However, we now know that these service charges should have been left within the amount charged for rent.
Although shown separately, they have effectively always been part of the rent. When these charges were first separated out, we reduced the amount of rent being charged by the amount of the service charges.
This meant that 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 of one or both of these service charges being separate to, rather than included within, the core rent. As a result of these charges being shown separately, we cannot be certain that some tenants may not have been accidentally overcharged.
We now need to put these charges back into the rent where they should always have been. When we add the service charges back into rent, the new total needs to be compared to the ‘formula’ rent for the property, which is the maximum we would charge.
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 intended to charge our tenants.
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 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.
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 – in order 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 that we also implemented this policy incorrectly. So we need to correct affected tenants’ rent accounts and pay refunds.
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.
Tell us if you are a former affordable or social rent tenant
