When you purchase a shared ownership home, you pay rent on the share you don’t own. Understanding how this rent increases over time is essential for planning your long-term finances. Most shared ownership leases include a clause that allows rent to increase annually, typically linked to inflation measures.

How Shared Ownership Rent Increases Work

The Two Common Rent Increase Formulas

Shared ownership rent increases are usually calculated using one of two formulas, both tied to inflation indices published each September:

RPI + 0.5% – Retail Price Index plus an additional 0.5%

CPI + 1% – Consumer Price Index plus an additional 1%

Your lease will specify which formula applies to your property. It’s important to check this before you buy, as it affects your future costs.

Understanding RPI (Retail Price Index)

The Retail Price Index is a measure of inflation that tracks the change in the cost of a basket of goods and services. When your lease uses RPI + 0.5%:

✅ RPI is a well-established measure that has been used for decades.

⚠️ RPI tends to be higher than CPI, typically by around 0.5% to 1%.

❌ RPI is no longer classified as a national statistic due to calculation concerns.

Understanding CPI (Consumer Price Index)

The Consumer Price Index is the government’s preferred measure of inflation and is used for setting the Bank of England’s inflation target. When your lease uses CPI + 1%:

✅ CPI is the official measure of inflation used by the government.

✅ CPI generally runs lower than RPI, which can mean smaller increases.

⚠️ The additional 1% margin means increases may be similar to RPI + 0.5% in practice.

When Rent Increases Happen

Rent increases typically occur:

📅 Annually on the anniversary of your lease start date.

📊 Based on the September inflation figures from the previous year.

📝 With written notice from your housing association, usually at least one month in advance.

Historical RPI and CPI Rates (September Figures)

The table below shows the September inflation figures for the last five years, which are used to calculate rent increases:

Year	RPI	CPI	RPI + 0.5%	CPI + 1%
2021	4.9%	3.1%	5.4%	4.1%
2022	12.6%	10.1%	13.1%	11.1%
2023	8.9%	6.7%	9.4%	7.7%
2024	2.7%	1.7%	3.2%	2.7%
2025	4.5%	3.8%	5.0%	4.8%

⚠️ 2022 saw exceptionally high inflation, leading to significant rent increases.

✅ Rates have since stabilised closer to the Bank of England’s 2% target.

How to Calculate Your Rent Increase

To estimate your rent increase, you can use the following approach:

Find September’s RPI or CPI figure (published by the Office for National Statistics).

Add 0.5% (for RPI) or 1% (for CPI) to get your increase percentage.

Apply this percentage to your current rent to calculate the new amount.

Example: If your rent is £400 per month and September’s RPI is 3.5%, your new rent would be:

£400 × (1 + 0.035 + 0.005) = £400 × 1.04 = £416 per month

Long-Term Impact: Compound Rent Growth Over 5 and 10 Years

A single year’s increase may seem manageable, but rent rises compound over time. The table below shows how a starting rent of £400 per month grows over 5 and 10 years under each formula, assuming typical long-term inflation rates of 3.5% for RPI and 2.5% for CPI:

Year	RPI + 0.5% (4.0%/yr)	CPI + 1% (3.5%/yr)
Start	£400	£400
Year 1	£416	£414
Year 2	£433	£428
Year 3	£450	£443
Year 5	£487	£475
Year 10	£592	£564

Over 10 years, even modest annual increases of 3.5–4% result in rent rising by 40–48% from your starting figure. This is why factoring in rent escalation is critical when assessing long-term affordability — and why staircasing to reduce the rented share can make a significant difference to your costs over time.

Planning for Rent Increases

When budgeting for your shared ownership home, consider:

✅ Build a buffer into your monthly budget to accommodate annual increases.

✅ Review your lease terms carefully before purchasing to understand which index applies.

✅ Consider staircasing (buying additional shares) to reduce the portion of rent you pay.

⚠️ Remember that your service charge may also increase separately from rent.

Recent Changes to Rent Increase Caps

Some newer shared ownership leases include additional protections:

✅ Homes England has introduced guidance limiting rent increases on new builds.

✅ Some housing associations voluntarily cap increases below the formula rate.

⚠️ These protections may not apply to older leases or resale properties.

The Homes England Model Lease (2021 onwards)

Shared ownership homes funded by Homes England since April 2021 use a model lease that sets rent increases at CPI + 1% rather than the older RPI + 0.5%. This shift reflects the government’s broader move away from RPI, which is no longer classified as a national statistic by the UK Statistics Authority.

Additionally, following the cost-of-living crisis in 2022–2023, some housing associations introduced voluntary rent caps — limiting annual increases to 7% regardless of the formula result. While these caps are not guaranteed to continue, they indicate growing recognition that formula-linked increases can outpace wage growth in high-inflation years.

Your Rights If the Housing Association Exceeds the Formula

Your lease is a legally binding contract. The housing association cannot charge more than the formula specified in your lease. If you receive a rent increase notice that appears to exceed the formula:

📝 Check the September inflation figure used — it should be the September figure from the previous year, published by the Office for National Statistics.

📞 Contact your housing association and ask them to show their calculation.

⚖️ If you believe the increase is incorrect, you can seek free advice from the Leasehold Advisory Service (LEASE), a government-funded body that provides free legal guidance to leaseholders.

🏛️ As a last resort, disputes can be referred to the First-tier Tribunal (Property Chamber).

What If You Can’t Afford the Increase?

If you’re struggling with rent increases:

💬 Contact your housing association to discuss your circumstances.

📋 Check if you qualify for any financial support or benefits.

🏠 Consider whether staircasing could reduce your long-term costs.

⚖️ Seek independent financial advice if you’re concerned about affordability.

For a broader look at all monthly expenses beyond rent, see our guide on managing monthly costs for shared ownership homeowners.