London boroughs are calling on the government to approve a social rent convergence rate of at least £3 per week from April 2026, warning that the forthcoming

decision will be critical to the future of council housing finances in the capital.

With ministers due to confirm their policy later this month, London Councils—the cross-party body representing the capital’s local authorities—said rent convergence would “lay the financial foundations” for thousands of new council homes and help stabilise stretched social housing budgets.

Rent convergence, in place nationally between 2002 and 2015, is designed to ensure tenants in similar socially rented homes pay comparable rents. Boroughs argue that reintroducing the policy at an adequate rate is essential as social housing finances in London face mounting pressure.

Analysis by London Councils suggests that a £3-per-week convergence rate would provide a significant boost to investment in new homes. Without it, boroughs could deliver at least 7,000 fewer council-led homes over the next decade compared with a scenario where the additional rental income is secured.

The group also said increased social housing supply would help reduce homelessness and reliance on temporary accommodation, generating net savings to government of at least £115m over ten years. In contrast, without new income streams, boroughs are expected to make real-terms cuts of £269m to spending on council housing repairs, management and resident services over the next four years in order to balance their Housing Revenue Accounts.

Boroughs stressed that rent convergence must be introduced from April alongside new social rent levels for 2026–27. Any delay, they warned, would see costs continuing to outpace income, further undermining council housebuilding plans as well as efforts to decarbonise homes and improve standards across the sector.

Cllr Grace Williams, London Councils’ Executive Member for Housing & Regeneration, said:  “Boroughs want to boost investment in council housing, but instead we face stark budget pressures and real-terms cuts. 

“We hope 2026 will be the year we turn around the crisis in council housing finances, and rent convergence should be an integral part of that. If the government enable us to introduce a rent convergence rate of £3 per week from April, this will lay the financial foundations of a much better future for London council housing.

“Boroughs are determined to work with ministers to deliver on our shared ambitions for housing. This includes making sure social rent levels are fair for tenants, put budgets in a healthier position, and bring investment for the much-needed new social homes that will help reduce homelessness and boost economic growth.  

“But without rent convergence at an adequate rate, we fear continuing budget shortfalls holding back delivery of the new council homes we all want to see.”  

She added that boroughs wanted to work closely with ministers to ensure rent levels remained fair for tenants while putting budgets on a more sustainable footing and supporting delivery of new social homes.

London’s local authorities own and manage around 390,000 social homes, housing more than one in 10 households in the capital. However, London Councils has warned that housing budgets are in a “managed decline”, limiting councils’ ability to improve existing homes or build new ones—making rent convergence their top priority for strengthening social housing finances in the years ahead.