CPI vs RPI

coachman12

As the RPI  has been more or less moribund since the Govt made CPI the face of inflation rates etc, isn't it about time that the use of RPI to calculate rent increases, just because of historical and outdated practices, is done away with and replaced by rent increases based on CPI figures?
After all, increases in many wage structures , some benefits, some occupational pensions, the state pension, etc are predicated on the level of CPI.
As the CPI tends to be about 1% less than the RPI, the use of the RPI for rent increase purposes once again depicts tenants as hard-pressed and landlords adding to their own coffers. The word "feudalism" springs to mind. In an era when house-buying is difficult for young people and renting is a booming business ( about a quarter of homes are rented) , isn't it time to move this area of legislation along with the times and make sure many people's earnings are not eroded year after year by the use of CPI-related earnings not being able to keep up with RPI-related rent increases ? Someone relying on income increases each year based on CPI can expect to have lost 10% of their annual income over a decade ( yes, very rough and ready figures).
Before posters rush to tell me that the above does not apply to them or all renters, I  fully accept that the scenario I paint does not apply to everyone, but it DOES apply to many, including state pensioners.

p00hsticks

I was under the impression that the main difference beteen CPI and RPI was that the latter included housing costs whereas the former didn't ?

If that is the case, then it seems sensible to use RPI for rentals ....

D.L

p00hsticks said:

I was under the impression that the main difference beteen CPI and RPI was that the latter included housing costs whereas the former didn't ?

If that is the case, then it seems sensible to use RPI for rentals ....

That is the broad difference in terms of the baskets, but RPI has been widely discredited due to the formula it uses. RPI is no longer an official statistic (but is still often used) with CPIH being the sort-of equivalent now.

sal_III

I don't think there is an universal AST template that uses RPI rather than CPI for automatic rent increases. You are free to negotiate either or none, where does the feudalism comes from? 

Up until year and a half ago I have been renting, never had automatic rent increase in the AST and successfully rebutted the attempt/suggestions of the LL/LA for rent increase, based on arbitrary number and not market conditions on two occasions.

t0rt0ise

For social rents the government is using CPI but then adding 1% as well. There is a rent rise every year.

AdrianC

D.L said:
RPI is no longer an official statistic...

Yes, it is. January 2020 figure is due out tomorrow.
https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/chaw/mm23

tom9980

The vast majority of Landlords set a rent at the start of the tenancy at market rate and rarely increase it. The biggest issue in recent years has been the LHA cap with many tenants requiring benefits being priced out of the market, as an example it costs £750 to rent a 3 bed semi here and the LHA rate is £664 for a 3 bed. Housing associations likewise have been forced to not raise rents and in turn are not investing in building more housing compounding the issues of lack of affordable housing.

D.L

AdrianC said:

D.L said:
RPI is no longer an official statistic...

Yes, it is. January 2020 figure is due out tomorrow.
https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/chaw/mm23

The ONS still publishes it as it is still so widely used, but it isn't an official statistic (or the actual term "national statistic")

AdrianC

The government's office for national statistics says...
"All of our statistics are official statistics." 
https://www.ons.gov.uk/aboutus/whatwedo/statistics/statisticsweproduce

Yes, that link behind the words "official statistic" takes you to...
https://www.statisticsauthority.gov.uk/about-the-authority/uk-statistical-system/types-of-official-statistics/
...and RPI does indeed come under "de-designated". Why?
https://www.statisticsauthority.gov.uk/wp-content/uploads/2015/12/images-assessmentreport246theretailpricesinde_tcm97-42695.pdf
Because in 2013 it was deemed to be non-compliant with best practice. Why? Because they decided to freeze the definition, "The Statistics Authority notes and supports10 the decision by the National Statistician that, to meet the needs of existing users of the RPI in its current form, ONS will not amend its basic formulation. This has the effect that the RPI is inconsistent with the Code of Practice (see paras 3.4 and 3.5)."
...and then goes on to say...
" To meet its statutory duty12 to compile, maintain and publish the RPI, ONSintends to continue to produce the RPI each month. However, if it is presented in Consumer Price Indices, or in any other publication that carries the National Statistics logo, ONS should: •include a statement that clearly explains the status of the RPI statistics to users; and •present the RPI separately in some way – for example, as an annex."

So, no, it is not a "National Statistic" (with a capital N and a capital S) - but it is an Official Statistic (with a capital O and a capital S) - and that "National Statistic" definition is a purely technical one that doesn't affect its validity or utility.

D.L

AdrianC said:

So, no, it is not a "National Statistic" (with a capital N and a capital S) - but it is an Official Statistic (with a capital O and a capital S) - and that "National Statistic" definition is a purely technical one that doesn't affect its validity or utility.

Thanks for bringing it full circle back to the original post and point. CPIH might be better than RPI for rental increases.

AdrianC

<shrug> That's for the landlord to decide.

If you don't like it, ask them to change it. If they won't, walk away from the unsigned tenancy. Or swallow it, sign, and grumble.