Housing associations are rebelling against the government's policy of rent restructuring, despite Housing Corporation warnings that non-compliance may influence future allocation of social housing grant.
Chief executive of the Church of England Soldier's Sailor's and Airmen's housing association Martin Marks, whose rents would have increased by 5% each year, said it was not in his tenants' best interests to implement rent restructuring and said the association "cannot be forced" to comply with the policy.

In a similar move, Octavia Housing and Care has reduced rents on some of its properties. "Despite government policies, we are determined to maintain our rents at an affordable level," said chief executive Grahame Hindes.

MP for Hammersmith and Fulham Iain Coleman said: "The government's rent restructuring policy is fundamentally flawed.

I congratulate Octavia Housing and Care for standing up for tenants' rights."

Marks added: "Our view is that we make the decisions about what resources we need to run the housing association, not the government using the artificial levels they want to set."

The sector has grumbled about the policy of capping rent increases at the rate of inflation plus 0.5% plus £2 a week since it was first mooted. But this is believed to be the first time an association has refused to comply with it.

A spokeswoman for the corporation admitted associations could not be forced into complying with rent restructuring.

The regulator does not have the statutory power to set rents.

But she warned: "Associations that choose not to comply are aware that this may influence our allocation of social housing grant in the future."

"We will review our rents at our November board meeting for implementation the following April," said Marks. "We will put in rises we feel are appropriate and unless we suddenly need to get a Housing Corporation grant, we don't anticipate any problems.

"Our policy is that we're here to look after the tenants. If anyone has to lose money it should be us, not our tenants."

Recently, chair of Winchester's Tenants and Council Together group Cyril Gilbert-Wood also raised concerns about the effect of rent restructuring policy on council tenants and claimed the calculation formula was creating wide divergence between parts of the country, with some London properties valued at more than £1m.