Public sector housing rents on the Isle of Man will be set under a new annual formula from April 2026, with increases linked directly to inflation.

The Department of Infrastructure (DoI) said the change will apply to more than 6,200 properties across the island, including homes managed by the DoI Housing Agency and by local authorities.

Under the new model, annual rent adjustments will be based on the previous September’s Consumer Price Index. Housing bodies will also have the discretion to add a further 1% on top of the CPI-linked rise.

At present, rent increases are set by the department after considering submissions from local authorities. The DoI said this approach lacked transparency because there was no clear explanation of how annual rates were determined.

The new mechanism forms part of a wider Isle of Man Government move to apply regular annual uplifts to fees and charges, normally aligned with the relevant inflation index. The department said the revised model is intended to be clearer and more consistent than the one it replaces.

According to the DoI, linking rents to CPI is intended to reflect economic conditions more closely while giving both tenants and landlords greater financial certainty.

Consultation with housing providers on the proposal has taken place since 2022. The DoI said the model was positively received at a recent Local Authority Housing Conference, with further engagement planned as work continues on wider rent reforms.

Officials carried out a review of the likely impact of introducing the new framework by assessing how it would have affected rents over the past 14 years. The analysis found that average annual increases would have been broadly similar to those applied in practice.

If all landlords had chosen to implement the additional discretionary 1% each year, the cumulative outcome would have been only 0.2% higher than the current position, the DoI said.

A safeguard clause has been included to give the department the power to intervene if inflation rises sharply and proposed rent levels are judged to be unaffordable. The DoI said this ensures the process remains consistent with the Housing Act 1955, which requires regular rent reviews and departmental approval for any changes.

The Department added that many benefits administered by Treasury’s Social Security Division are already uprated in line with the September CPI. Aligning rent increases with the same index is intended to support affordability for tenants on minimum or living wages.

Housing authorities will be required to tell the department and their tenants if they intend to use the optional 1% uplift. All tenants will receive formal notification of their new rent levels ahead of the 2026 financial year.

The DoI said the new approach is designed to create a clearer and more predictable system for setting rents, while retaining the ability to step in during periods of high inflation.

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