Each year we carry out a rent review to establish how much income we think we need to provide services for the following year. When approving the rent increase, our Board will consider feedback received from this consultation. Any increase agreed would be effective from 1 April 2023.
The UK is currently experiencing what is being described as a ‘cost of living crisis’ and the rising cost of energy and shopping leave few unaffected. Inflation (the increase in the cost of living) is predicted to remain above 10% over the next few months before starting to come down gradually (we have assumed the Consumer Price Index (CPI) to be 13%). Even though the rate of inflation will slow down, the prices of things are to remain high in the year ahead. To maintain the current services we provide, we would need to have a CPI increase on rent, however we recognise the impact an increase of this size could have on our tenants, which is why we are only offering options below inflation.
We are therefore inviting feedback from you on our proposal to apply either a 5.9% or 6.9% increase from 1st April 2023*. Either of these rent increases will result in a reduction of our existing services but with the rising costs of utility bills and general living costs, we are committed to keeping any increase as low as possible. The proposed lower increase is 7.1% below inflation and is the minimum amount that we believe we can apply in order to continue delivering key services with as minimal disruption as possible.
* dependent on the decision made by Scottish Government by 14th January – more information below.
Although the Associations financial model is based on inflation plus an amount to provide new homes, over the past few years we have tried to lessen the burden on our customers by setting levels below inflation as can be seen from the graph below.
You can also see that the gap between the rate of inflation and rent increases has continued to widen, which means each year we have proportionately less income to spend on upgrading your home, building new properties and providing the services you have come to expect.
What a rent increase looks like for 2023-24
With the predicted high levels of inflation for 2023-24, we are currently assuming CPI will be 13% and that a number of our contracts will increase by this amount. We therefore anticipate that our costs will increase by approximately £1.3m before we review any changes we may need to make to services or proposed work. A 5.9% rent increase would result in the Association receiving an additional income of £720k. A 6.9% rent increase would give the Association an additional income of £842k. As you can see, both of these figures are significantly less than the cost increase we’re facing.
5.9% rent increase ~ impact on services
To put it into context, the difference between a 5.9% rent increase and a 13% cost increase is the equivalent of 74 new doors & window replacements. As we are keen to ensure that we continue to invest in our homes as much as possible, we may also need to consider reducing or cutting other services such as the grass cutting scheme, our volume of communal landscaping activities, community support of free garages, exploring new housing projects, fencing and environmental improvements. We currently spend nearly £1m a year on reactive repairs and while we do not intend to cut this service, we will need to ensure repairs carried out are required and the Association’s responsibility. We would be interested in your comments on which service areas you feel are most important and should therefore be protected as much as possible.
6.9% rent increase ~ impact on services
Like the lower increase, this still results in a requirement to cut services, however, it does provide the Association with an additional £122k to invest in our properties. This additional income could provide 15 more windows and doors to be fitted or some additional services could get reinstated. As you can see, due to the increased costs that we face there will be some impact on service provision regardless of which option is implemented. We do not feel, however, that it is feasible to apply a higher increase given the financial pressures that everyone
will be facing.
What will a rent increase mean for you?
Below we have outlined some examples of rent levels and what they would become next year with the rent increase options.
Scottish Government Rent Legislation
The Scottish Government implemented legislation called The Cost of Living (Tenant Protection) (Scotland) Bill on 6th October 2022, which allows the Scottish Government to temporarily cap rents for private and social tenants. Currently, this means that your rent is frozen at its current rate and cannot be increased until 1st April at the earliest. The legislation also allows for the protection to be extended for a further 6 months beyond March 2023, however the Scottish Government will not decide whether to apply any measures beyond March 2023 until 14th January 2023. A rent freeze quite simply would result in delayed investment in homes and service reductions to the value of £1.3 million next year.
Almond HA have joined social housing landlords from across Scotland in lobbying against the potential rent freeze as we believe it will harm the future of social housing. Whilst we fully understand that a freeze would be welcomed with regard to keeping rent costs low at a
time of increasing costs, the impact on our ability to continue to invest in your home at the required level and to provide additional support services that are so crucial at this time would be significant and would impact not only in 2023/24 but in future years.
Tell us what you think
Your feedback is very imporant and we encourage you to use the feedback slip on the leaflet delivered to your home, or email us at email@example.com to let us know what you think. We have extended the deadline for responses and you have until Monday 9th January 2023 to submit your feedback.
If you are worried about paying your rent, please let us know so we can talk about how we can help. We have access to a number of advice ser vices which can help if you are struggling. If you have any questions, please get in touch.
Come along to our office for our Rent Consultation sessions on Tuesday 6th December at 10.30am or Thursday 8th December at 4.30pm. During these sessions, our Director of Housing Management will discuss the rent increase in more detail and take any questions.