Elected Member Briefing Note 2024, No. 97
About this Briefing Note
Report by: Elaine Ritchie, Strategic Lead, Housing and Communities
Date: 1st November 2024
Subject: Rent setting for 2025/26 - Rent Level Options consultation
Purpose
This briefing note gives an overview of proposals for rent levels for 2025/26 and provides information about how we are consulting and engaging with tenants on these proposals.
Briefing Information
Background
The Scottish Social Housing Charter sets the standards and outcomes that all social landlords should aim to achieve when performing their housing activities. Outcomes 14 and 15 of the Charter are primarily linked to the rent setting process and the financial aspect/delivery of the Housing Revenue Account. These outcomes reflect a landlord's legal duty to consult tenants on the affordability of rent levels, and to inform tenants about how their rent money is spent.
Discussions with tenants must also take place about rent levels, and any decisions made about rent levels should reflect tenants' views.
Our Approach
Each year, in partnership with our tenants we review the rent levels we charge for the Housing Services we provide. These annual reviews ensure that we continue to meet our duties to tenants as a landlord, respond to tenants' priorities and maintain high levels of service delivery.
It is very important that tenants have a say in their rent level, especially during the current cost-of-living crisis. Tenants should have a strong voice in all decisions that affect their homes, neighbourhoods, and services.
Last year a total of 2,944 tenants responded to our consultation on their rent level. This was the largest response so far.
This is the eighth year running we are giving tenants the opportunity to vote on their rent level, and we are again asking them to choose from three proposed options.
These have been based on what tenants told us their priorities are for spending through a process of engagement throughout the year - at our Summer and Autumn Tenant Roadshow events and the rent priorities consultation we carried out in Spring 2024.
Financial situation facing the Housing Revenue Account (HRA)
As you will be aware, the last three years have been a period of upheaval. We have experienced rising energy costs, increased inflation & interest rates and disruption to supplies of labour and materials.
As a result, our HRA continues to face significant increasing costs for:
- Materials and labour to repair, maintain and improve our tenants' homes
- Energy costs in offices and common areas in our blocks
- Borrowing, with interest rates continuing to be high over the last 12 months
- Nationally agreed pay increases for our staff
We continue to have some statutory duties that we need to carry out in 2025/26 which will involve a cost to the HRA. For example, we need to carry out an Electrical Inspection Condition Report (EICR) on each of our properties.
As a landlord we are also responsible for the cyclical servicing and maintenance of many systems and items of equipment in some properties, multi-storey flats, and our sheltered housing complexes.
In addition there are several other service pressures faced by the HRA, which include:
- Property Condition Resource - to undertake data interrogation and analysis to prevent damp, mould and condensation, as well as an increase in staff in relation to the planning of void properties
- An increase in costs of planned maintenance
- Increased costs in relation to our Garden Maintenance contract
- Costs in relation to remedial works following Fire Risk Assessments
- Further inflationary increases in service and maintenance contracts.
All of this means that the HRA is currently facing significant cost pressures of just under £2.8million. The required rent increase to fund these pressures for 2025/26 would equate to a rent increase of 6.5%, or an average increase of £5.18 per week.
Achieving savings for tenants
To reduce the financial pressure on our tenants we propose to use some of our reserves to defer a number of pressures until 2026/27. These savings will not have any impact on the current service that is provided to tenants.
However, even when this is taken into account, due to the significant costs faced by the HRA this year's proposed rent increase will be higher than in some recent years.
What are the rent level options for 2025/26?
A Rent Level Options form has been posted or emailed to every tenant household asking them to vote on the options below.
All three options will see our costs as a service covered, and investment in:
- Fixed cost increases facing the HRA.
- HRA financial pressures:
- Increased utility costs - £50,000
- Internet of Things household wi-fi sensors project - £17,000
- Housing Repairs Out of Hours Service - £5,000
- Continued funding of £150,000 for Digital, Financial & Social Inclusion
- Increased staffing to meet the requirements of compliance and service & maintenance - £187,000
- A new Gypsy Traveller Project Officer - £62,000
- A new Housing Enabler - £60,000
- HRA Roads & Footpaths - £15,000
- Property Condition Resource - to undertake data interrogation and analysis to prevent damp, mould and condensation - £105,000
- Planned Maintenance - £181,000
- Increased cost of materials - £175,000
- Contract price increases - £153,000
- Electrical Inspection Condition Reports (EICR) - £135,000
- Garden Maintenance Contract - £115,000
The rent level vote will determine how much more money we will spend on priorities, and what level of increased investment tenants would like to see. The three options we are presenting to tenants are:
Option 1 - 6% | Option 2 - 6.5% | Option 3 - 7.5% |
This will allow us to make the additional following investment:
| This will allow us to make the additional following investment:
| This will allow us to make the additional following investment:
|
Average weekly rent increase:
| Average weekly rent increase:
| Average weekly rent increase:
|
Affordability for our tenants
Our rent levels are currently the fourth lowest in Scotland and remain the most affordable housing option for people in Perth and Kinross.
Under our proposals for 2025/26 we are confident we will continue to have one of the lowest local authority rent levels in Scotland under each of the options.
Our average rents would also continue to be lower than in neighbouring local authorities under each of the options, and we would continue to offer the lowest social housing rent level in Perth and Kinross.
Proposed Increase | New Average 2025/26 weekly rent for Perth & Kinross | Social Housing Providers in Area | Local Authority Scottish Average |
6% | £84.52 |
£104.74 |
£87.37 |
6.25% | £84.92 | ||
6.5% | £85.72 |
Next steps
Tenants have been asked to return their completed forms to us by Friday 20th December.
They can also take part online using the Council's Consultation Hub.
We will encourage tenants to take part in the consultation using regular social media posts, text messaging, email communications and through participation events.
This year we have once again commissioned independent company Knowledge Partnership to undertake 1,500 telephone surveys on our behalf. They will be running their consultation alongside ours.
Housing staff will also work with tenants to encourage and support them to complete the consultation.
Information from the consultation will be included in a rent setting report to our Housing & Social Wellbeing Committee in January 2025, when a final decision on rent levels for 2025/26 will be made.
Share this page
