Elected Member Briefing - Rent setting for 2026/27 - rent level options being consulted on with our tenants

About this Briefing Note

Report by: Elaine Ritchie, Strategic Lead, Housing and Communities

EMBN Number: 139-25 

Date: 27 October 2025 

Subject: Rent setting for 2026/27 - rent level options being consulted on with our tenants

Responsible Officer: Steven Coyle, Finance Team Leader, Communities

Details

Purpose

This briefing note gives an overview of proposals for council housing rent levels for 2026/27 and provides information about how we will consult and engage with tenants on these proposals.

Briefing Information

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

Assessing and Demonstrating Affordability: Perth & Kinross Council's rent levels are currently the third lowest in Scotland, remaining considerably lower than the

average. We have developed a model which allows us to look at local income levels in Perth and Kinross and, using this information we assess how affordable our rents are. The model also allows us to compare these with other local social housing providers and neighbouring local authorities.

Involving Current and Future Tenants: Our approach to consultation and engagement was shaped by our tenants and provides each tenant with an opportunity to become involved through our Rent Setting Survey and Summer Conference. Feedback is also gathered from applicants (future tenants) who have been offered one of our properties on our waiting list.

Providing Rent Increase Options: The most significant change in our approach over the last five years has been to provide three rent increase options that tenants can vote on. Each of the options is assessed in relation to affordability and the impact on service delivery and level of investment in tenants' homes.

How We Calculated Rent Level Proposals for 2026/27

The proposals for 2026/27 reflect feedback gathered from tenants through our Spring Rent Spending Priorities Survey and our Summer Tenant Roadshow events, about what their spending priorities are for Housing Services.

This year the Housing Revenue Account (HRA) is facing significant increases in costs in key areas of service delivery, including:

• Materials and labour to repair, maintain and improve our tenants' homes
• Energy costs in offices and common areas
• Borrowing, with interest rates remaining at around 4%.
• Nationally agreed pay increases for our staff, which are funded by the Housing Revenue Account

As outlined above, we are continuing to face increased costs for materials which has a financial implication on both our revenue and capital budgets. We have and continue to face increases in the cost of purchasing general building supplies as well as inflationary increases to our service and maintenance contracts.

Increasing energy costs and high levels of inflation also continue to have an impact on the costs that the HRA.

We continue to have some statutory duties that we need to carry out in 2026/27 which will involve a cost to the HRA. For example, we will need to carry out an Electrical Inspection Condition Report (EICR) on each of our properties. As a landlord Perth & Kinross Council is legally obligated to ensure all its domestic properties, including common areas of sheltered housing, have a current EICR. Properties are required to be tested every 5 years and additionally as and when there is a change of tenant.

As a landlord we are also responsible for the cyclical servicing and maintenance of many systems and items of equipment in domestic dwellings, multi-storey flats, and our sheltered housing complexes. The systems and items of equipment include the following:

• Lifts
• Electric Wet Heating Systems
• Heat Pumps & Renewable Technology
• Solid Fuel
• Water Testing
• Asbestos Removal & Testing
• Fire Alarms & Fire Prevention Equipment
• Emergency Lighting
• Lightning Conductors
• Electric Testing
• EPC
• Sprinklers

In addition to the pressures highlighted above, there are several additional pressures that have been highlighted by staff.

• Further investment in our Internet of Things household wi-fi sensors project
• Increase in costs relating to external repairs and maintenance, and external voids
• Increase in costs of planned maintenance
• Increase in staff within locality services to support tenants with hoarding and support issues
• A new Handyperson service to maintain the appearance of sheltered housing units and retirement complexes to support tenants with a range of needs
• Contract costs to ensure all our properties have a current Energy Performance Certificate (EPC)
• Costs in relation to remedial works following fire risk Assessments
• Costs for a Gypsy Traveller Engagement Officer
• Increase in staff in Repairs to deal with the planning of voids
• Further inflationary increases in service and maintenance contracts

These examples, along with some other cost pressures, such as borrowing costs and increased bad debt provision, means that that the HRA is facing significant cost pressures of just under £4.2 million.

However, we are also very aware of the current financial issues our tenants are facing because of the continued high cost of living. We will continue do all that we can to keep rent rises as low as possible, whilst also covering our HRA costs.

We have identified a number of savings totalling £724,000 to lessen the impact of the cost pressures, these are detailed below: -

• Retaining our staff slippage target at 5% - £30,000
• Reducing our bad debt provision to 2.6% of income due to reduction in rent arrears and high rates of tenancy sustainment - £494,000
• Reduced costs in relation to the Electrical Inspection Condition Report budget - £200,000

Taking the above into account, the pressures that require to be funded through a rent increase is reduced to just under £3.5million, which equates to a 6.5% increase, an average of £5.49 per week.

Planned Capital Improvements

Our major Capital Investment Programme of improvements to our homes will continue, including central heating replacement, new doors and windows, kitchen upgrades, and energy efficiency work.

Our current and planned expenditure for investment in tenant's homes over the next 6 years is over £52m

Rent Level Options for 2026/27

The options that the tenants will be asked to consider are as follows:

Option 1 - A rent Increase 6.5%. An average rise of £5.49 per week

This would pay for:

• Fixed cost increases - £2,858,000
• External voids - £300,000
• Responsive Repairs - £200,000
• Contract price increases - £163,000
• Support Officers (Hoarding) - £88,000
• Fire risks assessments remedial work - £86,000
• Increase in corporate recharges for the support of other Council services - £80,000
• Energy performance certificates - £75,000
• Increase in staff in repairs to deal with the planning of voids - £69,000
• The appointment of a Gypsy Traveller Engagement Officer - £50,000
• Internet of Things project - £49,000
• Handyperson Service for Older Persons Housing - £40,000
• Planned maintenance - £37,000
• Increased utility costs - £30,000
• Increase in Think Yes budget to enable staff to support tenants in localities - £30,000
• Fleet vehicles - £17,000
• Lone working module - £8,000
• Garden maintenance contract - £5,000
• Housing Repairs out-of-hours service - £3,000
• Continued funding of £150,000 to support tenants with digital, financial & social Inclusion
• Buy Back Funding of £25million over 5 years - equates to buying back approximately 50 ex-Council properties per year to increase our housing stock of affordable homes for social rent
• Additional capital expenditure of £3m to invest in improvements in tenant's homes

Average weekly rent increase:

• Bedsit £3.84 
• 1 Bedroom £5.15
• 2 Bedroom £5.57
• 3 Bedroom £6.24
• 4+ bedroom £6.84

Option 2: A 7.5% rent increase - an average of £6.34 per week

This would pay for:

• Fixed cost increases
• Pressures as per Option 1
• An additional £5m of funding for buy backs, increasing funding to £30m over 5 years - this equates to buying back approximately 60 properties per year to increase our housing stock
• Additional capital expenditure of £3m to invest in improvements in tenant's homes

Average weekly rent increase:

• Bedsit £4.43
• 1 Bedroom £5.94
• 2 Bedroom £6.43
• 3 Bedroom £7.21
• 4+ bedroom £7.90 

Option 3: An 8.5% rent increase - an average of £7.18 per week

This would pay for:

• Fixed cost increases
• Pressures as per option 1
• An additional £10m of funding for buy backs - funding to £35m over 5 years - which equates to approximately 70 properties being bought back per year to boost our housing stock
• Additional capital expenditure of £6m to invest in improvements in tenant's homes

Average weekly rent increase:

• Bedsit £5.02
• 1 Bedroom £6.74 
• 2 Bedroom £7.29 
• 3 Bedroom £8.17 
• 4+ bedroom £8.95

Affordability

As always, it is important that we consider the impact of any increase on our average rent levels and how affordable these are for current and future tenants. The table below compares the new average rent level to other social housing providers in the area and neighbouring Councils. You can see that average rents would continue to be lower for each of the options. We are also confident that with any of the increases proposed, we will continue to remain one of the lowest Local Authority rents nationally.

To determine the potential impact of rent levels against other Scottish local authorities, a comparison has been made to highlight where Perth & Kinross would sit based on a rent increase of 6.5%, 7.5% and 8.5%. We currently have the 3rd lowest average rent in Scotland.

This assumes that other local authorities would increase their rent levels by the same amount they did in 2025-26.

Based on this assumption and the options contained within this briefing, the estimated rent position for Perth & Kinross would be:

• Option 1: 6.5% - 4th lowest rent

• Option 2: 7.5% - 4^th lowest rent

•  Option 3: 8.5% - 4th lowest rent

We have a range of practical help and support in place for tenants who find that they are struggling to pay their rent. We have dedicated staff who can make sure income is maximised and that tenants are receiving all the benefits that you should be. We also work in partnership with Perth Citizens' Advice Bureau to provide financial support to tenants. If any tenant feels like they need some help they should call our staff on 01738 476000 (option 2).

Next Steps

All current tenants will receive a Rent Options Consultation form through the post by 31 October 2025 providing an overview of the proposals including the impact on housing services and affordability. Feedback will be gathered on tenants' preferred option via mailed returns and through the Council's online Consultation Hub.

Tenants will be encouraged to participate in the consultation through the tenants' social media channels, our website, text messaging and email, as well as face-to-face, and over the telephone by Housing staff and our contractor the Knowledge Partnership.

There is also information about the consultation in the Autumn 2025 edition of On The House magazine being sent to every tenant household this month.

The final feedback from tenants will be included in a Committee report which will be considered by members of the Housing and Social Wellbeing Committee in early 2026, when a final decision will be made by elected members.