This is the time of year when the Co-operative is planning the budget for the next financial year starting in April 2023, and as a key part of that, we are carrying out our statutory consultation with tenants on what level of rent is set from April.
During December 2022, Tenant Scrutiny Panel Members and tenants who responded to the rent consultation for 2022/23 were invited to a discussion to help shape the rent proposal for 2023/24.
Initial consultation information seeking tenants views was also posted on the website from 22nd December 2022.
This is the next stage of the rent increase consultation for 2023/24.
Management Committee have considered the rent increase proposal and are seeking the views of all tenants following the Scottish Government decision that there will not be a continued rent freeze.
Are we able to increase rents in April 2023?
The Scottish Government passed the Cost of Living (Tenant Protection) (Scotland) Bill 2022 which put a freeze on rent increases from 6th September 2022 until 31st March 2023.
The Scottish Government has announced that a rent freeze or cap will not be extended beyond 31st March 2023.
The Welsh Government have announced a rent cap of 6.5% from April 2023 and the English Government have set it at 7%.
What if the Scottish Government had extended it’s rent freeze beyond 31st March 2023?
A rent freeze would simply be unsustainable due to increasing costs. It would result in WWHC not being able to meet all of our obligations currently included in the Business Plan and we would have to take steps to significantly reduce expenditure on overheads, services and future investment plans.
The Management Committee recognise that these have been some of the most challenging financial times for households in recent memory. Many people are struggling due to higher prices for food, energy, and general living costs.
The Management Committee is committed to keeping rents as low as possible and to finding the right balance between affordability and the need to cover the cost of providing services and continuing investment. The majority of our income (approximately 97%) comes from rents.
Do Rents have to Increase?
The costs of providing services, meeting our legal and statutory obligations, and keeping the area safe and tidy have gone up significantly in the last year.
|The last two years have seen rent increases of 1% from April 2021 and 2.7% from April 2022. The Scottish average rent increase of social landlords for the same periods were 1.2% and 3.2%||In October 2021, inflation (CPI) was 4.2%. This increased to 11.1% in October 2022 – a 40 year high. CPI at November 2022 was 10.7%|
The Scottish Federation of Housing Associations (SFHA) has calculated that the average of the preferred options offered in consultations for 2023/24 by Registered Social Landlords is 5.05%.
The Rent Policy
WWHC’s Rent Policy seeks to balance the provision of housing services with affordable rents. The Co-operative is non-profit making but we need to generate a surplus in order to have funds to pay for major repairs and renewal programmes when required. The Rent Policy is points based with factors attributable to service and amenity elements so that there are rent differentials between different property sizes and types. The Policy and Business Plan are linked to CPI.
How is Income Spent?
The Co-operative’s income needs to cover the cost of:
- Management Costs
- Maintenance Costs
- Voids and Bad Debts
- Development Costs not met by other grant funding
- Loan Repayments
- Future Major Repairs and Renewal Costs
No other Registered Social Landlord in Scotland has such a high proportion (67%) of multi storey flat stock type (this will reduce to 61% by April 2023 when the East Whitlawburn development is complete).
Below is a breakdown of how money is spent across budgets:
|% of budget 2022/23||% of budget 2023/24|
|MSF costs including Concierge||27.7%||24.8%|
|Planned and reactive maintenance costs||18.5%||18.8%|
|Office staff salary and employers costs||33.4%||24.5%|
|Office maintenance and running costs||4.1%||4.1%|
|Affiliations, fees and training||2.8%||3.0%|
|Community Support / Wider Action||2.5%||2.2%|
Supporting our Tenants and Community
Since March 2020, WWHC has been successful in securing external funding of over £200,000 to help our tenants with issues including food and fuel costs caused by both the pandemic and cost of living crisis. We have also put in place an additional welfare benefit advice service.
We have very recently secured additional funding of over £100,000 to continue this support. Please contact your Housing Officer if you require assistance.
Maintenance Plans – Next 5 Years
- Kitchens and Bathrooms – condition surveys currently being carried out have identified a number as needing renewed over the next 5 years
- Common area / close and landing improvements – lighting, painting and flooring
- Hard landscaping / car parking improvements
- Boiler upgrades (for properties built 2009)
What has the Management Committee considered so far?
The Committee has given detailed consideration of the impact of a rent freeze if that had been imposed by the Scottish Government, and has carefully considered options ranging from 3% to CPI at 11.1% in October 2022.
Given the current high level of inflation, we are not proposing to increase rents by the normal Business Plan assumption of CPI + 1% as this would have amounted to an increase of 12.1%.
- We take expert advice and benchmark costs e.g. maintenance costs. There are number of pending procurement exercises with anticipated cost increases budgeted for.
- We benchmark multi storey flat rent levels and services against other landlords with this stock type.
- We procure services jointly with other landlords where possible.
- We are not filling permanent office staff vacancies and we have changed the staff pension scheme from 2023/24.
- We have longer-term contracts with fixed costs in place where possible e.g. landlord energy supplies (although there has been a 30% increase, costs are fixed until 1st April 2025).
- We are members of appropriate industry bodies where cost information is shared and collective agreement reached.
- We will continue with close monitoring and explore additional efficiency savings.
Rent Increase Proposal of 5% for 2023/24
The Management Committee have a duty to consider the long-term impact of decisions that are made today and need to ensure long-term financial viability.
A 5% increase is the lowest that can be proposed without significant reductions in services and future investment plans.
- Can sustain the majority of services at current levels in the short term
- Results in a significant projected cash decrease in the first 5 years
- Leads to positive cash flow for the Co-operative in the longer term
- It is likely that we will have to review some of the scheduled planned maintenance and other services offered in the long term.
What would this mean for rent levels?
The following table illustrates the impact on average rents:
|Property Size||Average Weekly Rent 2022/23||Average Weekly Rent with 5% uplift||Average Weekly Rent with CPI (11.1%) uplift|
These average rents are calculated using the range of charges for different sizes and types of properties so they will not match the rent you pay.
Please send us your comments no later than Monday 6th February 2023.
Link to online survey: https://cxfb.co.uk/sc/890F2D19/8B082911
QR Code – If you have a smartphone or tablet point the camera at the QR code and fill out the survey online
You can also let us know your views on this:
In Writing: Complete the form that was delivered to your home and hand it in to the office or Concierge station
By Telephone: 0141 641 8628
By Email: email@example.com
Website contact form: contact us.
If you require further information, please let us know.
|Rent levels affect all of our members and tenants so it is important that as many as possible respond. We appreciate you taking the time. All responses will be considered by the Management Committee when making a final decision.|
If you are worried about paying your rent, please get in touch straight away so we can discuss how we can help.