Council tenants may be looking at a 1% rent increase come April, if Highland councillors vote it through tomorrow.
The council’s housing and property committee meets tomorrow to discuss the level of rent to charge in financial year 2022-23.
Council officers have recommended an increase of 1%, but options of 1.5% or 2% are also on the table. Councillors could also opt not to increase rents at all.
If rents do increase by 1%, the average weekly rent for council tenants will increase by 79p to £80.04 per week.
Highland Council says this makes them the sixth cheapest local authority out of 26 Scottish councils.
The council asked for tenants’ views about the proposed hike back in November 2021.
It contacted more than 13,000 tenants, and received 1,567 responses. Tenants were asked if they would prefer a 1% or 1.5% rent increase.
Around two-thirds voted for the smaller rise, though 37% said they would be willing to pay 1.5%.
Twenty people provided a written response saying they don’t want a rent increase at all.
Balancing act
In setting rent levels, councillors need to strike a balance between the cost of maintaining housing stock and what tenants can afford to pay.
The full report for tomorrow’s meeting lists a number of factors, including the affordability of a 1% rise given the big increases in the cost of living. However this is balanced against the need to fund improvements in council homes, including a commitment to make them more environmentally-friendly. For example, increased investment in heating and insulation would ultimately save money on heating bills.
Highland Council also faces rising costs. The annual pay award increases staff costs, while rent arrears continues to pose a problem. According to council figures, 68% of tenants on Universal Credit are in rent arrears, and Covid 19 has also had a big impact on people’s income. These factors are expected to push bad debt up to £2.1m in the next financial year.
New homes on the horizon
The council operates a house building programme that’s ‘cost neutral’ to tenants, but major investment means higher loan charges. Last week, the council announced that it will try an open market purchase scheme to boost home numbers.
Additionally, the council intends to spend nearly £16m on new homes and £88.6m on improvements to existing stock in the next five years. The associated loan charges represent 39% of rental income.
However, this major capital investment doesn’t include any funds to get council homes to net zero – a significant cost that will need to be found elsewhere.
The good news for councillors, is that tenant satisfaction is high. At the last survey, 89.9% said their rent is good value for money, against a national average of 84.1%.
Councillors may decide this justifies a rent increase of 1.5% or even 2%, delivering up to half a million in extra funds.
The housing and property committee will decide tomorrow, with the meeting due to start at 10am.
