Proposed council rent increases from April 2022

We'd like to hear from you

Please read the summary below and let us know your views on the proposed rent increase for next year, or if you have any questions. Email us by 20 January 2022 at getinvolved@swindon.gov.uk.

Also included below are some of the questions asked by tenants at two recent online meetings about the subject of rent increase.

We need to make sure that the money we receive is enough to pay for existing services, including repairs, but also to cover the cost of improvement work to your homes and allow us to continue to improve their energy efficiency.

When it comes to setting the rent, each year the Government provides us with guidelines based on the Consumer Price Index (CPI). This is the average price of a basket of goods and services, giving an indication of the cost of living.

In September 2021, CPI was 3.1% on top of which we are permitted to add a further 1%, giving a maximum rent increase of 4.1%. This would raise around an extra £2m.

So what does this mean?

Rent

The impact a 4.1% rent increase on the average rent would see this rise from £82.68 to £86.07, based on 52 weeks.

Service charges

These cover the cost of additional services which may not be provided to every tenant, or which may be connected with communal facilities. A significant increase in utility prices has resulted in some service charges rising. Reserves have been used where available to help minimise these increases.

Service charges apply to sheltered and supported housing including heating, multi-storey accommodation, and the Neighbourhood Warden service.

Supported charges

These are additional services to help tenants maintain their tenancies such as Sheltered Housing Officer services and alarm systems.

Support charges for sheltered housing will increase by 3.8%, and the cost of Homeline for council tenants will go up to £5.17 per week (over 48 weeks), an increase of 4.1%. This includes the recent decision to improve services for our sheltered housing tenants that we recently consulted on.

Garages

Some garage fees and charges will increase by up to 3.6%.

Questions and answers

Below are some of the questions tenants asked at our recent virtual meetings. Answers provided by Michael Ash, Director of Housing and Karl Read, Finance Manager.

A 52-week basis.

The consultation this year is based on a recommendation to increase rents by CPI +1% which will be 4.1% based on the previous September inflation figure. Yes, we could opt for the lower figure, but we need to be mindful of financial pressures to run the service. There is always a balance between affordability and running the service.

No, the government guidance is a cap on increases. They cannot be more than the CPI plus 1%.

Inflation is now running much higher than the September inflation figure, which is what we use as the rent cap. This causes budget pressures as our supplier and contract costs are rising.

We could opt for a lower rent increase of, say, 3.1% - but in previous years, we had four years where rents decreased by 1% each year, so rent income was much lower than if rents had risen by the 3% we had originally assumed under self-financing regulations. Inflation is also driven by wage increases, for some people wages are increasing. In real terms, based on an average rent this means a £3.39 increase per week to £86.07.

We will feed this back as part of this process that the 3.1% increase was favoured by some tenants at the Facebook meeting.

The Housing Revenue Account (HRA) also faces increasing costs in the same way households do. We have budget pressures of £3 million next year.

We have also had four recent years of rent reductions, losing £18 million in capital investment during the last six years. This has further increased that gap between the investment required as identified in the last stock condition survey and the funding available to improve properties, a gap of about £80 million in total.

The proposed rent increase only mitigates some of this pressure, which would mean that to make up the difference, savings would need to be found from capital investment potentially.

The HRA has a lot of debt, passed to us in 2012. We have tried to get this recalculated without success. We can choose to repay less on the loans, but this pushes the future burden of debt repayments on to future years and future tenants.

We are currently repaying £5 million a year off the £95 million we have outstanding. This puts us in a better position to borrow in the future to complete significant capital investments.

If we chose not to repay all of the £5 million per year it wouldn’t be a saving. Debt has to be paid at some point and the longer it takes to repay it, the more it costs in interest payments.

The HRA will need some scope to increase borrowing in the future as we start to look at the programmes of work on multi-storey blocks, for example, which could be a significant amount. The argument is to try and catch up as much as possible now because of the four-year rent reductions. If we leave it until later we work from a lower baseline.

We will try to shield costs for some tenants where we have longer term tariffs for those paying heating charges. We will feedback and discuss this with members at the Housing Cabinet Member Advisory Group (CMAG) meeting in January.

We want to look at 100% of the stock given its current condition. We need to know which properties to invest in and for how much.

This is a five-year project which will move forwards once we have Government guidance on the new Decent Homes Standards and Tenant Satisfaction Measures. We are doubling our efforts.

Yes definitely, hence why it will be a detailed stock condition survey. It will allow us to be confident that the Energy Performance Certificates (EPC) are accurate, we can then prioritise our works. The original budget was £170,000, this increase raises it to £350,000.

To be clear, we can’t increase rents higher than 4.1%. We have looked at other local authorities to see what action they are taking and there is a trend to use the full increase.

As a landlord there are pressures on us when supplying the housing service, such as the costs of labour and supplies. These are increasing. Apart from some grant funding the only income we receive comes from rents and service charges paid. Grants usually cover new housing projects so that they can be self-funding.

It is worth noting that CPI in November is 5.1%, but the rent increase is below this – it could have been an increase of 6.1% if current figures were used. It was recognised as being tough balancing the budget this year.

Tenancy services are also working to support tenants. We have access to the Discretionary Housing Payments to help tenants if arrears start to rise. We are careful to look at arrears and how tenants are coping.

Our rent collection figures are good at the moment and tenants appear to be weathering the storm. Next year we may see shortfalls in the budget because the increase in CPI is taken from September 2021 and not the higher inflationary figure in November, therefore potentially not covering the actual costs.

Some of our properties are more of a challenge, the next four years sees all the stock condition surveys being completed. High rise blocks are a challenge. Any surplus money is invested back into our properties. We do not make profits, but we need to make sure we invest properly into the right properties.

We have £16 million per annum to spend across all of the stock and it is important that we prioritise. The council will have the final decision how we will invest in the high rise blocks in Park North in the New Year following a detailed appraisal. We do not want people living in poor housing conditions.

We will feed your comments back into the process.

We'd like to hear from you

Please let us know your views on the proposed rent increase for next year, or if you have any questions. Email us by 20 January 2022 at getinvolved@swindon.gov.uk.

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