Angus Housing Association welcomes positive response to rent increase proposals
Proposals by Angus Housing Association (AHA) to increase rents by the Consumer Price Index (CPI) inflation only of 2.4% from April 2019 onwards has had a positive response from its tenants.
The increase compares favourably with the recently announced higher than inflation increases of 3.5% in the Angus Council area and 3.75% for Dundee City Council tenants, the two council areas in which the Association operates.
The response rate from AHA’s tenants was also reasonable with 12% of around 1,850 tenants getting involved and the proposal for an inflation only increase being endorsed by more than 85% of the total respondents.
More importantly, tenant response to the Association’s longer term financial planning has been very positive.
Speaking ahead of a proposal that the Association’s committee of management endorse CPI inflation as the basis of all future rent increases, AHA director, Bruce Forbes, said: “Since the introduction of austerity policies in 2010, we have increasingly been asked by our tenants to try to keep our rent increases to the absolute minimum. Our tenants have been telling us that their wages and benefits have been stagnating and that any increases above the rate of inflation were hitting them hard.
“To move away from assuming rental income would continue to grow at 1% above the old Retail Price Index was extremely challenging. In the past, this was the basis of how our public subsidy and our private borrowing were calculated. We have now completely re-vamped our long term financial planning to deliver what tenants have been telling us about controlling the affordability of the rents they have to pay.
“We have been working with our committee of management and financial advisers, Arneil Johnston, on this review for the last 10 months, culminating in this tenant consultation. Arneil Johnston also reviewed our current rent levels and found that these all meet the affordability definitions in use in Scotland. Our number one objective is to keep them that way.
“In April 2018, we kept our rent increase to the lower CPI inflation only but it doesn’t help our tenants if we have to go back to a higher percentage increase in future years. We are now confident that we can plan for the future on the basis of this inflation only, projected rental growth. In 2019/20, we will still be in a position where we can afford to borrow to build around 100 new homes.
“We also plan to invest £1.7 million in improvements to our existing stock and over £2m in repairs, cyclical maintenance and servicing costs out of a total budget of around £8.6m. No borrowing will be needed to achieve this level of investment in tenants’ homes. If external factors change in the future, however, our priority will be to keep our rent increases affordable to our tenants. If this means that we can’t afford to borrow to build new houses because, for example, Scottish Government capital subsidy reduces, this is a consequence we will have to face up to. We will not be putting our rents up at rates higher than inflation simply to deliver new housebuilding, however much it is needed.
“Obviously, no tenant wants to pay more for their rent, especially if they do not see the money they pay being spent on increasing the quality and comfort of their own home. In fact, nearly all of the tenants who opposed the inflation only rent increase wanted us not to increase rents at all.
“This consultation has, however, told us that tenants recognise we need to prudently take account of inflation and that we will continue to have their support for our strategic plans when we are limiting rent increases to inflation only.”