Our consultation with tenants over December 2022 and January 2023 provided background on the growing financial challenges facing the Association. Despite a January 2023 inflation rate of 10.1%, many of our main costs are growing at levels that are twice as high:
- Repairs – 20% increase
- Planned maintenance contracts – 25% increase
- Insurance premiums – 20% increase
- Office energy – 99% increase on electricity & 30% on gas
- Computer maintenance – 20% increase
Despite excellent financial planning to this point, the above unexpected pressures showed us that a rent freeze option would result in the Association running out of money within just a few years. We decided not to present a rent freeze option because of this.
We asked tenants for feedback on three rent increase options: 5%, 7.5% and 10%. 233 tenants participated in the consultation this year (94 returned the form we provided and 139 used our new online method). Tenants provided feedback that showed around 77% preferred a 5% increase, whilst around 22% thought 7.5% more was the way forward. Details of the feedback are presented below:
|Tenants who preferred 5%||Tenants who preferred 7.5%||Tenants who preferred 10%||Tenants who preferred a freeze|
Our Management Committee met on 8 February to discuss the consultation feedback, the Association’s financial position and future financial forecasts. The Committee decided to increase rents by 7.5% for 2023/2024. This still represents a below inflation increase – inflation stood at 10.1% in January 2023.
In making this decision, our Management Committee sought to balance the affordability of tenants’ rent levels with the need to ensure the Association stays financially viable – so that we can meet our obligations on the quality of services and homes we provide.
Inflation forecasts predict that the growth in prices will slow down over 2023/24, but they will still increase in real terms. The much higher actual rate that our costs are increasing at (as outlined above) shows no signs of slowing down. So Committee concluded that the Association needed to generate more income to meet our costs.
Our Committee found that our rent levels had been consistently affordable – based on tenant feedback and an accepted industry measure of affordability. They also found that we have a strong track record in keeping rents as low as possible – during 2021/22 and 2022/23 rents were increased at levels that were below the rate of inflation. Our rent levels also compare well other rural housing associations and Scottish average rents:
|1 bedroom||2 bedrooms||3 bedrooms||4 bedrooms||All house sizes|
|Clydesdale Housing Association||£79.24||£84.82||£92.96||£110.08||£85.28|
|Average of rural associations||£82.10||£88.08||£97.35||£107.99||£90.47|
Source: Scottish Housing Regulator statistical data for 2021/22 (published August 2022)
We hope that tenants will understand that this decision to increase rents has been taken with the best interests of tenants at heart. The Committee agreed that increasing rents by 7.5% would help to protect the Association from the financial risks that exist and a level of uncertainty in the economy. By generating enough income to meet our costs, we will protect services and be able to invest in maintaining the quality of tenants’ homes.
We understand that our decision may create additional pressure on some tenants’ household budgets. We will continue to seek out grant funding for tenants to support them with energy bills and any other funding that may become available. As always, our staff are available to support anyone who is or expects to experience difficulties in being able to afford their rent payment obligations. We offer welfare benefits advice, budget mentoring and can also signpost tenants to more expert support.
Please contact us on 01555 665316 or firstname.lastname@example.org if you need to discuss anything related to your tenancy.