2024 - 2025 Rent Charges and Management Fee Consultation

To provide services for tenants and customers and to maintain properties, the Association needs to generate income to pay for these. The Association’s income comes from the rents that tenants pay for the home they live in. This income needs to cover the day-to-day costs of the Association and needs to allow funds to be set aside for current and future cyclical maintenance works (such as painterwork, gas servicing, electrical safety) and current and future replacement and improvement works (such as replacement kitchens, bathrooms, windows, roofs). Over the past few years the costs of operating have increased dramatically. This is largely due to shortages of labour and materials, and the increase in the cost of the labour and materials available. This has resulted in increased direct costs and increased costs for our suppliers which then get passed on to us when we buy services and works.  There have also been dramatic increases in other costs such as insurance, where our costs have increased by well over 100% - this has not been due to any claims history by the Association and instead is due to price rises throughout the insurance sector.

The Association reviews its rental charges every year to make sure we have enough income for the costs as above, but also reviews to strive for our rental charges to be as affordable as possible for customers whilst covering our costs.  As part of this we also compare our rents with other social landlords – we consider average private sector rents, but these are always greatly higher, as you can see in the table below. 

The Scottish Housing Regulator (SHR) collects average rents from all social landlords and publishes them through their website - https://www.housingregulator.gov.scot/landlord-performance/

The Association compares our rents with those published by the SHR and from our benchmarking group SHN (Scottish Housing Network), along with the other housing associations/co-operative is Drumchapel – Drumcog (made up of Cernach HA, Drumchapel HC, Kingsridge Cleddans HA and Pineview).  The latest published figures for SHR and SHN relate to rents from 2022/23 and are compared below. 

2022/23 Average Weekly Rents:

The Association begins this work in Sept/October each year.  This includes reviewing past spend, considering future budgets (for the year ahead and the 30 years ahead for longer term planning), and consulting with tenants on proposed rent changes, which would be applied from 1 April.   The Association’s Committee of Management has considered all these matters and decided the consultation process to commence for rent charges due from 1 April 2024. 

The Association would normally consider using September inflation for determining rent increases.  The September 2023 inflation rate for consumer price index inflation (CPI) was 6.7%, published in October 2023. 

As explained earlier, the rent charge affects what the Association can do. Our costs have increased considerably above CPI so any rent increase below CPI will mean reduced income and therefore reduced money to be able to be spent on tenant and property services.

The Management Committee is acutely aware of the impact of the cost of living crisis on tenants, with lots of people struggling with higher prices for food, energy and general living costs.  The Management Committee are also aware of the many inflationary pressures and increasing costs which the Association has been facing.

However, with a focus on our tenants and in recognition of how tight thing are for everyone right now the Management Committee believe our priority is to take action to minimise increases without creating service concerns for tenants or stocking up problems for the future that could result in high rent increases. As such, the Management Committee have agreed to consult on three options:

Any increase would be applied to the base rent within our rent setting structure and then calculated through to the chargeable rent.  Due to rounding this can result in some charges being slightly less or slightly more than a straight % increase on the current charge.  Below, we have illustrated the options above on average weekly and average monthly rents.  There are 5 remaining properties with capped rent and these will incur a higher increase in order to bring them in line with all rents.

Impact of proposals on the average weekly rent charges:

Impact of proposals on the average monthly rent charges:

 Service charges are charged separately – our tenant service charges only relate to 3 customers currently for specialist door services. 

[1] https://www.gov.scot/publications/private-sector-rent-statistics-scotland-2010-2022/pages/1/- Glasgow monthly average x 12 then divided by 52 weeks.

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