KNOWES HOUSING ASSOCIATION TENANT RENT CONSULATATION 2023/24

BACKGROUND

As an important part of the annual budget process, Knowes’ Management Committee is required to review the rents the Association charges on an annual basis and decide whether it will be necessary to increase these rents for the forthcoming financial year 2023/24 (1st April 2023 to 31st March 2024).   

Knowes Housing Management committee recognise that these have been some of the most challenging financial times for households in recent memory. Many people are struggling as a result of higher prices for food, energy, and general living costs. Some of our tenants will be making difficult choices about buying food and heating their homes.

The Management Committee is commited to keeping rents and service charges low and affordable for all our tenants and owners. Thus, this year we are proposing a below inflation increase.

ARE KNOWES ABLE TO INCREASE RENTS IN APRIL 2023?

Earlier this year the Scottish Government passed the Cost of Living (Tenant Protection) (Scotland) Bill 2022 which put a freeze on rent increases until 31st March 2023. Any price increases can only take effect after this date.

The Welsh Government have announced a rent cap of 6.5% from April 2023 and the English Government have set it at 7%. However, the Scottish Government are still to make the final decision for Scotland.

Key Dates:

·         15 December 2022 - Scottish Government sets out its tax and spending plans for next year

·         14 January 2023 – Scottish Government decision on rents for 2023/24 financial year

·         16 January 2023 – Tenant Consultation ends (results taken to Management Committee meeting at end of January)

·         31 January 2023 – Knowes Management Committee makes decision on rent increase for Knowes Tenants (Tenants notified of decision after this date)

DO RENTS HAVE TO INCREASE?

The costs of providing our services and keeping our neighbourhoods safe and tidy have gone up massively in the last year. On Average we are seeing our costs going up by 30% and in some cases upwards of 50%. We applied a 0% rent increase during the pandemic and last year we applied a 2.9% increase compared to the Scottish Average of 3.2%.

Table below shows how we have compared to the Scottish Averages over the last 2 years.

HOW WOULD A RENT INCREASE/FREEZE IN 2023 AFFECT OUR 5 YEAR PLANS?

During the covid pandemic we froze rents, but this is simply not affordable to the Association this year because our costs have increased so much.

Should our main costs remain at a high level on prepandemic costs and then go up each year by projected inflation of 2% from year 3 (2025/26) onwards then our cash balances would be as below:

Scenario 1 (3% Increase) – This would add an extra £2.42/week on average rents

This rate result in cashflow difficulties for the association and would be unsustainable in the medium-term. Choosing this option:

·         Results in a £6m cash decrease for Knowes in the first 5 years

·         Leads to a minus cashflow for the Association in year 9.

·         To make it viable we would have to postponed capital works such as renewal of bathrooms, Kitchens and Boilers. We would also need to review other services offered.

Scenario 2 (4.9 % Increase) – This would add an extra £3.95/week to the average rent

This rate is financially viable in the medium to longer term. Based on current projections choosing this option:

·         Results in a £5.8m cash decrease for Knowes in the first 5 years

·         Ensures positive cashflows throughout our 30 year Business plan

·         Is less likely to result in a cut back to our plans of renewing bathrooms, Kitchens and Boilers. 

Scenario 3 (7 % Increase) – This would add an extra £5.64/week to the average rent

This rate is financially viable in the longer term. Based on current projections choosing this option:

·         Results in a £5.4m cash decrease for Knowes in the first 5 years

·         Ensures positive cashflows throughout the 30-year Business plan

·         Is less likely to result in a cut back to our plans of renewing bathrooms, Kitchens Boilers and so forth. 

WHAT OPTION IS THE KNOWES MANAGEMENT COMIITTEE RECOMMENDING?

After careful consideration the Management Committee of Knowes are recomending a rent increase of 4.9%. This is significantly below the current 11.1% rate of inflation. Had the management committee recommended an increase equal to the rate of inflation then the average rent would have gone up by £8.94/week. Applying the 4.9%, however, will safeguard the medium-term future of the organisation but ensures that the rents remain affordable for our tenants.

This increase will also allow us to carry on with the planned improvements to our stock over the next 5 years.  In the next 5 years we plan to:

·         Invest £14.6m into our stock – This will include insulating of homes, renewal of some bathrooms, Kitchens and heating systems (per our programme of works/30 year plan)

·         Build 25 new homes in the local area (our waiting list is circa.600)

·         Keep rents affordable in comparison to the rate of inflation

·         Continued improvement of our services and engagement with tenants.

RENT CONSULTATION RESPONSE 2023-24

Please complete the questions below and returned in person to our office, by post or email: info@knowes.org

Your views do count and will be passed on to our management Committee so please take the time to complete the questionnaire.

We have extended the closing date for responses to 20th January 2023. Received entries will be entered into a draw and 2 lucky winners will receive £50 vouchers. Thank You.