Council tenants in West Lothian will be asked to support rent rises of up to 4% next year to help build new homes to cut an ever growing waiting list.
The council’s executive meets on Tuesday and is expected to approve a pre-Christmas consultation with tenants which was tabled at the Housing Services Policy Development and Scrutiny Panel (PDSP) on Thursday.
It warned that a rent increase of either 3.5% and 4% would be needed to help fund the development of new houses to meet a waiting list of over 10,000.
Julie Whitelaw, the interim head of housing, customer and building services told the meeting: “Option 1, a 3% increase would be required to maintain service levels but would not support new housebuilding.
“A 3.5% increase (option 2) would support the building of 350 new homes and a 4% increase (option 4) would support 500 new council homes.”
A 3.5% increase equates to an average weekly rent of £83.12 for 2023/24, a rise of £2.42 on the current average rent of £80.70.
A 4% increase would take average weekly rent from £80.70 to £83.93.
In a report to committee Mrs Whitelaw said: “Given the demand for social rented housing in West Lothian, with 10,700 applicants on the common housing register, there is a requirement to add to the supply of council houses over the next five years. It is therefore proposed to consult on rent increase options of 3.5% and 4% per annum as both options will support an increase in the supply of council houses.
“It should be noted that the 3.5% and 4% rent options would not fully fund the proposed additional housing stock, with further borrowing of £11m (3.5% increase) or £26m (4% increase) required to fund the additional capital spend. However, the extra rental income generated by the additional rent increase would make the additional borrowing requirement more affordable, prudent and sustainable over the longer period.”
The average weekly rent level in West Lothian is comparable to the average rent charged by Scottish local authorities of £80.71 and below the average rent charged by local registered social landlords of £96.41. The current collection rate on council rent to date is 94%. This is in line with council targets and is projected to rise through the year to a final collection of around 98% at the end of the financial year.
The report added: “As of October 2022, 4,609 tenancies pay full rent, whilst 9,397 are in receipt of housing benefit and/or universal credit. This equates to 67.1% of council households. Adding a rent increase would likely increase this percentage as customers who do not currently quite qualify for benefits would move to a position where they would begin to receive payments for housing costs.”
Housing officers maintain that even with a 4% increase weekly rent would be below a standard of 30% of income spent on housing rent.
The report added: “It is suggested that when housing costs exceed 30%-35% of a household’s income, the cost is judged to be unaffordable.”
There is no formal guidance on how to define rent affordability. As per Scottish Government guidance, landlords should determine the balance between affordability for the tenants and costs of delivering services and property management.