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Your Rent, Your Say: Frequently Asked Questions

Aberdeen City Council Housing

Why does the current rent system need to change?

Our rents are currently based on the Gross Annual Value (GAV) which was last assessed in 1985. This is very complex with over 25 different factors taken into account which produces over 820 different rent levels within our stock. Staff and tenants find it difficult to understand it and it is difficult to administer.

What did we do to consult with tenants?

We decided to engage with our tenants at the very start of the process with the assistance of Tenant Participation Officers. Initially we sent out questionnaires to all tenants to gather their views on what factors should be included in a new rent policy. Over 90% of respondents supported the need for change. We then held a series of focus groups in February which were facilitated by Arneil Johnston to look at the factors identified by tenants in more depth and from this the main principles were identified. Arneil Johnston has assisted in the development of the Housing Revenue Account Business Plan and the modelling for the rent restructuring. Their detailed knowledge of our business needs and understanding of how other landlords have approached this issue has been invaluable.

Were there factors discussed which have not been taken forward?

As a result of the initial consultation tenants identified numerous factors which could be included in the calculation of rents and these were discussed at length during the focus group sessions. A few examples of these are

Energy Efficiency

The calculation of rents must be based on accurate information held for all our stock. In the case of energy efficiency, whist we are gathering information on the energy efficiency of our properties we do not currently have this information for all our stock. Tenants therefore felt that this indicator should not be used at this time. However when the energy efficiency of all our properties is known this indicator could be used as a factor for calculating rent levels.

Floor Space

Whilst some support was expressed for utilising square footage to measure property size, the focus groups acknowledged that the Council did not have the data available to support this in practice. On this basis, general support for using the number of bedrooms in each property was agreed.

Location

Tenants were of the opinion that the location of where applicants wanted to live was a personal choice. Many applicants wished to be in the city centre with access to services whilst others wished for a lower density setting. Location was seen as a very subjective issue which could not be easily incorporated in to a rent setting system.

Property Condition

There was almost unanimous resistance from the focus groups for using property condition as this criterion was perceived to be:

  • Too difficult to measure given the constant cycle of repairs, maintenance and investment in property.
  • Irrelevant, as all properties should by 2015 meet a minimum property standard i.e. the Scottish Housing Quality Standard.
  • Complex to continuously adjust to the constantly moving cycle of investment works; and unfair to tenants who have no control in the timing, extent or nature of modernisation works implemented.

What are the main principles?

The main principles identified are

  • A base rent for all properties plus;
  • Additional rent based on property groups - House, Four in a Block and Flats;
  • Additional rent based on number of bedrooms;
  • Additional rent for garages which are within the curtilage of the property;

Was this reported to committee?

A report was presented to Housing & Environment committee on 22nd May 2012 requesting approval to formally consult with our tenants on the principles. Subsequently a questionnaire was sent to all tenants with a closing date of the 30th July. Over 1700 responded with around 85% in favour of adopting a new rent structure based on the principles identified. We reported to committee on the 28th August 2012 with a recommendation to approve Option 3.

What models were identified?

Three models were developed see below

  • Option 1 - Base rent 43 with 4 property groups, bedsit 5 + garages
  • Option 2 - Base rent 43 with 4 property groups, bedsit 0 + garages
  • Option 3 - Base rent 42 with 3 property groups, bedsit 0 + garages

An option appraisal was undertaken to identify the most appropriate mode. Transparency, ease of understanding/implementation and fairness were some of the factors used to determine the best model. Once this exercise had been completed Option 3 was identified as the preferred model.

What does the proposed model look like?

Base Rent

Property types

 

 Bedrooms

 

 42

Houses

20  

None

0

 

 4 in a Block

15

 One

10 

 

Flats

10

 Two

15

 

 

 

 Three

 20

 

 

 

 Four

 25

Garages within the cartilage of the property 10. This applies to 105 properties.

Rent values for the number of bedrooms continues at 5 per bedroom.

Example: a three bedroom 4 in a Block without a garage

Base rent      42
4 in a block   15
3 bedroom    20
Total =          77

When will this new rent structure commence?

The new rent structure will be introduced from April 2013.

How will this affect tenants?

The new rent structure will see the rent increase for some properties and decrease for others.

To minimise the impact for tenants affected by a change in their rents it is proposed that as part of the implementation the changes be phased in over a 5 year period with annual increases or decreases capped at 3 per week, before any annual inflation rent increase is applied.

Appendix 1 provides an example.

What about the New Build Houses?

New build council properties currently have a 25% premium on the GAV rent, this was agreed in order to service the build costs and reflect the fact that the properties benefited from energy saving facilities.

It is proposed that the rental for these properties be frozen at current levels until such time the model rent with a 25% premium reaches the current value. It is not possible to calculate when this might occur as future annual rental increases are unknown. Once the model rent reaches the current frozen rent it is proposed that the rent should be increased as normal.

It is proposed that the properties be classified as new housing for 15 years from the date they are first let with the rental reverting to the standard model rent at that time by removing the 25% premium.

What will happen when properties become vacant and a new tenant is offered the property?

It is proposed that all properties relet, including mutual exchanges and management transfers from 1st April 2013 will be let at the new rent level without any phasing or capping.

What will happen to properties which have been designated as "defective" such as Tee Beam Construction?

Historically 135 properties have received a reduction of 15% on their rent as a result of the Housing (Scotland) Act 1987 designating tee beam construction houses as "defective".

These properties are subject to continued investment in terms of improvements and modernisation programmes and will be Scottish Housing Quality Standard (SHQS) compliant. In terms of daily living facilities these properties are no different from others in our stock and should not be considered as defective. It is proposed to remove the reduction in rent if the proposed rent restructuring is implemented. These properties are located in Mastrick, Northfield and Sheddocksley.

What about lettings to other organisations?

There are currently 79 properties let to other agencies such as Aberdeen University, NHS Grampian and Tullos Training. The rental charged to these organisations is the standard rent we would charge to an individual tenant. Given the specific use of these properties it is proposed to review the use of each individual property and rental charge with colleagues from Asset Management who manage similar properties held on non HRA accounts. This should help ensure a consistent approach is used for the charging of rents across accounts.

What is in place to provide help and assistance to tenants?

Once committee approve the recommendations, tenants will be informed of the new rents. It is proposed to issue a special edition of Newsbyte in September, there will be press releases and a dedicated web page with advice.
Rent management and housing staff are fully aware of the changes and can provide the necessary assistance. There will be a stand at the Tenants Open Day where tenants can come for advice and we are providing prospective tenants with information at the time they are made an offer of housing.

What if my rent increases and I have spare rooms in the property?

From April 2012 working age claimants who are in receipt of housing befit will have their housing benefit restricted based on the number of bedrooms their household requires. The reduction will be 14% for households with one spare bedroom and 25% for households with two or more spare bedrooms.

How will the properties affected by the proposed Haudagain bypass be treated?

The proposal for a relief road at the Haudagain roundabout will lead to the demolition of a few hundred properties if given the go ahead. Once specific properties are identified, a report will be presented to committee to seek agreement on how the rent restructuring should be applied to these specific properties.

How will my Housing Benefit be affected if my rent goes up or down?

The amount you are expected to pay towards your rent is determined by your income. So if the rent goes up or down the amount you pay remains the same and the housing benefit changes to make up the difference between the rent and the amount you are due to pay.

See example below assuming your income remains the same.                                                                        

Current Rent

Amount of Benefit

Amount you pay

 50

40

10

New Rent

 

 

70

60

10



If your income changes then you will need to be reassessed.

Appendix 1

Phased Rent Increase

Current Rent

Revised Rent

Annual Cap

 

Rent Phasing Example

52.03

65.00

3.00

 

 

 

 

 

 

 

Rent Implementation - NO inflation

Base

Year 1

Year 2

Year 3

Year 4

Year 5

1 Year - Big Bang

52.03

65

65

65

65

65

Capped at 3

52.03

55.03

58.03

61.03

64.03

65.00

 

 

 

 

 

 

 

With Inflation at 4.4%

4.40%

4.40%

4.40%

4.40%

4.40%

Cumulative Inflation

104.40%

1.089936

1.137893

1.18796

1.240231

Rent Implementation - WITH inflation

Base

Year 1

Year 2

Year 3

Year 4

Year 5

1 Year - Big Bang

52.03

69.95

73.03

76.24

79.51

80.61

Capped at 3

52.03

57.45

63.25

69.45

76.07

80.61

 

 

 

 

 

 

 

Annual Rent Increases

Capping

Base

Year 1

Year 2

Year 3

Year 4

Year 5

Capped at 3

0.0

3.0

3.0

3.0

3.0

2.97

Inflation @ 4.4 %

Base

Year 1

Year 2

Year 3

Year 4

Year 5

Capped at 3

0

2.42

2.80

3.20

3.62

4.06

Total annual rent increase

5.42

5.80

6.20

6.62

7.03

 

Phased Rent Decrease

Current Rent

Revised Rent

Annual Cap

Rent Phasing Example

75.00

67.00

3.00

 

 

 

 

 

Rent Implementation - NO inflation

Base

Year 1

Year 2

Year 3

1 Year - Big Bang

75

67

67

67

Capped at 3

75

72

69

67

 

 

 

 

 

With Inflation at 4.4%

4.40%

4.40%

4.40%

Cumulative Inflation

104.40%

1.089936

1.137893

 

 

 

 

 

Rent Implementation - WITH inflation

Base

Year 1

Year 2

Year 3

1 Year - Big Bang

75

69.95

73.03

76.24

Capped at 3

75

75.17

75.21

76.24

 

 

 

 

 

Annual Rent Increases

Capping

Base

Year 1

Year 2

Year 3

Capped at 3

0.0

-3.0

-3.0

-2.0

Inflation @ 4.4 %

Base

Year 1

Year 2

Year 3

Capped at 3

0

3.17

3.04

3.03

Total annual rent increase

0.17

0.04

1.03

 

* In this example the rents will reach the same level within 3 years regardless of applying a 'big bang' approach or phased approach.

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