A social landlord with more than 2,500 homes across Dumfries and Galloway is set to increase rents by up to seven per cent.
The move would see the weekly rent for a four-bedroom house with Loreburn Housing Association rising by £8.16 to £124.75 – when the cost-of-living crisis is already biting hard.
It is also warning of “a bleak prospect of underfunding in homes” and deferring investment plans as a long-term result of a rent increase of below the current 10.7 per cent level of inflation.
In a letter to residents, Loreburn Management Committee convener Russell Brown said: “Though this is unwelcome news to everyone, we feel it only right that we are realistic and transparent about the future.”
Loreburn has invited every tenant to take part in a rent consultation with two proposals on the table – an increase of either 6.5 per cent or seven per cent for the financial year 2023/24.
They were asked to return the paper survey or complete it online, or email or phone by yesterday.
Loreburn has stated that its management committee will consider the feedback before making a final decision.
Emergency legislation by the Scottish Government in November has restricted rent increases across Scotland until this coming April so it has only now been able to consult with tenants.
Loreburn put up rents by two per cent for 2022/23 after price freezes in 2017/18 and 2018/19.
Mr Brown said that increasing rents by 6.5 per cent or seven per cent would be “the minimum level” at which they could still operate and continue with “at least some (though not all) of plans for investment works”.
He described the proposed rent-setting hike as “one of the most difficult we have faced when we consider the impact of rising costs and inflation and the financial hardship faced by many of our customers”.
Mr Brown said: “It is our mission to keep rents affordable. However, if we do not increase rents, our ability to deliver services in the coming year – and beyond – will be severely impacted.
“The likely outcome is that we could only carry out essential repairs and maintenance.”
Mr Brown also warned: “Major works may have to be postponed or cancelled even with an increased rental income due to the rising costs of operations and investment. This, of course, would also have a cumulative impact affecting the years ahead as we try to “catch up” with the loss of investment.
“With inflationary pressures expected to continue, this presents a bleak prospect of underfunding in homes.”
The “not for profit” Dumfries-based landlord – which reinvests rents into providing more homes – has an ongoing development programme with more than 350 new homes due to be built by 2024.
Mr Brown said their “aspirations” are “still to invest in homes, focusing on a range of measures to make homes warmer and more affordable to run” and they have been making “operational savings where possible” for a number of years now.
Most recently this has been from salary cost reductions arising from vacated posts, through efficiencies in IT licences and maintenance and through the use of new technology.
However, Mr Brown added: “These savings simply cannot meet the impact of the wider economic situation where we have seen increased costs across all services, materials, fuel and insurances.
“These rising costs of providing services, investing and maintaining homes – and from interest rate rises – must all be considered when trying to balance affordability of rents against the ability to continue to deliver
services.”
