Home | Rent Restructure – FAQ
Rent Restructure – FAQ
Rent and service charge review - SBHA's new Rent and Service Charge Policy
In 2023, we reviewed the way in which we calculate rents and service charges. This was about ensuring that our charging system is fair, simple and consistent for all Tenants, with the same set of rules applying to everyone and no-one paying more or less than they should for the home that they live in and the services they receive.
We consulted widely with Tenants on this, and the Board of Management considered everyone's views, and agreed to begin phasing in changes from April 2024. The full process will take around five years to complete.
Please see our FAQ below, which explains a bit more about the process, the reasoning behind it and how it works.
Like many housing associations rents require to be reviewed every so often to ensure they are fit for the current environment.
SBHA inherited a rent structure at stock transfer in 2003 and undertook to harmonise rent levels for similar size properties across all stock, which had previously varied depending on the district council area. ie a 2 bed house in Kelso to the same as a 2 bed house in Peebles.
Service charges have previously not been reviewed at the same time as rents.
This fundamental review would therefore about ensuring consistency for how overall rent & service charges are applied. We undertook the review using experienced consultants, who have supported many other Housing Associations doing similar reviews. They helped us design and implement a fair and transparent way for setting rents and service charges, which would be easy to maintain, based on principles agreed by SBHA’s Tenants.
We consulted widely with Tenants to find out what you thought the principles should be. Some clear answers came back:
- you confirmed that you thought SBHA should adopt a consistent approach to charging rents
- you said rents should vary according to the size of the home
- you agreed that flats should be charged the same whether classed as a tenemental flat, flat or maisonette
- you felt houses were the most desirable followed by 4inblock, flat, amenity and bedsit
- you said that service charges should be included within main rent charge for property where possible
- you thought rents should vary depending on how recently a home was built
Our rents were previously set for various flat types. Our service charges were included in some rents and separately for others. Some service charges were worked out at great detail on a scheme by scheme basis which was cumbersome to administer. The differentials between each rent attribute required to be reviewed to ensure they were sufficiently and fairly spread.
A base rent is identified as the starting point, which is based on the most common property type/size in SBHA’s ownership- a 2 bedroom house. From there, rent has been added or deducted depending on certain attributes, for example:
- A flat would cost less
- An additional bedroom would cost more
Your rent letter details how your individual rent has been calculated.
| Criteria 1 – property size | Weekly adjustment |
| Bedsit | -£15.00 |
| 1 bedroom | -£10.00 |
| 2 bedrooms | £0.00 |
| 3 bedrooms | £10.00 |
| 4 bedrooms | £20.00 |
| 5 bedrooms | £30.00 |
| 6 bedrooms | £40.00 |
| Criteria 2 – property type | Weekly adjustment |
| Bedsit | -£25.00 |
| Amenity | -£20.00 |
| Four in Block | -£10.00 |
| Flat | -£15.00 |
| House | £0.00 |
| Criteria 3 – New Build Premium | Weekly adjustment |
| New Build 2 person space – Flat/Four-in-Block/House | £5.00 |
| New Build 3 person space – Flat/Four-in Block | £12.50 |
| House | £5.00 |
| New Build 4 person space – Flat/Four-in-Block | £15.00 |
| House | £10.00 |
| New Build 5 person space – Flat/Four-in-Block | £17.50 |
| House | £12.50 |
| New Build 6 person space – Flat/Four-in-Block | £20.00 |
| House | £15.00 |
| Criteria 4 – Amenity Premium | Weekly adjustment |
| General Needs | £0.00 |
| Amenity Scheme with Communal Area | £10.00 |
Criteria 3 – is the criteria premium if the property is classed as a new build and built from 2014 onwards. It is applied according to the person space, which means that some bedrooms are classed as single and others double. Person space is only a criteria for new build properties.
Criteria 4 – is a criteria premium if the property is within an amenity scheme with a communal area.
This means that some rents will go up, while others will go down.
Each home has a target rent, which is the rent that we’re aiming to get to at the end of the process.
During the consultation, we also asked about how you felt any changes should be implemented. You told us:
- 64% said that any changes should be phased in over time, or capped at a certain amount per year
Because of this, the current environment of higher inflation and to minimise the impact on Tenants whose rent may be increasing, we agreed to cap the rent increase or decrease resulting from the restructure at £2 per week for 2024/25.
(NB but this doesn’t include yearly rent increases – this was consulted with tenants and the preferred option was 6%, which was approved by Board )
Service Charges
Amenity Scheme Communal Cleaning and Window Cleaning – A charge is worked out by totalling the full cost for cleaning all amenity schemes divided by the number of amenity properties receiving the cleaning.
General Needs Housing Communal Stair Cleaning – A charge is worked out by totalling the full cost of cleaning all general needs stairs divided by the number of general needs properties receiving the cleaning.
They are two separate processes – the rent restructure is about establishing a fair and consistent approach to rents. The annual increase is about the increasing costs to the business and the need to ensure that we are able to continue to invest in homes and services. Your tenancy agreement states that we will not normally introduce more than one rent increase within a 12 month period. We felt that introducing and communicating these in one go was simpler to explain, so that you understood the overall impact.
The project started in early 2022, and put on hold in September 2022 due to the emergency Cost of Living legislation put in place by Scottish Government. It was restarted when the legislation ended for social housing tenancies, but we continued to monitor the impact of the proposals. This was a major factor in reducing the cap for phasing in the new rents, from the initial proposed level of £5 per week to £2.
At this time, it is more important than ever to ensure that our rents are fair and easy to understand.
We have benchmarked rent levels, by looking at rent charges by other Housing Associations in the Borders, and undertaken an affordability assessment of the rents by property size for typical households.
No – as some target rents are lower and some higher, this won’t generate extra income. The purpose of the restructure is to create a fair and easy-to-understand system for charging rents for the homes we provide.
We do understand that some Tenants are struggling financially, and we have a range of services in place to support them. This includes help to identify and apply for benefits, advice on budgeting and funding to help Tenants in fuel debt to pay this off. You can find out more about these services on our 'Here to Help' page.
No – we won’t be backdating. We implemented a new policy, which took effect from 1st April 2024 to determine our rents going forward. Similarly we would not ask Tenants whose new target rent is higher to pay the difference for the time before 1st April 2024.
As above, this process needs to be income-neutral to allow us to keep providing services. If we implemented lower target rents in one go, we would need to do the same for higher rents – we want to manage the impact for Tenants whose target rent is more than £2 higher.
The new target rent should be applied at the point a property becomes empty. New tenants are provided with the rent and service charge at sign up and make an informed choice. This is normal practice for a rent restructure implementation. However, in fairness to existing tenants whose rents may be reducing at a capped amount, new tenants will be charged the same phased down rent.
You can view our Rent and Service Charge Policy here.