Over 80% of council tenants face rent hike if Caerphilly adopts new way of calculating bills
Rhiannon James, local democracy reporter
Around eight out of ten council homes in Caerphilly County Borough could see their rent increase, if a new way of working out bills is adopted by the council.
Caerphilly County Borough Council’s rent policy is currently being reviewed in line with the Welsh Government’s expectations that social landlords should be charging an affordable rent.
Caerphilly County Borough Council is thinking of using a formula from the Joseph Rowntree Foundation (JRF) called the Living Rent Model. In Wales, Cardiff is the only other local authority which uses this method.
Its aim is to work out affordable rents linked to people’s income. It does this using earnings data for an area from the Office for National Statistics.
However if this was introduced for tenants of Caerphilly County Borough Council, it would mean 83% of council-owned properties would see an increase in rent.
A meeting of the council’s Housing and Regeneration Scrutiny Committee was told that on average, rent is currently 3.9% below what they would be using the JRF model.
At the meeting on June 9, the council’s head of housing Nick Taylor-Williams stressed the county borough would still be an affordable area for rent – despite the proposed increase.
Increasing rent using the JRF model would boost the council’s income by £2.4 million a year. That money would go into the Housing Revenue Account – which means it can only be spent back on council housing.
What will the changes look like?
Current tenants will not be affected by the proposed increase, as they are protected by current Welsh Government policy.
The current rent policy limits any rent increase for social landlords to Cost Price Inflation (CPI) plus 1% – using the level of inflation from the previous September each year.
If the JRF model is adopted, two, three and four bedroom properties, such as flats, bungalows, and houses, could see a rent increase when re-let to new tenants. However, rent for a one-bedroom property could be lowered.
Despite the JRF model calculating a lower rent for one bedroom properties, a report presented to the committee’s councillors admitted that rents for these could instead be frozen.
Cllr Shayne Cook, cabinet member for housing, said: “It is important to stress that if the JRF Living Rent model is adopted, all existing tenants would be protected under the current Welsh Government rent policy. As a social landlord it’s essential that we use an established model to ensure affordability for our tenants is measured fairly.
“It is true that adopting this model means we can benchmark against household earnings and allows flexibility in setting rents so that affordability is central to our decision making.
“Every year we review our rents in line with the limits set by Welsh Government and the money gained from any rent increase will go back into maintaining our council housing stock, providing services for all our tenants and building new council homes which will tackle the high demand for social housing in our county borough.”
Third lowest in Wales
Based on All-Wales statistics for 2019/20, the report also stated that Caerphilly Council rents were the third lowest in Wales, but that Caerphilly was the fifth highest area for workplace earnings.
The council, under its Caerphilly Homes brand, currently has a housing stock of 10,648. Of this, 75% receive financial assistance such as housing benefits or universal credit.
A survey of council tenants revealed that 65% thought their rent was “fair and affordable”.
At the scrutiny meeting, Plaid Cymru councillor for St Cattwg, Judith Pritchard, asked if those who are not online were consulted.
The councillor was told by officers that some phone calls were made to tenants, but the majority of the consultation was conducted online. Three focus groups were also held to gain residents’ views on the JRF living rent model.
The report was unanimously supported by the scrutiny committee, and will now be presented to cabinet before a final decision is made.
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Something doesn’t add up here. If “the Welsh Government’s expectation… (is) that social landlords should be charging an affordable rent”, then any level of rent below this is, by definition, within the Welsh Government’s guidelines. If the Joseph Rowntree Foundation (a respected body) says that X level of rent is affordable and that Caerffili’s rents are < X then the council can be reassured that it is complying with Welsh Government policy guidelines. Therefore, the Council can simply carry on with the current rents. That they are looking to increase the rents suggests that they have other reasons for increasing… Read more »
I may have this wrong so check for yourself. What Caerphilly propose is to make certain they measure future rent increases (for new tenants only) using the Living Rent Model as part (not all) of it’s calculations. LRM is “designed on the principle that a single person should not spend more than 28% of their net pay on rent for a standard single person unit of accommodation.” CBC complicate matters by using the word “affordability” as “being affordable” when it has a technical definition in housing terms of 80% of market levels. WAG sets levels on social rent and in… Read more »
Thank you. That makes more sense. Although it still suggests that CBC still have a choice and could continue to keep rents (including for new lets) at current levels?