For more information about our proposals, click the subjects below:

• Introduction

  A Three Year Deal or a Five Year Deal?

  Plus New and Increased Rent Discounts

  This year marks a big step forward for us as an organisation. With over three quarters of our tenants now using our digital services, we are able to provide a wider range of services, but more efficiently than ever. Our unique Key Tenant Scheme is also going from strength to strength, offering significant Rent Discounts, and making many of our tenants better off.

  All this means we can make a new offer on rents - not just this year, but for up to the next five years. It’s not an absolute guarantee on future rent increases - no-one could ever do that. If we have learned one thing in 2020 it is definitely to expect the unexpected! But it is a very clear statement about keeping rent increases down to no more than inflation over the next few years, with the potential for an effective rent freeze this year.

  We have two proposals - a Three Year Deal and a Five Year Deal. Alongside this, we are proposing to increase our Gold Key Tenant Rent Discounts from £10 to £15 every month, our Platinum Key Tenant Rent Discounts from £20 to £25 every month and introduce a new Automatic Bronze Key Tenant Rent Discount of £5 every month, just for going paper-free. As 73% of our tenants are already paper-free, most tenants would immediately qualify for the new Bronze Key Tenant Rent Discounts (and hopefully this will encourage everyone else to make the move to paper-free to join them).

  So, this is a proposal which means most of our tenants could pay the same or less rent next year than this year, and we then keep those levels locked down for the next few years.

• About Us

  Our Homes

  We own over 1,300 homes for rent all over East Lothian. We have built just under 70% of our properties (“own build” properties) using grant money provided by the Scottish Government and money that we borrow from banks and building societies.

  The rest of the properties we own were bought from Scottish Homes in 1996 through a “Large Scale Voluntary Transfer” (LSVT properties), and the whole cost of buying them was funded by a bank loan (i.e. we didn’t get any grant towards the cost of buying these houses).

  We also have around 40 Shared Ownership properties, and a number of garages, workshops and offices.

  Our Rent Levels

  Rent is our main income. We use it to run and manage the Association, and maintain our homes.

  Historically, our rent increases have been set at inflation plus 1%. This is because most of the government funding we have received to build new homes, and the price we paid for the LSVT properties, assumed that we would increase our rents in this way. In most years we have had to apply this level of increase to ensure we can continue to manage and maintain our homes properly and repay the loans we took out to build them, including the interest. Over time, this means our rents have become more expensive in real terms, and this is of course of concern to us because one of our main aims is to ensure we continue to provide first class affordable rented homes.

  We use the Retail Price Index or RPI as our measure of inflation, again because this is the same inflation measure we used to calculate the government funding we get for new homes and the price we could afford to pay for the LSVT properties, but also because it includes housing cost inflation, so is the most appropriate measure of inflation in relation to the costs of our business and the services we provide.

  Service Charges

  Service Charges are assessed separately from rental charges. These are costs that we pass on to some tenants for extra services we provide such as stair cleaning, warden costs or factoring services. What we charge the tenant depends entirely on what the contractors charge us for providing these services. Costs can go up or they can come down if we can find a cheaper way of providing services. Because of this, and because Service Charges only apply to some of our homes, they are not considered as part of the annual Rent Increase, and we will let tenants with Service Charges know separately what will happen to their charges for next year. But if there are any issues you would like to discuss about Services Charges individually, just get in touch.

• What your rent covers

  We only receive Government grant to cover part of the cost to buy or build new homes. This means that everything else we do must be funded through our rental income.

  

  Repairs & Maintenance

  This is our biggest expenditure and it covers several different areas:

  • Reactive repairs - where something in your home breaks or wears out and we send someone out to fix or replace it
  • Planned maintenance - such as kitchen replacements, new heating systems, insulation upgrades, etc.
  • Cyclical maintenance - things like external paint work and clearing rhones

  To keep costs down, we have our own in-house maintenance company, R3, which carries out around 85% of our repairs and maintenance. In recent years we have spent a lot of our repairs and maintenance budget on making sure all our properties meet the Energy Efficiency Standards for Social Housing (EESSH), and we are currently upgrading smoke alarms and moving to a five yearly inspection of all electric systems to comply with new legislation.

  Running Costs

  This is what is spent to administer our business and provide services to tenants, housing applicants and everyone else that we work with – employment of staff, insurances, tenant surveys, upkeep of our offices and the equipment we use, stationery, the Money Advice Service, legal and audit services and more.

  Loan Interest and Repayments

  While we do get some funding to help us buy or build new homes, the rest of the cost of new builds has to be covered through bank loans. We have to repay these loans over time and are also charged interest on the amounts outstanding. As there is not enough social housing in East Lothian to go around (we have around 4,300 families registered for housing with us at any one time, and currently only house around 70 of them each year from vacancies arising within our existing homes), we hope to continue to build new properties.

• Keeping rents affordable

  Each month we check all our new tenancies against an Affordability Tool provided by the Scottish Federation of Housing Associations (SFHA). This tool enables us to assess how affordable our rents are and helps us identify any new tenants who may be eligible for additional financial support (such as Universal Credit or other welfare benefits).

  In the last year, the Affordability Tool has continued to show us that our rents remain affordable, but has also helped us to provide additional support or advice services where they are most needed.

  Key Tenant Scheme and Rent Discounts

  Our Key Tenant Scheme is unique in UK housing and we remain the only Housing Association offering monthly cash rental discounts to our tenants.

  All our tenants, including tenants on Universal Credit or Housing Benefit, are eligible for our Key Tenant Rent Discounts. If a tenant getting Universal Credit or Housing Benefit receives a discount, they are allowed to keep that money, in full (the net reduction in housing costs does not mean it is then deducted from their benefit entitlement).

  This year, alongside our proposed Rent Increase, we are consulting on increasing our Gold and Platinum Rent Discounts by £5 every month (increasing from £10 to £15 every month for Gold Key Tenants and from £20 to £25 every month for Platinum Key Tenants), and also introducing a new Bronze Key Tenant Rent Discount of £5 every month. Our new Bronze Key Tenant status will be automatically awarded to all paper-free tenants who are not already Gold or Platinum Key Tenants.

  This would mean that the vast majority of our tenants who are not already receiving Rent Discounts will immediately qualify for the Bronze Key Tenant Rent Discount, as 73% of tenants are already paper-free, and of course we hope this new automatic Rent Discount will encourage a lot more tenants to join them and go paper-free too.

  On top of this, for the 69% of tenants not yet claiming Gold or Platinum Key Tenant Rent Discounts, by upgrading to Platinum Key Tenant status now, their rent could go down by £20 a month next year under the Three Year Deal, or down by £15 a month under the Five Year deal. We do not believe that any other Housing Association will offer their tenants rent reductions like this at the moment.

  So, if you are not already getting Rent Discounts, there is no time like the present to find out how simple it is to qualify for them and make it a New Year’s resolution for 2021 to start claiming them! More information is available on elha.com, or log into your My Home account and click on the Key Tenant button to get started.

  My New Home Rent Discounts and Other Services

  New tenants using our unique My New Home service have access to Rent Discounts covering all of their first month’s rent, meaning that no one needs to struggle to pay rent at the very start of their new tenancy. We also provide paint packs to help new tenants decorate their new home.

  We offer a free garden care scheme for our elderly or disabled tenants who live alone and are no longer able to manage their garden, and funding is available for medical adaptations to allow tenants with changing needs to remain in their home for as long as they want. We also hold a small Tenancy Sustainment fund to help tenants in unusual or exceptional circumstances, where their tenancy could otherwise be placed at risk and there are no alternative options available.

  Money Advice Service

  In 2010 we introduced an independent Money Advice service for our tenants. This service quickly proved its usefulness, and now achieves around half a million pounds of additional benefits, grant funding and charitable donations each year for our tenants (that’s not a typing error, we help our tenants claim around £0.5m every year in additional income!). In 2020, we expanded the Service to include Home Energy Advice.

• Our annual rent increase consultation and budget setting process

  In January each year, we consult tenants on a proposed Rent Increase. In most years, we have consulted on an inflation increase (based on the published figure for November each year) plus 1%. All of the responses we receive to our consultation, including all comments made by our tenants (in full), are shown to our Management Committee to review before they agree the coming year’s Budget and Rent Increase.

  Our Management Committee meets in February each year to consider our Budget for the coming financial year (1 April to 31 March). They need to consider what it will cost us to provide services to our tenants, while considering the feedback from the Rent Increase Consultation and looking for ways to keep costs down.

  Rent Increases over the Last Five Years

  

  * In 2017 we consulted with tenants about a larger Rent Increase to fund the introduction of the Key Tenant Scheme. Tenants supported this increase, and the Key Tenant Scheme was launched in April 2017.

  ** In 2018, as fewer tenants had received a Key Tenant Discount than initially expected, we were able to consult with tenants on a lower rent increase.

• Frequenty asked questions

  Q: What do you mean by “equivalent to an inflation only increase” in the 5 Year Deal?

  A: Up to now, we have always set a percentage increase for all rents. This year, because we are introducing the new Bronze Rent Discount of £5 every month and increasing the Gold and Platinum Rent Discounts by £5 a month, instead of a percentage increase we are proposing a flat rate increase in 2021 to make things clearer. This Rent Increase would be £5 a month under the 3 Year Deal, and £10 a month under the 5 Year Deal.

  Under the 3 Year Deal, the majority of our tenants will receive a £5 Rent Increase met with a new or additional £5 Rent Discount, and so will end up paying the same rent in 2021/22 as they have in 2020/21 - a Rent Freeze. Under the 5 Year Deal, the majority of tenants will see a Rent Increase of £10 a month met with a new or additional £5 Rent Discount, so will pay £5 more rent each month in 2021/22 than in 2020/21.

  The 3 Year Deal offers an immediate Rent Freeze followed by two years of inflation only increases. The 5 Year Deal aims to offer five years of inflation only increases. The actual inflation only increases would therefore start in 2022, when it is intended to apply percentage increases again (although we will still consult with our tenants each year about this). However, in 2021, A £5 net increase would be very close to an inflation only increase in relation to our average rent. This means that individual rent increases could be slightly higher or lower than inflation, depending on the actual rent for your home - but the difference will be very small.

  For example, our current average rent is £428.57 a month. The rate of inflation in December 2020 (that we would normally have used for setting our rents) was 0.9%. A £5 increase to our average rent level would represent a 1.17% rent increase. A flat rate increase means that our lowest rents will increase in percentage terms by slightly more than our highest rents. We have calculated that our actual percentage rent increases will range between 0.75% and 1.68%.

  Q: Why are your rents higher than East Lothian Council (ELC)?

  A: There are a great many reasons for this, we can’t list all of them, but to give you an idea:

  • Until ELC re-started their new build program, they had no loans to service and repay as they had paid in full for all their properties
  • The way most of our new build properties have been funded by the Scottish Government, and the price we paid for our LSVT Properties, assumed that our rents would continue to rise by inflation plus 1%, which keeps initial grant down, but does have an impact on our rents through time
  • As we must meet certain financial obligations, such as loan covenants, which are agreed over the long-term, we need to plan our rent increases over a similar long-term basis, and so we cannot necessarily make changes to our overall approach on a year to year basis

  Having said that, our annual Rent Increases have been lower than the Council’s for a number of years, so although our rents are higher, Council rents are slowly catching ours up. The table below compares our rent increases over the last five years.

  

  Q: Why can I only get a Rent Discount if I go online?

  A: We launched the Key Tenant Scheme as an incentive to get tenants to use their My Home accounts online for several reasons:

  • My Home is the most cost-effective way for us to manage your tenancy, so if we keep our costs down, that helps us keep your rent affordable
  • Universal Credit accounts can only be managed online, and we wanted to give all our tenants an incentive to get used to managing their tenancy online, so if they do receive Universal Credit at any point in the future, it won’t be such a shock to the system
  • Anyone getting Housing Benefit or Universal Credit can keep their Rent Discounts in full, and an extra £25 every month (or £300 extra every year) certainly helps

  We are also very interested in expanding our Energy Advice services and helping our tenants get lower energy bills. All the cheapest tariffs need to be booked and managed online. Where we can help our tenants improve their digital skills, as well as reducing rent costs, this will help reduce other bills too. We are also continuing to provide services to help those tenants that still find the digital world a bit of a challenge.

  Finally, the Coronavirus pandemic has shown many of us the benefits of the digital world, and lots of people have gained new digital skills as a result of it. Just a year ago, who would have thought so many of us would have got used to meeting our friends and family through video calls! Hopefully these new skills are something useful to have come out of the challenges we have all faced over the last year, and we can continue to do our bit to help our tenants access more services and increase their incomes.

  Q: Why do you use the Retail Price Index (RPI) instead of the Consumer Price Index (CPI) when you increase rents?

  A: RPI is the measure of inflation that includes housing costs, so is the most applicable to the costs of our business.

  Q: How do you calculate rents in the first place?

  A: We use a points system for all our new builds. Each property feature is given a number of points. For example, a double bedroom is 5 points, a single bedroom is 3 points, a separate dining room is 3 points, a large garden is 3 points, and energy efficiency measures can be anything from 0 to 6 points. Each point has a cost, which is how the rent is calculated. For example, if the cost per point was £1.20 per week, and a property had 80 points, the rent would be £96 per week.

  Q: Why should I pay more rent when my wages haven’t increased?

  A: Because our costs have increased, and we need to cover those costs. If the rent increases to the point where it is not affordable for you, please get in touch. Our Money Advisor can help you make the most of your money, and check if you qualify for any additional income or benefits such as Universal Credit, which may help make up the shortfall.

  More Information

  If you would like more information on any of these topics, we have a wide range of information on elha.com , leaflets are available from our offices, or just drop us an e-mail or call in.