Trying to find the right balance for our annual rent increase has been particularly difficult over the past few years, even more so this year.

Whilst costs have gone up over the last few years, our rents have come down in real terms. They are over 9% lower than if they had gone up with inflation, as the table below shows:

On top of this, our Key Tenant Rent Discounts went up last year too, making our rents even lower in real terms.

We aim to ensure that we limit our rent increases to no more than inflation + 1%. We would have been able to do this again this year, but the Employers National Insurance increase announced in the UK Budget has a big impact on us, so this year’s increase is proposed to be inflation + 1.5%, a total of 4.9%.

We are acutely aware of the impact rent increases have on our tenants, but we need to make sure we charge enough rent to continue to manage, maintain and invest in our homes into the longer term.

We have kept costs down and improved our services by introducing My Home, and this year, more tenants have switched to paying their rent by Rent Collector, our new App which makes paying rent easier and quicker whilst reducing our administration costs and transaction charges.

We remain the only landlord in the UK offering monthly Rent Discounts through our Key Tenant Scheme, and over 87% of our tenants are now getting a monthly Rent Discount. We know that for many of our tenants getting higher Rent Discounts reduces the rent they pay, and so setting the right Rent Discount levels for us is just as important as getting the balance on rent level right too.

This year, we’re adding even more discounts by offering Housing Perks to all our Bronze, Gold and Platinum Key Tenants. Just buying household essentials using these new discounts should be enough to wipe out this year’s rent increase, and we hope our tenants save much more than this overall.

Our Rent Increase Consultation is your chance to let us know if you think our rents are good value for money, and please, make suggestions if you have ideas about how we can improve our services.

Do you agree with our approach this year? Are you happy with our new, improved discounts, and are you going to use them?

Please let us know what you think by Friday 24 January 2025.

Our Homes

We own over 1,400 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 29 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 (although the 9.2% real terms reduction over the last three years has helped to address this), but this is of course remains 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 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. We use the October figure (published in November each year) as our reference point. October 2024 RPI inflation was 3.4%, so unusually our proposed increase this year is inflation + 1.5%.

Why is our Proposed Rent Increase 4.9% in 2025?

When we started considering our Rent Increase proposal for 2025, we were confident that we would be able to keep our increase below inflation + 1% once again in 2025. Unfortunately, the UK Budget unexpectedly announced additional Employer’s National Insurance contributions, which hits both ELHA and our maintenance company, R3, hard. As rents make up more than 90% of our income, we have no option but to pass this additional cost on as part of our Rent Increase.

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 each tenant depends entirely on what the contractors charge us for providing these services.

Costs can go up or 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.

We only receive Scottish Government grants 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 normally 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, and so on
• Cyclical maintenance - things like external paint work and clearing gutters

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 the legal requirement to upgrade smoke alarms and carry out electrical safety inspections.

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 and Home Energy Advice & Housing and Community Outreach Services, legal and audit services and more.

Loan Interest & 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 must 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 3,500 families registered for housing with us at any one time, and currently only house around 80 of them each year from vacancies arising within our existing homes), we hope to continue to build new properties. Loan costs have risen significantly with the recent rises in interest rates.

Our Performance

For more information about our performance, please visit our Performance 365 microsite.

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 & Rent Discounts

Our Key Tenant Scheme is unique in UK housing, and we remain the only Housing Association offering monthly cash Rent Discounts to all our tenants.

All our tenants, including tenants on Universal Credit or Housing Benefit, are eligible for our Key Tenant Scheme 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).

87% of our tenants receive some form of discount; £10 each month Bronze Key Tenant Discount, £20 for Gold Key Tenants and £30 for Platinum Key Tenants, meaning a maximum annual Rent Discount of £360.

So, if you are one of the 13% still not getting monthly 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 2025 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 & 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 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. 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.

Last year, we introduced a new Housing & Community Outreach service providing intensive Housing Support to both new and existing tenants who may struggle to set up home or maintain their tenancy.

Housing Perks Discounts

We’ve now added even more discounts in hundreds of local shops and retailers to our Key Tenant Scheme, and all Bronze, Gold and Platinum Key Tenants can access these savings straight away!

It’s really easy to access the new discounts, they’re simple to use and they quickly add up. So much so, that just by buying a few essentials, you can save more in new discounts than we’re proposing to increase your rent by, as the table below shows.

Money & Home Energy Advice Service

Since 2010 we’ve been offering independent Money Advice services for our tenants, which we expanded in 2020 to include Home Energy Advice. This service quickly proved its usefulness and saves an average of just under 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 an average of almost £0.5m every year in additional income). Our service has been so successful that we brought it fully in-house in 2024, meaning we can now help more tenants each year than ever before.

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 October each year) plus 1%. Unfortunately, this year, we are having to propose an increase on inflation + 1.5% (we did not expect to have to do this, but the announcement of the increase to Employer’s National Insurance in the UK Budget means we have to cover these unexpected additional costs).

All of the responses we receive to our consultation, including all comments made by our tenants (in full), are given to our Board to review, before they agree the coming year’s Budget and Rent Increase.

Our Board 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

* The April 2021 increase was slightly different. Inflation was 0.9% and so a normal increase would have been 1.9%. Instead, a £5 flat rate increase was applied which, on average, was equivalent to 1.2%. However, 82% of our tenants saw this matched with a new or increased Rent Discount of £5, so saw a Rent Freeze. Overall, this resulted in an average Rent Increase 0.2%.

** The Rent Increase in April 2024 was a 7.1% increase (which was the October 2023 inflation figure of 6.1% plus 1%), matched with an increase to all Key Tenant Scheme Rent Discounts, which reduced the net Rent Increase to 6.07%, just under inflation for all tenants receiving Rent Discounts.

Our Key Tenant Scheme Rent Discounts can reduce your rent by up to £30 every month.

We remain the only housing association offering Rent Discounts in the UK, so use your unique opportunity to reduce your rent – and don’t forget that tenants receiving Housing Benefit or Universal Credit are allowed to keep their Rent Discounts in full.

If you are already receiving a Bronze or Gold Key Tenant Rent Discount, now is the time to upgrade further. The table below shows the difference upgrading can make. For a tenant not currently receiving any Rent Discounts, upgrading actually results in a Rent Decrease of 0.8%. Or, for a Bronze Key Tenant, upgrading to Platinum reduces the increase to 1.1%, whilst upgrading to Gold reduces the increase to 3%, well below inflation.

So, what are you waiting for? Just login to your My Home account and click on the Key Tenant Scheme box to find out more.

The table shows the increase to the average monthly rent of £524.20

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 (see Introduction), 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

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 £30 every month (or £360 extra every year) certainly helps

We are also very interested in expanding our Home 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. We have introduced Healthy Happy Home Checks to try and find ways to help a bit more.

Finally, whilst thankfully a distant memory, the Coronavirus pandemic showed many of us the benefits of the digital world, and lots of people gained new digital skills as a result of it. Just a few years 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 all faced during that time, 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.

In this consultation, we are using the October 2024 RPI figure (published on 20 November 2024), of 3.4%, as this is the closest published figure to our Board meeting which agrees the level of increase to be consulted on.

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 £1.30 each week, and a property had 80 points, the rent would be £104 each week. Full details can be found in our Rent and Service Charge Policy which is available to download from elha.com HERE.

Please note that LSVT property rents are based on historic rents set by Scottish Homes. More detail on our approach to rent setting is in our Rent and Service Charges Policy.

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. We 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.

This year’s Rent Increase is higher than it otherwise would have been because the UK Government unexpectedly increased Employer’s National Insurance costs in the Autumn Budget and, unfortunately, we have no other option but to pass these costs on to our tenants.

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.

Your feedback on these proposals is important to us. To let us know what you think, please complete your Feedback Form by Friday 24 January 2025.