This policy is in line with the Housing Corporation Performance Standards about rent setting (Third edition, December 1997, Performance Standard D). In summary these are that we set rents:
that meet current and future costs and are below private market levels
that are affordable to those in low paid employment and minimise dependence on Housing Benefit
that are apportioned between properties by taking account of local market values, size, amenities, location and condition
Each registered social landlord is expected to:
be aware of private market rents for equivalent accommodation where there is such a market and take this information into account in their rent policy
define its policy on the level of rents that are affordable to those in low paid employment without HB. We should make no distinction in the rents or service charges paid by those who are receiving Housing Benefit and those who are not.
Method for setting annual rental income needed
The Co-op's rents shall be set as part of the process of drawing up the budget, and agreed at the February General Meeting.
The Co-op shall set affordable rents at levels which shall take account of the Co-op's projected costs, and ensure that these costs and a contingency fund are covered by rent income. The rents must cover the cost of:
maintaining and furnishing the properties
managing them e.g. wages and office overheads
future maintenance costs e.g. replacement of major items, and a small cushion for unforeseen events.
Service charges shall be set in line with projected service costs for the coming year.
Water rates and Council Tax shall also be collected with the rent, based on the amounts charged by Cambridge and Anglian Water and Cambridge City Council.
Rent setting and affordability
We will get information from Cambridge’s Rent Officer Service about average private sector rents for properties equivalent to Ash Co-op and about current local reference rents, an average of rents determined by rent officers and used when calculating Housing Benefit. Our rents should stay below both these figures.
Ash Co-op supports the National Housing Federation’s affordability policy that:
““Rents are affordable if the majority of working households taking up new tenancies are not caught in the poverty trap ( because of dependence on housing benefit) or paying more than 25% of their net income on rent”.
Each year, we will ensure that any proposed rents, i.e. rent plus service charges eligible for Housing Benefit, are the same as or less than the National Housing Federation’s indicator rents for properties of a similar size, unless there are urgent reasons why higher rents are needed.
The Housing Corporation requires that rent increases are limited to the Retail Price Index (RPI), currently around 3%, plus 1% unless there are good reasons why a bigger rent increase is needed. It is likely that we will need to increase rents by more than RPI plus 1%; this is partly due to small rent increases in the past . However, as long as our rents are still affordable, and we can show that we are increasing rents to ensure we meet our future maintenance needs, the Housing Corporation is likely to accept rent increases of more than RPI + 1%.
Cost based method for setting rent for each type of property
There are four type of property at Ash Co-op; 10 person, 6 person and 4 person houses and one bedroom flats. To set rents for each type of property at Argyle Street Housing Co-op
Property costs are split between properties according to their share of the gross floor area.
Costs for the replacement of some fixtures and fittings are split according to the number of tenancies for each type of property.
Management costs are split evenly between each member. (Amended GM 1.3.2000) Service charges for maintaining the grounds and Hut are also split evenly between all members with each tenancy contributing the same amount.
The costs included under each of the three categories (Property costs, fixtures and fittings and management costs) are given at Appendix 1. Budget headings may change from year to year but we should be able to include all headings under these categories.
Any surplus that is to enable us to keep our major repairs and cyclical maintenance fund topped up should be divided between tenancies as follows:
the proportion of the surplus likely to be spent on property costs (general maintenance, external decoration, internal decoration, flooring, major repairs) should be divided between tenancies according to floor area
the proportion of the surplus likely to be spent on fixtures and fittings should be divided according to the number of tenancies per property.
These proportions will be worked out by looking at the budget for relevant property costs and fixtures and fittings.
The increase to flat rents will be limited to half of what it would be under the cost based method for one year(1999/2000), and then the full increase will be introduced in 2000/2001. The shortfall for 1999/2000 will be divided equally between the 76 members in shared houses.
(Agreed by GM 24.2.99) Any shortfall in rent due to rent not being set until February be divided between the tenancies as follows:
Proportion of the shortfall likely to be spent on property costs is divided between tenancies according to floor area
Proportion of the shortfall likely to be spent on fixtures and fittings is divided according to number of tenancies per property.
Proportion of shortfall likely to be spent on management costs is split evenly.
These proportions to be worked out by looking at spending in the relevant Budget.