Rugby Borough Council house reform will bring rent rises

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RENTS could rise by five per cent as Rugby Borough Council moves a step closer to buying back properties from central government.

It is estimated that the council will need to take on £73.4m in debt when the move takes place.

In common with all councils that still control their housing stock, the council has to make a one-off payment to buy itself out of the national funding scheme for council housing.

While the council has no choice but to do so at the price quoted by government, it will mean that the council can invest all of its rents in future in repaying the debt and continuing to improve the council’s homes.

At present, central government takes a ‘cut’ of tenants’ rents which goes up year-on-year: it is £4.5m in 2011/12 and will be £5.4m in 2012/13.

Tenants of Rugby Borough Council are almost certain to see their rent increase over the next five years to pay off this debt whilst meeting the Government’s requirement to make the cost of housing association and public sector rents more equal over a five-year period. Government will provide the final debt figure in January 2012.

Cllr Leigh Hunt, Rugby Borough Council portfolio holder for Sustainable Inclusive Communities, said: “Whereas the council understands that a rent increase in these difficult economic times would be difficult for many people, we must set rents at a level that will reduce our debt costs and allow us to invest in council homes.

“Our rents are still significantly below market rents in the private sector, which are also rising.”

Cllr Hunt added: “Government’s November estimate of the debt is higher than its last one, and although the final rents for next year will not be set until full council meets in February, when the final figure will be available, my advice to tenants is to prepare for further rent increases.”