2007-02-21 rent setting.doc by niusheng11


									                                                                       Executive Group Item No.6

                                     Rent Structures – Starter Paper

1.  To inform the Housing Executive Group about previous research on national rent setting
    policies, and advise that the Scottish Executive is currently undertaking research and
    holding policy discussions on rent structures in social housing.

2.  Members are asked to consider and agree COSLA’s position on rent setting structures
    within local authorities for forthcoming discussions with the Scottish Executive.

3.  In England, in 2000, the government issued a Green Paper which included the objective
    to remove rent differences between Registered Social Landlords (RSLs) and local
    authorities. The Green Paper was part of a wider longer term package linking the reform
    of housing benefit, allocations and rent setting. In 2002 the Office of the Deputy Prime
    Minister introduced rent setting in England. Both local authorities and RSLs now have a
    common formula for rent setting.

4.    Currently, Scottish local authorities have autonomy to set the rents of individual
      dwellings to raise the total rent income required. ALACHO are clear that tenants do not
      regard rent levels as an issue. Some tenants are detached from rent levels because of
      the method of payment of housing benefit. The Welfare Reform Bill proposes to increase
      the number of tenants handling their own housing benefit and to extend the principle of
      tenant responsibility. Given tenants may be paid housing benefit directly, they may take
      more of an interest in rent levels.

5.    The retention of local discretion in rent setting keeps housing policy at the heart of the
      local community. However, national rent setting developments in England and housing
      benefit reform have led the Scottish Executive to initiate research and discussions on
      rent restructuring, prior to emarking on potential policy development

Evidence base
6.   The average local authority rent in Scotland is £46.65 per week in 2006-07, an increase
     of 4.2% on 2005-06, with a range of £21.12 between the highest and lowest rents.

7.    Scottish Executive research, Determined Differences: Rent Structures in Scottish Social
      Housing (2003), concluded there is scope for greater consistency in rent setting across
      social housing (or at least a need to establish a clear rationale for existing rental
      patterns). The research highlighted four areas for further consideration:
       i.   The nature and rationality of rent schemes and rent structures;
      ii.   The policies that determine landlords’ average rents;
     iii.   The process of rent reviews;
     iv.    Potential changes to housing benefit.

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8.    In 2006 the Scottish Executive commissioned further research, Development Options for
      Restructuring Social Rents. Part of the research required the modelling of the following
      policy options:
       Rents based on house prices;
       Rents based on earnings, considering options containing either a greater or lesser
           market value factor;
       Rents based on earnings.
      The findings will be available at the beginning of March 2007.

9.    Arguments used in support of national rent setting include an ostensible attempt to more
      fairly reflect the location, type and quality of tenancies and a supposedly improved
      choice for tenants. However, national rent setting also represents centralisation of yet
      another element of housing strategy, severely limiting scope for local responsiveness
      and local accountability.

10.   The Scottish Executive is currently running a series of housing policy development
      seminars asking:
       How do local authorities determine what level of rent is affordable?
       Do local authorities make a direct link between levels of rent and the quality of
         housing provided to individual households?
       Do local authorities seek to reflect tenant (or prospective tenant) preferences in
         terms of trading between levels of rent and standard of quality?
       How might greater efficiencies be achieved?

Scottish Federation of Housing Associations
11. Other partners are also less supportive of national rent setting. The Scottish Federation
     of Housing Associations, for example, consulted RSLs on the affordability and
     consistency of rents across the housing association sector. Eighteen of the 30
     consultation respondents did not support government intervention on rent setting.
     Sixteen respondents, however, agreed equity across the housing association and local
     authority sectors was desirable (although the majority thought it was not achievable).
     The Scottish Executive has also set up a Collaborative Forum on Social Rents with
     representation from COSLA and ALACHO. Forum members opposed any system to
     converge rents across local authorities, considering it politically unacceptable.

Cosla’s Proposed Position
12. To inform and support COSLA’s proposed position we will look at local and international
     evidence on rent structuring. The implications of rent re-structuring need to be
     considered against the broad spectrum of social policy objectives that local authorities

13.   Members are invited to consider and agree the emerging position that:

         Rent levels are best determined locally within the context of Local Housing
         There is no pressing demand for rents to be set nationally from tenants or providers
          – the agenda appears to be driven solely by Housing Benefit reform, centralisation
          and alignment with England rather than by improved service delivery and customer
         The number of local variables and level of fluctuation in terms of housing quality,
          market rents, demand, wage levels, and housing pressures, makes national rent
          setting untenable.
         Local Authority and RSLs’ long-term business plans, are all agreed on the basis of
          variable rent levels.
         The housing priorities identified by tenants and communities and championed by
          local elected members should drive the national as well as the local policy agenda –
          rent setting is not a concern.

14.   It is proposed that COSLA’s emerging position on rent setting is further developed and
      conveyed to the range of Scottish Executive-led officer groups as well as to the
      Communities Minister. Members are invited to agree this approach.

15. Social housing rent structures are on the Scottish Executive’s policy agenda. Members
    are advised to consider the key arguments and agree COSLA’s position.

Caroline Johnston
Policy Manager
0131 474 9259

February 2007

0131 474 9259

February 2007

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