A fair public sector rent rise

Monday, 12 November 2012

Minister announces Public Sector Rents to rise by inflation but that they will be more closely linked to the amenity values of the properties.

All Public Sector rents on the Island are calculated using the same pointing formula, based on floor area and basic amenity value of the property. The current formula is outdated and does not differentiate between new build and older properties.

There has been significant investment in Public Sector Housing over the last 10 years or more and it has not been reflected in the existing formula. This has led to inequity in rent charges and subsequent rent increases for tenants who have yet to see major improvement in their homes.

The Minister for Social Care Hon Chris Robertshaw MHK commented:

'There is considerable inequity within the current rent formula which is well over 20 years old and does not take account of the significant investment that has been made in public sector housing.

A rent formula that charges individual tenants on the size and quality of the property they occupy and the amenities that they access is a much fairer way of apportioning rent – if you have more you will pay more.'

The Department has taken the opportunity to combine the requirement to set the annual public sector rent increase with amendments to the rent pointing formula to provide an equitable method of targeted charges based on a property's amenity value.

This year the formula has been revised to take account of the improvement in the properties, and will include highly valued amenities such as off road parking, large private gardens, modern kitchens, etc in addition to the improved property layouts and thermal efficiency of new build property. Overall rent increases for tenants of older properties with limited amenities will be much lower than for tenants in new build energy efficient properties.

Reviewing the way that rents are calculated means that it is possible to apply an annual rent increase of just inflation (CPI) - 1.8%, in addition to the changes in pointing formula.

For example: (Please note these examples are based on current average public sector rents.)

When the amendments to the rent pointing formula are applied, the rent for a new build 3 bedroom property with a garden and off road parking will increase by around £16 a week and will cost in the region of £95 per week. This is approximately 40% of the cost of renting a similar property in the private sector where the cost is currently around £250 per week.

An older 3 bed property (not recently refurbished) with private garden and off road parking will have a rent increase of approx £7 and will cost in the region of £86 per week.

An older 2 bed flat (not recently refurbished) with no private garden or off road parking will have a rent increase of inflation of 1.8% only and will cost in the region of £63 per week.

The Minister also added:

'This exercise is the next step in providing an equitable and transparent rent charging system and it is a prerequisite to the ultimate introduction of Means Testing.'

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