That means the average rent will rise by £2.05 per week, although about half of all tenants receive housing benefit or Universal Credit so will be protected from the increase.
At a meeting of Falkirk Council, members heard that it was legally required to make sure that the cost of providing council housing is self-financing, so a three per cent rise was necessary to cover the cost of maintaining houses and building new ones. And as the council announces a £316 million investment programme, the report also makes clear this rise will almost certainly be followed by a similar rise in years to come.
A three per cent rise, the council says, will allow it to make improvements to around 8000 houses and provide an additional 200 homes per year.
Councillor Gordon Hughes, the SNP’s housing spokesperson, said: “We asked our tenants their views on a range of options for a rent increase which allows us to invest and improve our tenants’ homes. We have agreed a three per cent increase which will keep our rents amongst the lowest in Scotland.”
But councillors also also heard warnings that as welfare reforms are implemented and economic austerity continues more tenants could find they were under financial pressure.
As more tenants move to Universal Credit, it is likely that rent arrears will rise.
Councillor Jim Blackwood, Labour’s housing spokesperson, said his group recognised the need to increase rents to continue investing in housing stock.
He then asked what was being done to address the problem of rent arrears.
Housing manager Kenny Gillespie told councillors that in Falkirk rent arears are improving compared to the national picture and the housing team was working on an early intervention strategy, giving tenants support where needed.
“The key thing is to make contact quickly if they fall into arrears and get them into a repayment plant and keep in contact. It’s when tenants ‘drop off the radar’ that we experience difficulties,” he said.
“We also have to bear in mind that tenants who have rent arrears will more than likely have other forms of debt.”
The meeting heard that Falkirk Council had asked tenants for their views on a range of options – as it is obliged to do – and received 1463 responses to the 16,500 questionnaires sent out.
It found that 655 of those who responded favoured a two per cent rise; 421 tenants agreed with a three per cent rise; and 241 people thought a four per cent increase was acceptable.
The consultation found the main areas of tenant dissatisfaction were about the condition of things such as doors, windows and kitchens.
Councillors heard that Falkirk has the sixth lowest rents in Scotland and the seventh highest level of repairs and improvement expenditure.
Mr Hughes said: “As the Housing Revenue Account must be self-financing from rents, a three per cent increase will maintain housing investment levels to ensure that our stock meets housing standards.
“It also delivers a programme of additional affordable homes to help meet demand.
“However we must also recognise that as welfare reform and economic austerity continues, tenants will experience further financial pressures increasing the likelihood of possible increases in the levels of arrears.”