Published on : Fri, 06 May 2005 00:00GMT
by : Lucy Andrews

A leading housing expert from Scotland warned that tenants may be in for a rude shock as huge rent hikes could be on the offing as council homes were now coming under a new landlord.

David Orr, the chief executive of the Scottish Federation of Housing Associations, said in a letter to the Communities Minister Malcolm Chisholm that rent restrictions would curb investments in the long-term.

Meanwhile, there were apprehensions amongst opponents of a housing association for Edinburgh, as they feared that the new body would levy ‘inflation-busting’ rent increases instead of what was promised by the local authority.

Orr also said in his letter that the guarantees to rent for tenants had to be confined to ten years in the contract to facilitate scope for a rent hike after that period. The letter read, “Indications are that rent increases that are inflation only may be unsustainable in the long term as costs increase. The balance of the evidence to date is that the rent increase clauses are unduly restrictive and do not take into account tenants’ views, changes in investment plans and priorities or the level of services offered.”

The anticipated stock transfer will see each council home in the Capital being acquired, with about £310 million of the council’s housing debt being paid off by the Treasury. Even Edinburgh housing chiefs will be open to using £2 billion in investment, which was not possible earlier.

Although these offers were appreciated largely in the Capital, a poll revealed that 14% of tenants opposed the proposal. A big "no" campaign by these protestors is underway, mainly led by the Edinburgh Tenants’ Federation who are strongly against the idea.

According to them, the new association will lack the accountability, which the present system had wherein councillors could be expelled by the ballot system in case of a problem. The convener of the Edinburgh Tenants’ Federation, George McKie, said, "We would be vociferously opposed to rent increases. We want rent guarantees strengthened, not weakened." However, Keith Anderson, Edinburgh City Council head of housing, acknowledged that a hike in rent levels would become essential after a period of ten years. He added that an investment strategy was being devised by the council for the new organisation so that good quality standards could be established by 2015.

He said, "We have relatively high rents and do not wish to add to the pressure of unaffordable rents over this period. For this reason the transfer price and investment plan needs to be based on rent rises no greater than inflation for at least the first ten years. Once the quality standard is delivered, the mechanism for rent rises thereafter should be based on discussion and agreement between tenants and the housing association. Ensuring rents remain affordable will be a key objective for the organisation at all times."