More than a quarter of Brentwood council tenants are living in poverty as the level of arrears has reached a record high, a council meeting has heard.
And that could get higher still if Brentwood Council chooses to impose the maximum rent increases it is allowed under Government rules.
From April next year council tenants may be facing harsh increases of more than 10 per cent. But if the council chooses not raise the rent that will leave its housing revenue account stretched given the inflationary pressures placed on it from its maintenance and capital expenditure commitments.
Brentwood Council says the level of rent arrears that stands at £817k is indicative of how the cost-of-living crisis is affecting its tenants who are struggling to maintain their finances.
There has also been a significant increase in the number of requests for financial advice and assistance and applications for discretionary housing payments (DHP) being received.
A review has predicted that up to 26 per cent of Brentwood Council tenants could be classed as ‘in poverty’ with a disposable income of less than £2 per week.
A report adds that high-level debt remains a problem and the reduction is being hindered by the courts either refusing enforcement against suspended court orders or delays in court hearings being listed.
The council says extra pressures are likely to be felt whatever the council chooses to increase rents by – which is normally CPI plus one per cent. From April next year rents could technically go up by around 10 per cent.
Councillor Tom McLaren (Cons, South Weald) said: “I’m distraught by that, I’m stunned and I’m very concerned about the impact that’s going to have on our tenants.”
Ian Winslet, strategic director at Brentwood Borough Council said: “The good thing, if there is one about the government’s rent formula, is it’s a maximum.
“So the council doesn’t have to apply it, it can’t go over it but it doesn’t have to apply it and so in the end the council through its budget setting processes can decide what rent increase to apply.
“So what we’ll be presenting as I say is a kind of a stress-tested position which shows what the housing revenue account business plan would look like without a rent increase at all, what it would look like with the full increase and what it might look like perhaps with an increase that we applied last year which was 4.2 per cent or something like that.
“So I think there’s lots of flexibility within the rent model or the rent regime to apply what we think is reasonable and consistent and is affordable by Brentwood Council tenants.
“But we don’t have to apply the full formula rate so it’s in our hands. What we’re going to be doing is the work upfront so that we can offer members through that budget setting process some scenarios to choose from.”
He added: “The way in which rents are raised each year is against the government formula which is effectively CPI plus one per cent based upon the September CPI figure.
“Now that could be huge this year and so that leads us to a point where we’ve got to think long and hard about the way in which we might be presenting through the budget round, what the rent increase may look like because it will have a fundamental impact on individual residents.
“Although we may not be able to charge the full amount we will pick up the cost of the full amount of inflation because we’ve got a maintenance team we’ve got a capital program and we’ve got a new homes delivery program.
“So we’ll be coming back at some point through the budget round to give members a stress-tested view of what the impact is going to be on the housing revenue account but also to make some choices.”