Council tenants are set to be hit in the pocket after Gateshead councillors voted in favour of a rent increase.
This comes after they considered a report at Tuesday’s cabinet meeting that stated Government policy enables rents to be increased up to the Consumer Price Index (CPI) for September plus an additional 1%.
The document proposed an increase of 4.1% which would bring social housing rents in the borough up by an average of £3.31.
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Members voted to approve the increases at a full council meeting on Thursday and they are set to kick in this April.
But, Liberal Democrat Coun Ron Beadle said his group was against the charges, saying the rises would be a blow to residents who have already had a tough year.
He said: “We debated this and we think at a time of absolute crisis for our communities we don’t see the argument has been fully made for a CPI plus increase.
“In the main report we’re told, rightly, that the rent standards allows us to do it, but that isn’t a reason why we should do it.
“We think the argument for a CPI increase might be understood by people but CPI plus 1% for a large number of residents, that’s more money out of their pockets and into the council’s pockets when they can ill-afford it.
“We think the argument just hasn’t been made properly. I think we should be responding to what we all know is going to be a terrible year for our residents and going to CPI plus is not the way to do it.
“That argument that we need to raise the extra income so that we have it in future could be made if there was no limit, potentially it’s an argument for a principle that says ‘take as much money as we want from people’ and that surely isn’t a good argument.”
Labour Coun John Adams, cabinet member for housing, said the rent rises are needed after years of Government cuts.
He added: “This is a decision we have to take. Ideally we wouldn’t have to put up rent but realistically we don’t have much choice.
“This is what happens in a local housing field after years and years of austerity and a right wing Government in London imposing obligations on us which of course was supported by your party for many years.
“For many years the council was forced to have a CPI minus 1% increase in rent from 2015 – 2020.
“That means year after year tenants received a cut in the rent that they paid and increases that we have to make today take us back to the 2015 level.
“The Housing Revenue Acdcount (HRA) is in a very difficult position financially we absolutely need to put the HRA revenue account for housing on a sustainable basis.
“We cannot see a situation in the future where it tips over and we’re not able to provide the service we need for our tenants.
“Three out of four of our tenants receive Universal Credit or Housing Benefit so the poorest are protected from this increase.
“The HRA must be protected otherwise we won’t be able to provide housing in the future and maintain our housing stock to the level we would like.”
Out of the 18,750 “live dwellings” 5,598 tenants have to pay mandatory service charges and 2,218 tenants take up discretionary services.
These tenants could see a change in their service charge depending on where they live and what services they pay for.
The report stated that Government rules mean that local authorities have to prevent debit balances accruing in their Housing Revenue Accounts, therefore, the council’s business plan allows for £3m to held in its HRA.
It said: “Council agreed the Housing Revenue Account (HRA) 30-year Business Plan on 18 November 2021.
“Overall, the HRA Business Plan is fully costed and does not breach the minimum £3 million balance during the life of the plan (30 years).
“However, to incorporate all the cost pressures and anticipated capital investment, including new social housing stock, borrowing will need to rise significantly above the current levels.”
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