Council house tenants in Fife are likely to be facing a rent increase of at least five per cent.

Members on Fife Council's cabinet committee were told last week that anything less than a seven per cent rent increase next year will result in unspecified service reductions. 

In light of what is shaping up to be a challenging budget setting season, the committee agreed to conduct a survey during December and into January, asking tenants about rent increase options of five, six and seven per cent.

Tenants will also be asked about their priorities for housing services they wish to see protected.

The Housing Revenue Account (HRA), which is the account responsible for income and spending associated with the council’s role as a landlord, is looking at a projected £8 million shortfall for 2024-25 if rents are not raised or savings are not made. 

Dunfermline Press: An increase in rents is required to balance the Fife housing budget.An increase in rents is required to balance the Fife housing budget. (Image: Pixabay)

Councillors were told that the HRA is experiencing a “difficult financial situation” as a result of high inflation over the last two years. The council has so far managed the challenges, but a rental increase or cost savings must now be identified going forward. 

An SNP move to consult tenants on lower two and four per cent options was voted down, with the Labour administration leader David Ross commenting: “I think it’s unreasonable at this stage to bring in lower options. The reality is that setting rent at too low a level means significant cuts to services. 

Dunfermline Press: Councillor David Ross says the reality is that setting rent at too low a level means significant cuts to services. Councillor David Ross says the reality is that setting rent at too low a level means significant cuts to services.  (Image: Fife Council)

“We absolutely need to sharpen our pencils to make the service as efficient as it can be, but let’s not kid our tenants that we can keep low rents without a significant impact on services.” 

Councillors were told a six per cent rent increase would leave the HRA with a £138,000 budget gap, but a seven per cent increase would result in a budget surplus for the service. 

Council opposition leader David Alexander (SNP) said: “A seven per cent increase would actually give the HRA a surplus, it’s just ridiculous. A gap of £138,000 it’s not exactly a disaster. The HRA is under pressure, but so are rent payers.”

Fife’s head of housing services John Mills stressed that any surplus from a seven per cent increase would go towards funding HRA services and providing security for future years. 

And the council's housing and finance services also pointed out that any rent increase would only affect around a third of council tenants who are not claiming housing benefits or universal credit. 

“The affordability of housing rents will depend on the circumstances of individual tenants,” the services stated in a report. “Approximately 69 per cent of council tenants are supported through housing benefits or universal credit to pay their rent. A low rent increase would therefore not benefit the majority of tenants but would instead benefit HM Treasury.” 

Councillors were told that there is also a £2 million rent support fund available for tenants struggling to make rent payments. 

A decision on the level of rent increase will be made in February, and will take into account the results of the survey of tenants.