MARGARET BLACKWOOD HOUSING ASSOCIATION

RENT AND SERVICE CHARGE POLICY 1. 1.1 Policy Statement This policy is applicable to almost all the Associations housing stock the one exception relates to housing which is included in a registered care package. There are various tenancy types within the housing stock and this policy sets out a structure of rent setting for these different types. As a Registered Social Landlord, the Association aims to operate a rent and service charge policy which results in charges which are equitable and consistent across its housing stock, meet affordability levels and are comparable with similar provision by other housing providers. An essential requirement of the policy is that it ensures that rental income covers costs. Principles The Associations rent and service charge policy is under-pinned by the following principles: 2.1.1 In setting rents for its properties, the expected rental income should cover in full the cost of loan repayments and interest charges, voids, management and maintenance costs, major repairs, and other contractual obligations. 2.1.2 The rent structure should be justifiable, based on clearly defined criteria and capable of being established objectively. 2.1.3 The charges should be consistent, reflecting the amenities available. 2.1.4 The rents set should be affordable to tenants using a recognised measure of affordability. 2.1.5 The rents should be comparable with similar provision by other housing providers. 2.1.6 Service charges should cover the costs of providing defined services which are additional to housing provision.

1.2

2. 2.1

Key Operational Framework 3. 3.1 Rent Setting Structure The main objective of the rent structure detailed below is to determine the rental charge in an equitable way for each type of property, irrespective of tenancy type, first let or re-let. It is a method of apportioning the total amount of required income amongst the different property characteristics of the housing stock.

3.2

The rent level for each property is set according to a points system which allocates points in accordance with seven criteria:
Page 1 of 5

property type special design heating type property size location/amenities special features property status

3.3

The number of points which each criterion attracts is detailed in the Points Matrix at Appendix One. Using the rental points matrix, points are given for each criterion and a points total is calculated for each property. The rent for each property is calculated by multiplying the number of points by the rent per point. The monetary value of each point is a calculation from the total income required to meet costs. In order to ensure consistency of approach, any variation to the weighting of points must be authorised by either the Associations Housing Services Director, Finance Director or the Chief Executive.

3.4

3.5

4. 4.1

Service Charge Setting Service charges are payable by most tenants along with their rent and cover the cost of providing additional services over and above the provision of the house. In calculating the amount to be charged for each service, the Association divides the total cost of providing that service by the number of tenants who receive it, so that all tenants are charged the same amount. By spreading the cost amongst all tenants, everyone is protected from any unusually high spend which occurs from time to time. A 1% surplus will be maintained for those service charges where there are likely to be significant fluctuations and such a surplus will cushion the impact for tenants in future years. Rent and Service Charge Reviews The different tenancy types amongst the Associations tenants require different review processes and these are detailed below: 5.1.1 Scottish Secure Tenancies Scottish Secure Tenants are subject to an annual rent review on the first of April each year. Increases to be applied to the basic rent (excluding service charges) will be based on the Retail Price Index (RPI) at the closest date available for the December Board meeting, plus 1%. Should the Association require to implement an increase greater than RPI plus 1% in order to meet its costs, this will only be applied following consultation with tenants and approval by the Board of Management.

4.2

5. 5.1

Page 2 of 5

A small number of rents have yet to be brought into line with the points system over recent years these lower rents have been increased at a greater rate than RPI plus 1%. Such increases will continue until all rents meet the relevant points levels. The rate of increase which will be applied is 5% of the current rent or one tenth of the difference between the current rent and the points rent level whichever is the greater. This increase will be in addition to RPI plus 1% being applied to these rents. Where there is a change in tenancy, the rent will change to the points level for the new tenancy.

5.1.2 Fair Rent Tenancies Fair Rent Tenants have their basic rents set on a three-yearly basis by the Rent Registration Service (RRS) which is independent of the Association. The process of re-registering the rent every three years involves the Association making an application to the RRS and in doing so the Association will apply for rents in line with its rent setting structure detailed above but also taking account of the fact that the rent will not be increased again for three years from reregistration. In order to deal with the situation where the Private Rented Housing Panel (PHRP - formerly the Rent Assessment Committee) has set rents in excess of those asked for by the Association, it is proposed that the Association applies the principle of using the points rent for the property plus three years percentage increases. This principle would apply unless the PHRP sets a rent lower than this calculation (the Association cannot legally charge a rent higher than that set by the PRHP). Such rent setting decisions will apply until the rent is again re-registered after three years or until a change of tenancy. 5.1.3 Shared Ownership Housing Shared ownership rents are calculated on the same principles as followed for rented properties, that is, points are awarded according to specific property criteria. In recognition of the fact that sharing owners are responsible for carrying out all maintenance works to their property, an annual sum for maintenance is deducted from the rental costs. Shared ownership rents are reviewed on an annual basis at 1 April each year and increases to be applied will be calculated by using RPI at the previous April, plus 1%.

5.1.4 Service Charges Service charges will be reviewed on an annual basis and any changes will be implemented on 1 April each year for all tenancy types (this includes service charges to fair rent tenants except where the rent officer has registered the charges as non-variable). In exceptional circumstances, service charges may be reviewed at other times during the year in accordance with requirements of the tenancy agreement.

Page 3 of 5

The majority of tenants pay for more than one service in their service charge and the Association will provide tenants with a breakdown of charges for each service received along with notification of any change to the charges.

6. 6.1

Tenant Consultation In any rent and/or service charge review, tenants will be consulted on the proposed changes in line with legislative requirements and the Associations Tenant Participation Policy. Affordability The Association aims to provide housing at costs affordable to tenants. Affordability will be monitored annually using data supplied from SCORE for new tenants in that year. In addition, the Association will carry out a tenants income survey every three years, commencing in 2005, to measure rental costs in relation to tenants income. Benchmarking The Association will participate in a benchmarking group to ensure its rents are comparable with other landlords in its peer group. Review This policy is due for review in December 2007 unless legislative or Association changes prompt an earlier date.

7. 7.1

8. 8.1

9. 9.1

Page 4 of 5

Appendix One POINTING MATRIX Property Characteristics Property Type Rent Code PTBU PTFC PTFO PTFS PTST SDAD SDNS SDWC CHEL CHGA CHLP CHOF HS11 HS21 HS32 HS42 HS43 HS53 HS54 HS63 HS64 HS74 HS84 HS85 HSDB HSSB LAAA LAHA LALA OFBR OFCO OFGA OFKD OFOG OFRP OFSR OFWC OFCDE PSGN PSRH PSSN PSIH Description Bungalow or detached House Flat off corridor Flat own door Flat common entry Semi detached or terraced Ambulant Disabled (Mobility) Non Disabled Wheelchair Central Heating Electric Central Heating Gas Central Heating Liquid Petroleum Central Heating Oil Fired 1 person x 1 bedroom 2 person x 1 bedroom 3 person x 2 bedroom 4 person x 2 bedroom 4 person x 3 bedroom 5 person x 3 bedroom 5 person x 4 bedroom 6 person x 3 bedroom 6 person x 4 bedroom 7 person x 4 bedroom 8 person x 4 bedroom 8 person x 5 bedroom Double bedsit Single bedsit Average Amenity High Amenity Low Amenity Extra bathroom Car port Garage Separate kitchen diner Own Garden Remote car port Extra shower room Extra WC Communal door entry Points 10 -2 2 0 5 2 0 5 6 14 36 27 100 110 125 135 140 150 155 160 165 175 185 190 105 95 2 5 -5 1 2 5 1 1 1 1 1 4

Special Design

Heating Type

House Size

Location / Amenity

Other Features

Property Status

General New Build 0 Re-habilitated 0 Sheltered new build 5 Individual Home purchase discretionary Total Points

Annual Cost per point 2007/2008 = 22.19

Page 5 of 5