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Senior councillors have agreed to adopt a new way of working out bills, which could result in rent increases for eight in ten council homes.

Caerphilly County Borough Council will now use a formula from the Joseph Rowntree Foundation (JRF) called the Living Rent Model.

Its aim is to work out affordable rents linked to people’s income. It does this using earnings data for an area from the Office for National Statistics.

In Wales, Cardiff is the only other local authority which uses this method.

The adoption of the policy means 83% of council-owned properties would see an increase in rent. But, Cabinet member for Housing, Cllr Shayne Cook, said this only applies to new tenants and current tenants would be protected from increases.

On average, council rent is currently 3.9% below what it would be under the JRF model.

Increasing rent using the JRF model would boost the council’s income by £2.4 million a year. That money would go into the Housing Revenue Account – which means it can only be spent back on council housing.

At the cabinet meeting held on July 13, the council’s head of housing, Nick Taylor-Williams, said: “Any potential revenue we can generate legitimately through rent increases will go in to providing better services for our residents.”

The rent policy was reviewed in line with the Welsh Government’s expectations that social landlords should be charging an affordable rent.

At a housing and regeneration scrutiny committee meeting on June 9, Mr Taylor-Williams stressed the county borough would still be an affordable area for rent – despite the proposed increase.

What will the changes look like?

Current tenants will not be affected by the proposed increase, as they are protected by current Welsh Government policy.

The current rent policy limits any rent increase for social landlords to Cost Price Inflation (CPI)  plus 1% – using the level of inflation from the previous September each year.

New council-tenants of two, three and four bedroom properties, such as flats, bungalows, and houses, will see a rent increase. However, rent for a one-bedroom property will be lowered under the new model.

Despite the JRF model calculating a lower rent for one bedroom properties, a report presented to Cabinet admitted that rents for these could instead be frozen.

The model states that single persons shouldn’t spend more than 28% of their income on rent.

Cllr Cook previously said: “It is true that adopting this model means we can benchmark against household earnings and allows flexibility in setting rents so that affordability is central to our decision making.

“Every year we review our rents in line with the limits set by Welsh Government and  the money gained from any rent increase will go back into maintaining our council housing stock, providing services for all our tenants and building new council homes which will tackle the high demand for social housing in our county borough.”

Based on All-Wales statistics for 2019/20, the report also stated that Caerphilly Council rents were the third lowest in Wales, but that Caerphilly was the fifth highest area for workplace earnings.

The cabinet unanimously approved the adoption of the policy.