Question

Answer

Q. Why has RCHA decided to put this increase in place now?

Following a recent independent review of our Factoring Service, it has become clear that the service is running at a loss as we are not charging enough for our annual Management Fee.

You are a Housing Association, and a Charity why is it so important that your Factoring Service does not run at a loss?

Our Factoring Service is not part of our Charitable status and needs to be financially viable and sustainable in line with the Scottish Housing Regulator guidelines.

Why is the increase so large and why are you applying it now?

The recent review of Factoring has more accurately highlighted the financial performance of the service and this needs to be addressed as a matter of urgency to ensure that our RCHA tenants are Not subsiding the Factored Owners. Any such cross subsidisation is Not permissible under the Scottish Housing Regulator guidelines.

The service has been running at an average loss of £49,325 each year, for the last 3 years and this increase is overdue.

Will this be the last increase in the Management Fee?

The stepped increase we are introducing in 2025 should ensure that the service is in a sustainable position going forward. We do not anticipate that an increase approaching 62% will be necessary in future years. However, the Association will need to ensure that it charges all owners the actual cost of providing the Factoring Service and this is the criteria we will use for setting all Management Fees in future.

How is your annual Management Fee arrived at?

We take account of all the staffing and associated costs for providing the service. Not just Factoring staff but including the support supplied by other parts of RCHA such as the Maintenance, Housing and HR Teams, along with input from our CEO and other members of the Senior Management Team. These costs are then apportioned across all Factored owners with RCHA.

This process is governed by the Scottish Housing Regulator who insist that the actual costs of providing the service need to be recharged to all owners receiving the service.

What alternatives do I have if I am not happy with this increase?

As outlined in our recent letter, if a majority of owners at each property votes for terminating the Factoring Services of RCHA then the arrangement can be brought to an end. If enough people vote through a change of Factor, then you would need to supply us with 3 months advance notice that this is required.

Why is our Buildings Insurance charge going up by almost a £1 per week?

The Association is Not the actual insurer and we always arrange your Buildings Insurance through a reputable Broker (in this instance Howdens) We do not make any charge or profit for arranging the Insurance and apply the cost of the premium, in 2 amounts within your 6 monthly Factoring invoice.

The insurance Sector is becoming more difficult in recent years with fewer Insurers in the marketplace willing to take on Housing Associations and/or large number of Factored properties.

We believe that Howdens have secured a competitive cost (with aligned increases in the level of cover for re-building your property) for the 2025/26 financial year and this will be reviewed once again when the Policy is up for renewal in April 2026.