Midlothian Council has outlined plans to deliver more affordable homes to meet increased demand as councillors agreed to raise housing rents by 3% to help fund the investment.

The rent increase, which was agreed at a council budget meeting yesterday, will come into effect from April 2019 and will also go towards ensuring that existing stock is upgraded to comply with current standards for quality and energy efficiency.

The local authority has reached a significant milestone in surpassing 1,000 new build council homes built since the start of the new social housing programme in 2006. Despite this success, the level of affordable housing need is growing with nearly 5,000 households currently on the housing list, including over 1,000 homeless households.

Head of housing services, Kevin Anderson, said: “The increase in rents is to address the increased demand for more affordable council housing to be built. The increases are required in addition to continued grant funding from the Scottish Government for new building.

“It is beneficial to agree a future rent setting strategy early in 2018 as this will directly influence sites and investment for new build council housing. In addition, tenants of new build council homes which are now over 10 years old, require certainty of the arrangements for the convergence of their rents with that of tenants of the existing housing stock.”

As part of Midlothian Council’s commitment to involving tenants and other service users in the management of housing services, it undertook a consultation on the future rent setting strategy before making a recommendation on the rent charges for the period 2019/20 to 2021/22.

This consultation revealed that 95% of tenants and applicants who responded support further development of new council housing. Tenants and housing list applicants were asked to select their preferred option for annual rent increases for the next three years. They were also advised what impact each option would have for future investment in council housing in Midlothian. An increase of 3% was the most popular choice with 56% of respondents selecting this option.

The council’s most recent Tenant Satisfaction Survey, undertaken in 2016/17, recorded that an increased majority of respondents (82%) were satisfied their rent provided good value for money.

In December 2015, Midlothian Council agreed to increase council house rents by 5% per annum for the three year period between 2016/17 and 2018/19. Consequently all council house rents will rise by 5% from 1st April 2018.

In agreeing a budget for 2018/19 yesterday, the council addressed a £10.43 million shortfall and provided up to £201.5m for spending on services.

The overall savings package will result in the loss of over 217 posts across the council, though an increase in early years provision and care will also see new posts created.

Measures agreed in the budget also included a 3% Council Tax from 1 April 2018.

A number of the savings proposals put forward by council officers as part of a package of measures to meet the growing budget shortfall were rejected, including £4.62m in adult social care savings planned for the next four years and the proposed transfer of welfare rights and advice services.

Two planning officers posts which were to have been lost as part of the savings will now be retained, with costs to be met from developer contributions.

Over the next four years, the council plans to carry out a fundamental review of the services it provides and the way in which it provides them, recognising the ongoing financial challenge.