Skyrocketing energy costs and inflation are directly impacting the operations of housing associations across Scotland with increased overheads forcing delays to maintenance services and the re-assessment of development programmes.

The drop in tenants’ incomes and living standards is another worry and associations are also bracing themselves for a rise in mould and damp issues as tenants reduce their use of heating systems to save on costs.

The energy price cap set by Ofgem from the beginning of October reached £3,549 per year for an average dual fuel household, an increase of 80% on the cap level in February.

Ofgem’s decision to revert to a quarterly price cap means that consumers and businesses are at risk of even more increases in January and April next year, with the energy regulator warning that the winter market for gas could see prices get significantly higher through 2023.

Caledonia Housing Association told Scottish Housing News that its gas and electricity prices “more than doubled” when its contracts were reviewed last year.

Director of people Barry Johnstone is concerned that a reduction in the level of planned maintenance and delays in procuring and delivering Caledonia’s programme is a “likely impact” of these increased costs.

He said: “We are undertaking detailed financial planning along with comprehensive stress testing of our key business plan assumptions. For each scenario, we are assessing business resilience and the mitigation measures which may be necessary.

“We have identified a number of key indicators related to key business activities which will be monitored more closely to determine what intervention may be required and when that would need to happen. We are prioritising the delivery of frontline services and the provision of support and advice to vulnerable tenants.”

Barry added: “Rising energy costs have had an impact on the high levels of inflation being experienced. We have seen large increases in our overheads, including the costs of providing our maintenance services and in the costs of delivering new build housing, affected by rising energy costs, inflation and interest rates.

“Through procurement exercises, we are seeing that the cost of some elements of planned investment does not offer value for money at present, with increasing instances where projects have to be re-procured or their specification amended to align with the programme of planned investment.”

Also high on Caledonia’s radar is the ability of tenants to meet rising food, energy and other household costs.

“The most likely impact will be on incomes and tenants’ ability to maintain their commitments – this will include rent payments but also very likely other household commitments such as food and other bills,” said Barry. “Rental income may potentially come under pressure as tenants are faced with balancing all of the demands on their household incomes.”

He added: “We also anticipate some increased maintenance issues such as increased levels of damp and condensation as tenants reduce the use of their heating systems to save on costs or as a result of inadvertent utility disconnections of some tenants on pre-payment meters.

“We are not seeing significant levels of concerns being expressed by tenants, however, we have seen an increase in contacts requesting assistance and referrals being made to debt welfare and advice agencies.”

Loreburn Housing Association said it also expects income from rents to be impacted and its repairs budget to increase as the winter conditions take their toll on its properties.

Gary Alison, interim director of property and development, told SHN: “The Association and, in turn thankfully, tenants are less impacted by our running costs as a business as we moved to an agile and community-based model, meaning we no longer have costly offices to heat and service. However, there is inevitably an impact through fuel to deliver services – for our In House Repairs service, for example, and of course, costs from suppliers and contractors are increasing.

“We obviously expect income from rents to be impacted, with increases in arrears as customers choose to heat over paying rent. In addition, if tenants do not heat their homes we face a rise in mould and damp issues which will then impact our repairs budget.

“On property component maintenance, increases in prices means a reduction in the number of planned component replacements in each financial year. Development programmes could cease if the costs of the projects are not supported with equally high grant rates, over and above current benchmarked rates.”

Indications of concern among social tenants were evident back in August when Langstane Housing Association chief executive Helen Gauld revealed that tenants had requested to have their gas heating turned off because they couldn’t afford the rising bills.

Gary has seen similar examples during the last few months at Loreburn.

“We are seeing concern among tenants, naturally,” he revealed. “Requests for new windows, doors, heating systems have increased and whilst we would of course like to meet these requests immediately, the reality is that this requires a long-term investment.

“We’re working with tenants to give them this assurance that they are being listened to and that their priorities are our priorities; but it will take time.”

Gary added: “We have installed in a limited number of homes, heat and humidity sensors along with energy clamps that assess energy consumption via the meter.

“This has flagged customers already in fuel poverty that we are supporting but in the most alarming cases, one customer is choosing to eat over heat and only has the fridge appliance switched on in the home, everything else is unplugged. We can see this to be the case through the energy clamp.”

As a provider of housing and care, Bield has a particular responsibility to ensure its services are not disrupted. The association has been looking to arm its tenants with any tools available to combat the crisis.

“Like all organisations and individual households, Bield is experiencing a considerable increase in energy costs for 22/23,” Liz Peacock, Bield’s head of development and sustainability, told SHN. “This has a direct impact on the operating costs of our offices and developments.”

Liz added: “Bield will do whatever is feasible to ensure our services are not impacted. We have an elderly customer base therefore it is essential that their health and wellbeing are at the forefront of our decisions and our services are maintained. Staff and other service users’ health and wellbeing is also critical to ensure services are delivered in accordance with our ethics and values.

“There has been a very visible indication that customers are concerned about increased energy costs and cost of living. It is essential that we look at energy efficiency solutions and offer support to customers to advise them on benefits they may be eligible for to assist with energy and living costs.”

Bield has formed an internal Energy Action Group which focuses on ways to save energy by implementing innovative solutions and offering advice to customers through various means such as posters, media posts, leaflets etc. Bield has also recently released its Energy and Environmental Policy which clearly sets aims and objectives to meet net zero in line with Scottish Government targets.

Similar work is being undertaken at Berwickshire Housing Association (BHA).

Chief executive Michelle Meldrum said: “BHA is doing everything we can to support our customers and colleagues as the rising cost of living takes hold and are prepared to channel resources to further expand and intensify the efforts of our specialised services related to tenancy sustainability and financial inclusion. These services provide the necessary assistance for customers who require debt management and financial support.

“BHA is also part of the Borders Housing Network, which has previously been successful in securing the Scottish Government’s Fuel Support Funds to help mitigate the rise in domestic energy costs. We hope to secure additional funding through the network to provide much-needed support to customers in the coming months.”

Earlier this year, Link Group launched a wide-ranging strategy to assist its communities which has been supported by cabinet secretary for social justice, housing and local government, Shona Robison.

A Link spokesperson said: “Our data shows more of our tenants are struggling with essentials such as food and fuel.

“For example, the number of tenants we supported to get emergency fuel support through HACT increased 300% this year, and we continue to distribute these emergency vouchers to people in need daily.

“We have also seen increased referrals to our advice services – this year, we have already supported 747 tenants with 1,586 matters to receive £850,900 in benefit entitlements and other essential financial support.”

There are other support mechanisms being used. Back at Caledonia, tenants are being provided with advice and support on energy use and welfare benefits as well as being signposted to other agencies that can provide advice and financial assistance.

Practical support and assistance such as the provision of energy-saving devices and LED lighting are being used alongside regular welfare calls and checks with vulnerable tenants.

Loreburn, meanwhile, has targeted energy efficiency investment in its homes.

Gary Alison said: “We have a long-term investment programme to improve affordability in the use of our homes. Last year we invested £1.13 million into homes, improving heating systems, and replacing doors and windows. We also provided cavity wall insulation for more than 600 homes through the delivery of a £1.2m grant-funded programme.

“We are also piloting a project on retrofitting and trying to gain a deeper insight into quantifying and costing the measures that will be needed to improve the energy efficiency of our older homes. For new build homes, we made a commitment some years ago to build to Passivhaus standard and tenants in these homes are now beginning to see these benefits in terms of their running costs.

“In the short term, we are setting up a cost-of-living working group to be able to react as challenges present themselves. One such area the group will focus on is ensuring we are signposting customers to support services that can assist them with their issues.”

Gary added: “Last year we were successful in a bid for grant funding to assist those living in fuel poverty and will continue to be active in seeking out any further opportunities this winter. We believe strong communications and our vision around solving these crises in the long term are key but nothing is going to soften the impact without putting money in people’s pockets.”

For Gary, there are multiple things the Scottish Government could be doing to provide assistance.

“Grant funding for whole house retrofit projects aimed at reducing heating demand would be welcomed. Possibly regionalised Escrows to manage the retrofit process,” he said.

“Though the challenges are significant and won’t resolve the issues faced by tenants this winter, we believe our strategic approach is proactive and will yield dividends far quicker than other RSLs who may still be at an early stage of addressing energy inefficiency of their ageing asset base.”

This sentiment was echoed by Bield’s Liz Peacock, who added: “Although we will do everything we can to soften the impact, Associations can only do so much. More intervention is required from the government to offer financial support for customers and for organisations to deliver big impact energy projects.”

Barry Johnstone has asked the Scottish Government to provide clarity on the application of the emergency rent freeze legislation beyond March 2023 before the middle of January next year and to extend the funding available for the Social Housing Fuel Support Fund to assist social landlords to provide support for tenants facing fuel poverty.

He said: “We appreciate that the Scottish Government took the decision to freeze rents this year until 31st March in response to the cost of living and energy crisis and we are aware that the removal of the energy cap next March will likely have a significant impact on households.

“We are monitoring the position closely as the industry awaits confirmation as to whether this emergency legislation will be extended into the next financial year. Until there is confirmation on this, it is difficult to plan with any certainty.”