Agenda item

Councillor Lesley Kelly, Cabinet Member for Housing and Public Protection, introduced the report

The report set a budget for the Council’s Housing Revenue Account (HRA).  It was noted that the position for 2012 onwards was different from previous years because the Government had enacted changes to the way in which Housing Revenue Accounts were set and managed, known as “Self Financing”. The report therefore introduced the Council’s first Self Financing Business Plan, as well as setting a budget for the first year of the Plan.

The HRA remained a ring-fenced account that was used to manage the Council’s own housing stock. The proposed budget would enable the Council’s Arm’s Length Management Organisation, Homes in Havering, to manage the stock to a reasonable standard for the time being, and to deliver the next phase of the Council’s Decent Homes Programme.

The HRA also enabled the Council’s retained housing services to be delivered to a reasonable standard. It further set rents, service charges and other charges for Council tenants for the year 2012/13. The Council’s main source of income to manage its housing stock was tenants’ rents. The Government controls rents by applying a formula called “rent restructuring”. It was reported that since the introduction of the restructuring system in 2002/03, the date at which council and housing association rents were expected to converge had been amended by the government to 2015/16.

It was noted that the Council had to meet the target rent by or as soon as possible after 2015/16. Until meeting the target rent, there was no avoiding the fact that the national rent formula requires tenants’ rents to increase by an amount above the basic annual increase amount of RPI (in September of the preceding year) + 0.5%. The government had, however, capped the steepness of the annual increase to no more than £2 a week above the RPI + 0.5% increase.

In 2011/12, the average rent in Havering was £74.44. Applying the formula of RPI (at September 2011) + 0.5% + £2, gave an increase of £6.86 a week, that is, 9.22%. The average rent in 12/13 would therefore be £81.30.

In response to concerns raised in respect of the 9.22% rent increase, the Cabinet member advised that Council tenants who received housing benefit would not be affected by the increase as it remained under the Housing benefit cap. For those Council tenants who did not receive housing benefit, a benefit assessment would be offered should tenants be significantly affected by the rent increase.

Reasons for the decision:

A decision was required to set rents and service charge for tenants of the Council in order to ensure that there was sufficient income to be able to manage and maintain the housing stock.  The Council must also adopt a Business Plan to demonstrate how it will meet its obligation to pay its share of the national housing debt."

Options considered.

Option 1: not to increase rents and service charges.  This was rejected as rising staff and building costs mean that it is important to maintain a healthy balance on the Housing Reveue Account.

Option 2: to set rents at lower than the guideline rent increase.  This was rejected because Havering's Council rents are the lowest in London, and rents are considerably lower than Government target rents.

Cabinet Agreed:

1.                  The Housing Revenue Account Budget as detailed in Appendix 1 to the report. 

2.                  The Retained Housing Service budget as set out in paragraph 5.8 of the report, including the addition of a Housing Occupational Therapist on a fixed term basis for two years, representing growth of £40,000 in 2012/13, to work exclusively on assessing the suitability of HRA properties identified for tenants and/or prospective tenants with a disability, and specifying the necessary works, thus better matching properties and minimising delays and void periods.

3.                  The base Management fee for Homes in Havering of £20.639m, as set out in paragraph 3.2 of the report.

4.                  To delegate approval of the Homes in Havering Budget and Delivery Plan to the Cabinet Members – Value and Housing & Public Protection, acting on advice from the Group Directors for Finance & Commerce and Culture & Community.

5.                  The detailed expenditure items in the 2012 – 2013 HRA Capital Programme, based on total resources of £34.338m, as presented in Appendix 2 of the report, and agreed to refer the Programme to Council for final approval for expenditure.

6.                  The proposed HRA Capital Programmes for 2013/4 and 2014/15, as set out in Appendix 3 of the report, and agreed to refer the programmes to Council for final approval for expenditure subject to release of Decent Homes grant by central government in those two years.

7.                  The detailed expenditure items in the funded HRA Capital Programme for 2013/14 to a limit of £15.78m based on the resources in the HRA Business Plan excluding the Decent Homes grant yet to be confirmed, as set out in Appendix 4 of the report, and agreed to refer the programme to Council for final approval for expenditure.

8.                  That the Council retain Abercrombie House for use as temporary hostel accommodation and allocate £490,000 from the 2012/13 HRA Capital Programme to carry out internal remodelling of the building beyond the Decent Homes obligations and to reconfigure the outside space.

9.                  That the average rent for Council properties owned by the London Borough of Havering be increased by £6.86, from £74.44 to £81.30 (9.22%) with effect from 2^nd April 2012, in line with the Government’s policy to restructure rents. This would mean in effect that rents were increased as set out in the table below:

10.              That the rent free weeks for 2012/13 be w/c 27 August 2012, the two weeks commencing 17 December 2012, and the week commencing 25 March 2013.

11.              That tenants’ service charges and heating and hot water charges for 2012/13 be increased or decreased as follows:

12.              That the service charge for homeless households accommodated in the Council’s hostels be increased by 6.1% to £23.33 a week.

13.              That charges for high and medium demand garages be increased by 2.5% and that rents for low demand garages be frozen.

14.              That support charges for mobile support for older people be increased by 6.1% as follows:

15.              That the Careline support charge for sheltered tenants be increased by 6.1% as follows:

16.              To leave the Careline support charge for community users unchanged to avoid two increases within 12 months as the charge was last increased in September 2011.

17.              That Telecare support charges be increased by 6.1% as set out below:

18.              To put in place transitional arrangements to correct the undercharging, by £4.18 a week, of tenants in the former Hornchurch mobile support pilot scheme, whereby the full charge would be gradually increased over the five year period 2012/13 to 2016/17 inclusive for the 13 tenants paying for this service; for 2012/13 this amounts to a weekly charge (52 weeks) of £0.84.

19.       To approve the Council’s Self Financing Business Plan as set out in Appendix 5 of the report.