Agenda item

Councillor Damian White, Cabinet Member for Housing, introduced the report

Cabinet was informed that the report set a budget for the Council’s Housing Revenue Account (HRA) and HRA Major Works Programme.  From 2012 the position of the HRA had changed from previous years because of the introduction of a regime, known as “Self Financing”.  An update to the 30 year HRA Business Plan was provided.

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 to manage that stock to a reasonable standard and to complete the Council’s Decent Homes Programme.  It further set rents, service charges and other charges for Council tenants for the year 2015/6.

The Housing Revenue Account was sound and was able to invest in its stock and develop new homes over the coming three years.  Due to a recent change in the Government’s rules on rent increases however, the former system of rent restructuring was being abolished in 2015/16 and future rent increases were designed to be limited to no more than the Consumer Price Index (CPI) + 1%.  

The Council planned to move to the new system in 2016/17 but had to take the opportunity which remained in the current year, to move its rents to target rents immediately.  This would remove the inequality between properties that currently existed. 

At present it was possible for identical properties to have different rents, because of the transitional nature of the rent restructuring plan.  By moving immediately, in one year, to target rents, this inequality would be eliminated.  All rents would be at target rents; additional rental income would be available to invest in the housing stock and in new homes and future rent increases for the next 10 years would be in line with inflation pressures as expressed by the CPI. 

In addition, if the Council did not move its rents to target rents, this opportunity would be lost and a regime of CPI + 1% - if applied immediately - would have lost the Council’s Business Plan £100m over the life of the Plan.  Despite this level of rent increase, Havering’s rents remained the lowest in London, during the year 2014/15.

Reasons for the decision:

The Council is required to set the housing rent, service charges and a budget in accordance with the Local Government and Housing Act 1989.

Alternative Options Considered

There are no alternative options in so far as setting a budget is concerned. However, there are options in respect of the various elements of the budget. These are considered in preparing the budget and cover such things as the rent and service charge increase, budget growth and major works programme proposals.

Cabinet:

1.            Agreed the Housing Revenue Account Budget as detailed in Appendix 1of the report. 

2.            Agreed that the average rent for existing tenants in Council properties owned by the London Borough of Havering be increased by £7.87, from £91.44 to £99.31 (8.6%) with effect from 6 April 2015 in line with the Government’s current policy to restructure rents.

3.            Agreed that the rent-free weeks for 2015/6 be w/c 24^th August 2015 the two weeks commencing 21^st and 28th December 2014, and the week commencing 28 March 2016.

4.            Agreed that tenants’ service charges and heating and hot water charges for 2015/6  were increased or decreased as follows:

5.            Agreed that the service charge for homeless households accommodated in the Council’s hostels were increased by 1.2% to £25.14 a week (average figure).

6.            Agreed that charges for high and medium demand garages were increased by 1.2% and that rents for low demand garages were frozen.

7.            Noted that the charges for mobile support would be deleted, but that  new service charge for the provision of security and support in sheltered housing would be introduced and would be £6.57pw (52 weeks).  This would replace the mobile support charges which last year ranged from £5.48pw to £13.70pw, depending upon the level of support.

8.            Agreed that the Careline support charge be increased by 1.2%.

9.            Agreed that Telecare support charges be increased by 1.2%.

10       Noted that there was a projected in-year surplus of £1.620m, and agreed that £0.5m would be carried forward to fund the replacement of the Housing Management system.

11       Agreed the HRA Major Works Capital Programme, detailed in Appendix 2 of the report and referred this to full Council for final ratification.