Agenda item

Report of the Cabinet Member for Housing, detailing a new funding system for the Housing Revenue Account, seeking approval for a number of schemes in the 2012/13 and recommending an approach on a number of issues, attached. 

The report of the Cabinet Member for Housing was submitted detailing a new funding system for the Housing Revenue Account, seeking approval for a number of schemes in 2012/13 and recommending an approach on a number of issues (copy of report circulated with agenda and appended to signed minutes).

RESOLVED:

(i)  that the following principles be approved to underpin the development of the full 30 year Housing Revenue Account (HRA) business plan:

(a) For rents

·  Rent increases will follow Government rent policy (rent restructuring) so as not to disadvantage the business plan.

·  From 2 April 2012, all new tenants will be charged the full target rent for the property they move into

·  From 2 April 2012, the target rent for houses be increased by 5% and the target rent for flats reduced by 2.9%so that there is no change in the average target rent for the HRA as a whole subject to a full financial assessment of the impact on tenants and the business plan being considered as part of the budget report in February 2012.

(b) For service charges, from 2 April 2012:

·  All existing service charges will be recalculated to ensure that the charge is linked directly to the cost of the service provided.

·  The charge will endeavour to meet the principle of full cost recovery, with any exceptions being agreed as part of the budget report in February 2012.

·  Charges will then go up (or down) each year based on the actual cost of the service giving residents greater transparency and control over what they pay for a service.

·  That delegated authority be granted to the Senior Manager for Housing Services, following consultation with the Cabinet Member for Housing, to approve the annual revision to service charges within the policy parameters agreed by Council.

(c) For garages and parking spaces, from 2 April 2012:

·  Garages and car park spaces charges will increase each year by RPI + ½% i.e. in line with target rents.

·  These charges will be reviewed every 2 years to ensure they are comparable with other landlords.

·  A reduced rent incentive of 50% for 6 months will be introduced on garages where there is a need to increase usage.

·  That delegated authority be granted to the Senior Manager for Housing Services, following consultation with the Cabinet Member for Housing, to decide where to apply the rent incentive and also to approve the annual revision to charges for garages and parking spaces within the policy parameters agreed by Council.

·  Plans will be implemented to remove the lockable posts from parking spaces in Housing ownership in the City centre.

(d) For the borrowing headroom:

·  A proportion of the headroom will be retained as a reserve / contingency for any unforeseen or high risk / short term issues that need to be supported.

·  Some funding will be allocated on an “invest to save” basis so that there is a payback of capital over a period.

·  Some funding is allocated to “cash flow” estate regeneration initiatives where expenditure on relocating tenants and preparing for redevelopment takes place before the capital receipts are received from the sale of the sites.

(e) For treasury management:

·  The Council adopts the two loans pool approach for long term debt.

·  Existing long term debt (at 16 November 2011) is split between the HRA and General Fund (GF), with this split ensuring there is no adverse impact on the GF.

·  All long term loans raised after 16 November 2011 are allocated into either the HRA or GF pool.

·  That delegated authority be granted to the Chief Financial Officer “To increase the limits set in the annual treasury management strategy by the sum notified to the Council that it needs to pay to CLG under HRA reform and to take all decisions needed to borrow this sum before 26 March 2012”.

·  For the purposes of preparing the current business plan, the maximum average debt per property should be set by reference to the projected HRA debt outstanding at 31 March 2012 and stock level used in the final debt settlement (currently estimated at £10,400).  Average debt levels per property over the life of the business plan should not exceed this level.

·  The full 30 year business plan should aim to make provision for the repayment of all HRA debt by the end of the plan.

(ii) that the capital programme for 2011/12 to 2015/16 as set out in Appendix 1 to the report be approved;

(iii) that it be noted that the implementation of the new system would require the HRA to borrow an estimated £70M in order to make the payment to CLG in March 2012.