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Agenda Item

 

The Vale of Glamorgan Council

 

Cabinet Meeting 28th April 2014

 

Report of the Leader

 

Local Average Interest Rate

 

Purpose of the Report

1.         This report is to recommend the rate of interest to be charged on Council mortgages.

Recommendations

That:

1.         The Authority declares an unchanged rate of interest on all new and existing variable housing loans including the sale of Council dwellings of 5.83% with effect from 1st April 2014.

Reasons for the Recommendations

1.         Interest rate recalculated in accordance with statutory requirements.

Background

2.         Schedule 16 of the Housing Act 1985 specifies how local authorities must set interest rates on mortgages arranged since 3 October 1980. This rate shall be set for every period of six months or earlier if required by the Welsh Government. Authorities must charge whichever is the higher of the local average rate, or the Standard National Rate.

3.         The local average rate declared shall be the average annual rate of interest payable on the amount outstanding by way of money borrowed by the Authority, other than short term borrowing, plus 0.25%.

4.         The Standard National Rate is set by the Welsh Government after taking into account interest rates charged by building societies in the United Kingdom and any movement in those rates. The major building societies have announced interest rates ranging from 2.50% to 5.79% for existing borrowers.

Relevant Issues and Options

5.         The rate of interest currently charged on our mortgages is 5.83%.  The local average interest rate has been calculated at 5.83%.  The Standard National Rate of interest is    3.13%.

Resource Implications (Financial and Employment)

6.         There are no financial implications as a direct result of this report.  

Sustainability and Climate Change Implications

7.         There are no sustainability and climate change implications as a direct result of this report. 

Legal Implications (to Include Human Rights Implications)

8.         The Council is legally required to charge borrowers the higher of the Standard National Rate or the local average rate of interest.

Crime and Disorder Implications

9.         There are no Crime and Disorder implications arising from this report.

Equal Opportunities Implications (to include Welsh Language issues)

10.      There are no equality implications as a direct result of this report.

Corporate/Service Objectives

11.      To effectively administer the setting of the Authority’s mortgage interest rate in accordance with statutory requirements and its subsequent collection.

Policy Framework and Budget

12.      The proposals within this report are in accordance with the Policy Framework and Budget.

Consultation (including Ward Member Consultation)

13.      Since the proposals are within the Policy Framework and Budget and the changes are required by Statute, no further consultation has taken place.

Relevant Scrutiny Committee

14.      Corporate Resources

Background Papers

Council's Loan Pool records.

Contact Officer

Michael Bumford

Accountancy

Tel: 01446 709253

 

Officers Consulted

Not Applicable

Responsible Officer:

Managing Director

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