Top

Top

 

Agenda Item No. 10(f)

 

THE VALE OF GLAMORGAN COUNCIL

 

COUNCIL MEETING: 4 MARCH 2015

 

REFERENCE FROM CABINET:  23 FEBRUARY 2015

 

C2652        FINAL HOUSING REVENUE ACCOUNT (HRA) BUDGET PROPOSALS 2015/16 (L) (SCRUTINY COMMITTEE – HOUSING AND PUBLIC PROTECTION) -         

 

To set the HRA budget for the financial year 2015/16 and to set the rents and service charges for the forthcoming rent year beginning on 6 April, 2015.

 

Each local housing authority was required under Section 74, of the 1989 Local Government and Housing Act to keep a Housing Revenue Account.  Section 76 of the Act requires local authorities to set a budget for their Housing Revenue Account (HRA) on an annual basis.  The budget must be such that the Housing Revenue Account is not in deficit at the year end.

 

In previous years the level of rent increase had been based on the Housing Subsidy Determination issued by the WG. However WG had changed the basis for rent increases as part of the new Policy for Social Housing Rents.  The new rent policy will apply to local housing authorities from April 2015 (regardless of whether exit from the HRA subsidy system had occurred).  The policy set a target rent band for each authority.  If the average weekly rent was below the lower end of the target rent band, the authority was expected to increase average rents.  If the average rent was above the target rent band, then the authority was expected to increase rents at a rate lower than the guideline rent increase. The 2015/16 rent bands for each local authority were issued on 23 December, 2014, the agreed increase was 2.7%, this being the agreed CPI (as at September 2014) plus 1.5% laid out in the new rent policy.  However the Vale of Glamorgan would need to increase its rents by a minimum of 3.3% to ensure rents were within the lower limit of the rent band.

 

The initial HRA budget proposals were considered by Cabinet on the 17 November, 2014 (minute no. C2532). They were subsequently referred to the Housing and Public Protection Scrutiny Committee on 3 December, 2014, who noted the proposals as did Corporate Resources Scrutiny Committee on 9 December, 2014.

 

Base Budget 2015/16

 

The Budget Strategy for 2015/16 outlined that, in order to establish a baseline, services should prepare revenue budgets for next year based on the cost of providing the current level of service and approved policy decisions. This meant that the cost of price increases and pay awards should be included.

 

Due to the nature of the HRA in that it was ring fenced and any growth had to be funded from the balance, no cost pressures had been formally identified.  The budget was presented in the traditional objective analysis format.

 

The proposed 2015/16 budget was set out at Appendix 1 attached to the report.

  • HRA (General) - This budget head relates to net income from rents and service charges as well as general expenditure such as Tenant Participation Groups.
  • Housing Repairs - This budget relates to the revenue repairs and maintenance service for the Council Housing Stock. 
  • HRA Subsidy Payable - This budget relates to the estimated proportion of rent payable to WG.
  • General Management - This budget head relates to the general management of the Council's housing stock, for work carried out within the Housing service, and for various issues relating to the Council tenancies excluding the repairs and maintenance function.
  • Special Services - This budget relates to the running expenses and the cost of staff employed directly within the Housing service, in relation to functions such as sheltered housing schemes, running the hostel and temporary accommodation.
  • Capital Expenditure from Revenue Account (CERA) - This budget relates to a contribution made from the Housing Revenue Account to fund capital expenditure. 
  • Central Support & Operational Building Charges - This budget relates to the services provided by other Departments within the Council, and the cost of office accommodation occupied by the Housing Services staff.
  • Capital Financing - Costs associated with financing debt.

In summary the change in the budget was itemised as follows:-

 

2014/15

Original Budget

Inflation / Pay Award

Committed Growth / (Savings)

Estimated Rent Increase

2015/16

Proposed Budget

£000

£000

£000

£000

£000

3,514

99

            (3,163)

(579)

(129)

 

The committed savings of £3,163,000 were due to a number of factors:

  • A saving associated with the exit of the HRA Subsidy System, assuming the exit goes ahead in April 2015, of £5,043,000.
  • There was a decrease in the available CERA budget of £4,502,000 to finance the Housing Improvement Programme and meet Welsh Housing Quality Standards by 2017. This decrease was required to ensure the Housing Revenue Account balance remains within an acceptable limit.
  • A £37,000 decrease in Central Support recharges.
  • Further savings of £177,000 for 2015/16.

These had been partially offset by:

  • An increase in Capital Financing charges of £4,306,000, £3,988,000 relates to financing of the intended HRAS Subsidy exit, a further £318,000 was due to increased borrowing in the year required to finance the Housing Improvement Programme.
  • Increase in Repairs budget to accommodate works to void properties £633,000 and £300,000 for an external painting programme. 
  • Additional Staffing costs £317,000 per annum to support any redevelopment project and tenant management, anti-social behaviour co-ordinators and two estate handy-persons.
  • An increase in the Bad Debt Provision adjustment of £940,000, this represented 6% of gross annual rents, compared to 0.95% in 2014/15.  This was thought to be a prudent step, in line with similar authorities' plans.  This should allow for any negative impacts of Welfare Reform, and in particular, the Universal Credit on rent collection. 
  • It was also anticipated that, should the Universal Credit be adopted in the Vale of Glamorgan during the year, additional resources will be required at £100,000 per annum. However this will be closely monitored.

Proposed Increases in Rents

 

The rent policy set a target rent band for each landlord and landlords would be required to operate with average weekly rent levels that fall within the scope of those bands.  The target rent band provided a low end figure, a mid point and a high end figure for each landlord.  The average weekly rent level for each social landlord is compared to the target rent band.  Out of the eleven local housing authorities, nine would fall below their target rent band should they only apply a 2.7% increase. The Vale of Glamorgan was included in those nine.

 

The WG target rent band for the Vale of Glamorgan based on a 52 week rent year for 2015/16 was

 

Low end £86.11 per week

Mid point £90.64 per week

High end £95.17 per week

 

It was be noted that the equivalent average rent for comparison purposes for 2014/15 is £83.36 per week. A 2.7% increase on this average rent equated to £85.61 which was 50p below the low end rent band. Therefore a further increase of 0.60% would be necessary to comply with the new rent policy.

 

There was 3 options for rent increase:-

 

Option 1 - increase by the absolute minimum allowable by WG, 3.3%, this would generate an average rent of £86.11, comply with the new rent policy, but would translate to an increase in the required borrowing for the Housing Investment Plan of £149,000.

 

Option 2 - increase by 3.5%, this would generate an average rent of £86.28, comply with the new rent policy, and not impact on the level of borrowing required for the Housing Business Plan.

 

Option 3 - increase by the maximum allowable by WG 4.3%, this would generate an average rent of £86.95, comply with the new rent policy, and, reduce the level of borrowing required to fund the Housing Investment Programme by approximately £578,000.

 

It was usual practice that the Vale of Glamorgan only increase rent by an amount specified via Department for Work and Pensions (DWP) to prevent a breach of the Housing Benefit Rent Rebate Limitations. Breach of the limitation would mean that the HRA would be liable for a proportion of the additional increase. At this stage however, details regarding the DWP limit under the new rent policy was unknown.

 

A 3.5% rent increase would equate to a £2.92 per week increased, based on a 52 week rent. The Vale of Glamorgan will charge rents over 50 weeks in 2015/16.  The equivalent average weekly rent increase is £3.04 per week.

 

The target rent increase per property type based on an increase of 3.5% is detailed below:-

 

    Type

Present Target Rent for 2014/15

(Based on 50 Chargeable Wks)

 

Proposed Average Rent Incr (+)/ Decr (-)

(Based on 50 Chargeable Wks)

Proposed Average Target Rent for 2015/16

(Based on 50 Chargeable Wks)

 

Bungalow

  £85.42 per week

         +£2.99 per week

     £88.41 per week

Flat

£74.59 per week

+£2.61 per week

£77.20 per week

House

£92.93 per week

+£3.26 per week

£96.19 per week

Maisonette

£81.51 per week

+£2.86 per week

£84.37 per week

TOTAL

£85.13 per week

+£2.99 per week

£88.12 per week

 

Proposed Increases in Other Charges

 

Garage Rents - The rent of freestanding garages was currently £6.84 per week.  It was proposed that rent for all garages was increased by 3.5% to £7.08 per week.  This percentage increase was in line with the recommended increase to dwelling rents.

 

Ty Iolo Hostel - The current charge for persons accommodated was £153.88 per week. It was proposed that the weekly rent charge be increased by 3.5% to £159.27 per week. As rooms at the hostel were classified as HRA dwellings, the rents charged are also subject to Housing Benefit Rent Rebate Limitations, which means that hostel rents should be in line with recommended rent increase. 

 

28 Evans Street, Barry - This property, owned by the Council, was let to Llamau Housing Trust and comprises of six units of accommodation.  The current weekly charge was £513.00. It was proposed that the charge be increased by a maximum of 3.5%, in line with the recommended increase for the Hostel. The weekly charge will therefore be £530.96 per week.

 

Temporary Accommodation - The average current weekly charge including additional management, utility and service charge costs was £152.22. It was proposed that the rent element be increased by a maximum of 3.5%, in line with the WG recommended guideline increase. The weekly charge would therefore be £157.55 per week.

 

Sheltered Housing Guest Suites - It was proposed that the charges for guest room facilities be increased by 3.5% to £11.87 per person per night for double occupancy and £16.97 for single occupancy.

 

Vale Community Alarm Service (VCAS) - This was a charge that formed part of the inclusive rent, but was separately identifiable.  It had been proposed to increase the VCAS charges by 3.5%.

 

The charges in the following paragraphs were based on the agreed Service Charge Policy which stated that charges would be based on the best estimated cost of providing the service in the forthcoming year, using prior year's information and any known contract costs:-

 

Heating - The cost of providing heating to sheltered properties had decreased.  It is proposed that the charge be decreased from £9.37 per week to £8.51 per week based on the actual costs incurred in the 12 months prior to the budgeting period.

 

Warden Management & Support Charge - The cost of providing Warden Management & Support had reduced, this was based on actual costs incurred in the 12 months prior to the budgeting period.  The proposed charge for the Warden Management element is £2.81 per week, and the proposed charge for the Warden Support element is £5.63 per week. 

 

Lift Maintenance - The cost of lift maintenance had increased, this was largely due to an increase in the number of emergency call-outs.  It was proposed that the charge be increased from £0.49 per week to £1.44 per week based on the actual costs incurred in the 12 months prior to the budgeting period.

 

Door Entry - The cost of providing maintenance on the door entry systems has increased. It is proposed that the charge be increased from £0.28 per week to £1.31 per week based on the actual costs incurred in the 12 months prior to the budgeting period.

 

Sewerage Treatment Plants - The charge to owners of all purchased and private dwellings connected to Council owned and maintained treatment plants was currently £332.92 per annum, based on the average charge payable if the properties were connected to the main sewerage system. It was proposed that these dwellings continue to be charged at a similar sewerage rates to the Water Schedule 2015/16 issued by Dwr Cymru Welsh Water. The Welsh Water Schedule was not available at the time of writing.

 

The final budget proposals would be considered by Council at a meeting to be held on 4 March, 2015.

 

This was a matter for Council decision

 

RESOLVED –

 

That Cabinet recommends the following to Council

 

(1)       T H A T the final HRA budget proposals for 2015/16 be recommended to Council as outlined below:-

 

Proposed Budget

2015/16

 

£'000

HRA General

(15,416)

Housing Repairs

3,547

General Management

1,688

Special Services

682

Capital Expenditure from Revenue Account (CERA)

3,485

Central Support & Operational Buildings

1,239

Capital Financing

4,646

(Surplus)/Deficit for the Year

 

(129)

Working Balance Brought Forward

(2,892)

Working Balance Carried Forward

(3,021)

 

 

 

(2)       T H A T option 2 for rent increases be approved and recommended to Council, as set out in paragraphs 12-23 of the report.

 

(3)       T H A T the increase suggested for other services be approved and recommended to Council, as set out in paragraphs 24-35 of the report.

 

(4)       T H A T the following charges for 2015/16 financial year be recommended to Council:-

 

50 Week Basis

 

Current Charges

 

Proposed Charges

 

Heating

 

£9.37 per week

 

£8.51 per week

 

Warden Support Charge

 

£7.08 per week

 

£5.63 per week

 

Warden Management Charge

 

£3.54 per week

 

£2.81 per week

 

VCAS:

- Piper

- Communicall

 

 

£4.19 per week

£4.75 per week

 

 

£4.34 per week

£4.92 per week

 

Grounds Maintenance

 

£1.24 per week

 

£1.27 per week

 

Cleaning of communal areas

 

£1.83 per week

 

£1.80 per week

 

Lighting of communal areas

 

£1.12 per week

 

£1.16 per week

 

Laundry Facilities

 

£0.23 per week

 

£0.27 per week

 

Window Cleaning

 

£0.28 per week

 

£0.29 per week

 

Lift Maintenance

 

£0.49 per week

 

£1.44 per week

 

Door Entry

 

£0.28 per week

 

£1.31 per week

 

Intercom

 

£1.00 per week

 

£1.06 per week

 

Sewerage Treatment Plants

 

£332.92per annum     

 

Based on the Rateable     

Value (RV) from the

Welsh Water Schedule 2015-16

 

(5)       T H A T all changes to rents and service charges be implemented from 6th April 2015 and that increase notices be sent to tenants 28 days in advance of the new charges coming into effect. 

 

Reasons for decisions

 

(1)       As required by statute.

 

(2)       To set new rent levels within the specified Welsh Government (WG) guidelines, whilst not negatively impacting upon the Housing Improvement Programme.

 

(3)       In order that the budget accurately reflected any changes necessary.

 

(4)       To approve new charges in time for any administration changes to be carried out.

 

(5)       To meet the deadline to notify tenants of the new charges as required by Statute.

 

 

[View Cabinet Report]

Share on facebook Like us on Facebook