Agenda item

Agenda item

Housing Revenue Account 2021/22 to 2023/24

The report of the Strategic Director (Growth and Development) and Deputy Chief Executive and City Treasurer was to follow and is now enclosed.

Minutes:

Councillor Midgely declared a personal interest in this item of business, knowing an employee of Northwards Housing.

 

A joint report by the Strategic Director (Growth and Development) and Deputy Chief Executive and City Treasurer presented the proposed budget for the Housing Revenue Account (HRA) for 2021/22 and indicative budgets for 2022/23 and 2023/24.

 

The report set out the requirements placed on the Council with respect to the HRA budget:

·         the Council had to formulate proposals or income and expenditure for the financial year which sought to ensure that the HRA would not show a deficit balance;

·         to keep a HRA in accordance with proper practice to ensure that the HRA is in balance taking one year with another; and

·         the HRA must, in general, balance on a year-to-year basis so that the costs of running the Housing Service must be met from HRA income.

 

Under a variety of arrangements, the Council owns and manage around 15,500 properties within the HRA. The arrangements included PFI schemes and the stock managed by either Northwards Housing or other Registered Social Landlords. During 2020/21 the Council was anticipating selling around 80 properties under the Right to Buy scheme.

 

Included in the report was the forecast for the HRA in 2020/21 to have an in-year surplus of £5.148m, compared to the original balanced budget set in 2020 (Minute Exe/20/18). The main reasons for that variation were explained in the report. They were mainly due to underspending on the revenue contributions to capital outlay (RCCO).

 

In 2020/21 the Government had allowed local authorities to increase rents by a maximum of the Consumer Prices Index (CPI) plus 1%. That was provision was to continue up to 2024/25. The CPI at September 2020 had been 0.5% so the report proposed that tenants’ rents for all properties should increase by 1.5% in April 2021.

 

Gas for the communal heating systems was sourced as part of the City Council’s overall gas contract. The existing wholesale gas contract expired shortly, and latest prices indicated that the current wholesale gas price would reduce by 10% with effect from April 2021. Therefore, in order to ensure that the costs of gas used were recovered through the tariffs charged for tenants and residents on a scheme-by-scheme basis, it would be necessary to vary the current heating charges by between +5% and -20%. Appended to the report was a complete schedule of proposed heating tariffs for pay by rent and pay by prepayment card, showing the percentage change for 2021/22. More than half the properties involved would see their gas heating charge decrease, with the average being around a 5% reduction.

 

Given that a change in the control of the housing stock currently being managed by Northwards Housing was being considered (Minute Exe/21/15) it was felt that the Management Fee for Northwards should continue at the level agreed in 2020/21.

 

In order to ensure that the increase applied to garage rents remained in line with that applied to dwelling rents, it was proposed that 2021/22 garage rents be increased by 1.5%, which would see an increase in the rental of between 3p and 7p per week. The charges being:

 

Table 1 – Garage Rents

Weekly Charge 2020/21

Weekly Charge 2021/22

Weekly Increase

Site Only

£1.90

£1.93

£0.03

Prefabricated

£4.22

£4.28

£0.06

Brick Built

£4.96

£5.03

£0.07

 

The report also explained the other key changes in the HRA budget for 2021/22, and the full budget was presented as set out below.

 

Table 2 – the HRA Budget

2020/21 (Forecast)

£000

2021/22

£000

2022/23

£000

2023/24

£000

Income

 

 

 

 

Housing Rents

(61,027)

(61,617)

(62,813)

(64,034)

Heating Income

(623)

(533)

(543)

(554)

PFI Credit

(23,374)

(23,374)

(23,374)

(23,374)

Other Income

(984)

(1,132)

(1,107)

(1,083)

Funding (from)/to General HRA Reserve

5,148

(16,494)

(15,448)

4,952

Total Income

(80,860)

(103,150)

(103,285)

(84,093)

Expenditure

 

 

 

 

R&M & Management Fee

21,097

25,415

24,170

23,368

PFI Contractor Payments

34,084

32,476

33,054

32,303

Communal Heating

607

532

542

553

Supervision and Management

5,391

5,254

5,319

5,356

Contribution to Bad Debts

547

930

1,264

1,611

Depreciation

17,378

18,435

18,602

18,790

Other Expenditure

1,393

1,105

931

949

RCCO

(2,416)

16,241

16,673

(1,539)

Interest Payable and similar charges

2,779

2,762

2,730

2,702

Total Expenditure

80,860

103,150

103,285

84,093

Total Reserves:

 

 

 

 

Opening Balance

(111,871)

(117,019)

(100,525)

(85,077)

Funding (from)/to Revenue

(5,148)

16,494

15,448

(4,952)

Closing Balance

(117,019)

(100,525)

(85,077)

(90,029)

 

It was noted that an earlier version of the HRA budget report had also been considered at a meeting of the Resources and Governance Scrutiny Committee in January where the committee had noted the proposals in the report (Minute RGSC/21/05).

 

Decisions

 

1.         To note the forecast 2020/21 HRA outturn as set out in the report.

 

2.         To approve the 2021/22 HRA budget as set out above and note the indicative budgets for 2022/23 and 2023/24.

 

3.         To approve the proposed 1.5% increase to dwelling rents, and to delegate authority to set individual property rents to the Director of Housing and Residential Growth and the Deputy Chief Executive and City Treasurer, in consultation with the Executive Member for Housing and Regeneration and the Executive Member for Finance and Human Resources.

 

4.         To approve the proposal that where the 2021/22 rent is not yet at the formula rent level, the rent is revised to the formula rent level when the property is re-let.

 

5.         To approve the proposed 2021/22 changes for communal heating charges as detailed in the report.

 

6.         To approve the proposals for 2021/for the 22 Northwards management fee as set out in the report.

 

7.         To approve the proposed increase in garage rental charges as set out above.

 

 

Supporting documents: