Agenda item - DRAFT HOUSING REVENUE ACCOUNT (HRA) BUDGET SETTING AND RENT REPORT 2024/25

To consider the draft Housing Revenue Account Budget and Rent Setting report for 2024/25.

[REPORT TO FOLLOW]

The Executive considered a report in respect of the draft Housing Revenue Account (HRA) Budget and Rent Setting for 2023/24.

In reply to a Member’s question, the Strategic Director (CF) confirmed that when a Council property was let, it became the responsibility of the tenant to pay rent/Council Tax etc. This responsibility passed to the Council when properties became void. She referred to initiatives aimed at improving the identification of when properties became vacant/void, including the recent employment of an Empty Homes Officer and enhanced information collaboration arrangements between the Revenue & Benefits Team and Housing Officers.

It was RESOLVED:

1. That the HRA dwelling rents be increased (week commencing 1 April 2024) by 7.7%, which equates to an average increase of £8.45 for social rents, £13.12 for affordable rents and £9.96 for Low Start Shared Ownership homes per week (based on a 52-week year).

2. That Council be recommended to approve the 2024/25 service charges, as set out Paragraph 4.2 of the report.

3. That Council be recommended to approve the HRA budget for 2024/25, as set out in Appendix A to the report.

4. That the 2024/25 growth options, as set out in Section 4.4 of the report, be approved.

5. That Council be recommended to approve the 2024/25 Fees and Charges, as set out in Appendix B to the report.

6. That Council be recommended to approve the revised minimum levels of balances for 2024/25, as shown in Appendix C to the report.

7. That the Rent Increase Equalities Impact Assessments, as shown in Appendix D to the report, be approved.

8. That the increase to the 2023/24 Working Budget of £256,540, to fund the 2023/24 pay award, as detailed in Paragraph 4.4.11 of the report, be approved.

9. That the contingency sum of £400,000, within which the Executive can approve supplementary estimates, be approved for 2024/25 (unchanged from 2023/24).

10. That the decisions taken on Resolutions 1 to 9 above be referred to the Overview and Scrutiny Committee for consideration, in accordance with the Budget and Policy Framework Rules in the Council’s Constitution.

11. That key partners and other stakeholders be consulted and their views considered as part of the 2024/25 budget setting process.

Reason for Decision: As contained in report.

Other Options considered: As contained in report.

The Executive considered a report in respect of the draft Housing Revenue Account (HRA) Budget and Rent Setting for 2024/25.

In the absence of the Portfolio Holder for Resources and Transformation, the Portfolio Holder for Housing & Housing Development advised that the report followed on from the HRA Business Plan that was presented to the Executive in November 2023. It was recommended that HRA rents on dwellings be increased by 7.7%, which represented September CPI plus 1%, and was in line with Government policy for rent setting. This would mean an average of £8.45 for social rents, £13.12 for affordable rents and £9.96 for Low Start Shared Ownership homes per week (based on a 52 week year).

The Portfolio Holder for Housing & Housing Development stated that the net rental income increase for 2024/25 was estimated to be £4.5Million, which included the impacts of estimated right to buys, a significant number of expected new properties and properties taken out of management (awaiting redevelopment). Service charges were not subject to the rental increase of 7.7%, but were based on cost recovery. It was recommended that service charge costs should increase with inflationary pressures and changes in usage. The cost of gas was expected to reduce by 40% compared to last year, and this had been reflected in the charges for communal heating systems.

The Portfolio Holder for Housing & Housing Development explained that the impact of these changes was that 5,136, or 64%, of homes did not receive a service charge. Of the 2,834 properties that were eligible for service charges, 648 (8%) would see a decrease up to £17.50 per week due to lower gas costs and 2,172, or 27%, would have increases up to £2.50 per week.

The Portfolio Holder for Housing & Housing Development advised that the overall impact of the 2024/25 rent increase and service charges was that 7,424 homes, or 93%, would receive a weekly rent and service charge increase between £4.00 and £9.99. The reduction in utility prices had led to lower increases for some homes, offsetting the impact of the CPI +1% rent increase of 7.7%. The increases above £9.99 mainly related to larger properties and where affordable rents were paid.

The Portfolio Holder for Housing & Housing Development stated that the report also outlined the requirements for revenue growth for the 2024/25 HRA totalling £2.4Million, and which was shown in Section 4.4 of the report. The main items were:

· One off growth for Void Works of £500,000 to meet the additional costs relating to void properties;

· One off growth of £850,000 to continue the work in clearing the current backlog of fencing repairs and replacements; and

· Additional staffing of £249,000 for staff posts that had been extended in response to operational challenges.

The Portfolio Holder for Housing & Housing Development commented that new loans totalling £37.6Million and £18.8Million were expected to be taken in the current (2023/24) and next (2024/25) financial years. However, the timing of when to take the new borrowing would be reviewed, weighing up the cost of carry and the Public Works Loan Board rates. The interest payable in 2023/24 and 2024/25 was estimated to be £8.9Million and £9.4Million respectively.

The Portfolio Holder for Housing & Housing Development explained that the HRA balances had been significantly increased from £3.3Million to £10.3Million, in order to mitigate the higher borrowing levels included in the latest HRA Business Plan, and to allow greater flexibility to respond to future challenges facing the HRA.