Agenda item

The Director of Housing submits a report on rent arrears for the period April 2014 to March 2015.

The Director of Housing submitted a rent arrears progress report for the financial year April 2014 to March 2015, and was presented by the Head of Service, and Income Collection Manager.

The Chair read out information reported online by the Office for Budget Responsibility (OBR), that rent reforms would cost councils £2.6bn over the next five years, and estimated that those funds could have been used to build 19,000 homes. The OBR also forecasted that social landlord rents in five years’ time would be 12% lower than they had expected as a result of the changes, and that this could force some housing associations into insolvency and trigger writedowns of the value of their housing portfolios. Figures obtained from the Local Government Association indicated the move would also hit councils which own and manage social housing, and by 2019-20 the annual funding gap would hit £1bn, or 60% of the councils’ total housing maintenance budget.

The Income Collection Manager reported that arrears were down by approximately £7k compared to the end of 2013-14 despite the welfare reforms. The number of cases of those in arrears increased by 1.4% over the previous year-end figure, but the number of more serious cases fell by 21.9%. It was reported that £1.34m in extra rent as a result of bedroom tax was collectable, and the arrears among those affected by the Bedroom Tax fell by just under £20k for the financial year 2014/15.

The meeting was informed there had been a 51% rise in evictions to 103 households for the financial year 2014-15. Of those evicted, 28 were family cases, 2 were childless couples and 73 were single people. Officers had looked at some benchmarking figures on evictions for local authorities in England, and Leicester’s eviction rate was slightly higher than average. Members were informed that of those evicted, 34.5% single people had been in contact with the council for further housing need, but the figure was lower for families. 39 people sought assistance from housing options and 13 went into council hostels.

Members were informed that debt which remained following evictions was reported centrally, and those figures would be provided for Members’ information. Members also enquired about a reported £6-7million overpayment, and were informed the figure would be reported separately by Revenues and Benefits team, and figures would be provided to Members.

The Head of Service said anyone could contact the housing options service after eviction. The authority had a duty to look at individual circumstances, and would provide temporary accommodation while an investigation took place. Each case would be judged on its own merits, but duty would vary between assistance for families, vulnerable people and single people.

Members drew attention to the glossary in the report and asked if the council would be penalised by Government for having a £2million void loss, and said it would be useful to know if the figure was up or down on the previous financial year. The Head of Service said there was no government penalty, just the council tax liability that had been introduced by Government last year. She added the Council had a remit to bring properties to standard in the shortest time possible to minimise rent loss to the authority, but some homes required more work than others. The council would undertake an inventory when tenants left a property and record malicious damage as a rechargeable debt. It was reported that a voids progress report would be brought to the Scrutiny Commission meeting on 8^th September 2015.

Members asked how credible was the introduction of mandatory direct debits for new tenants, as a lot of people on benefits struggled with cash flow. The Head of Service said welfare reforms and the Chancellor’s budget announcement to reduce rents by 1% were a serious challenge, and it would be harder to collect the same amount of money. She added that the rules for Universal Credit made it clear people must have a bank account for payment, paid on a monthly basis. The Council would engage with tenants to ensure they were aware of the issue. It was acknowledged that some people could not have a bank account and would be introduced to Clockwise at no cost to the tenant. A Clockwise account could also assist with the payment of some other bills. It was also noted that vulnerable people would be identified, and rent paid direct to the landlord on their behalf.

The Assistant Mayor said that as an authority there was some concern with mandatory direct debits. He said that in the pilots for the introduction of UC, rent arrears and evictions had risen. There was also less money to spend on housing.

The Chair requested a report be brought to a future meeting of the Commission on the impact of the 1% decrease in rents.

The Chair thanked officers for keeping rent arrears as low as possible through their hard work.

RESOLVED:

that:

1.    the report be noted;

2.    figures on debt remaining following eviction be provided to members;

3.    a voids progress report be brought to the Commission meeting on 8^th September 2015;

4.    a report on the impact of 1% decrease in rent be brought to a future Commission meeting.