Agenda item

The Director of Housing and the Director of Finance submit a report, which asks the Commission to consider the proposed Housing Revenue Account (HRA) budget for 2021/22.

The draft report to Council is attached as an appendix and subject to any amendments following consultation with the Tenants and Leaseholder Forum, Council will consider the proposed budget in February 2021.

The Director of Housing and the Director of Finance submitted a report, which asked the Commission to consider the proposed Housing Revenue Account (HRA) budget for 2021/22.  It was confirmed that the draft report to Council, which was attached as an appendix, would be considered in February 2021.

The Director of Housing reported that the financial landscape of the four-year period from 2016 to 2020 was dominated by the government requirement that rents be reduced by 1% each year.  Despite this pressure, it was noted that the HRA delivered balanced budgets.  

It was reported that for the 5 years from 2020, rents were permitted to increase by up to CPI+1% and that whilst this relaxation helped to sustain a financially viable HRA and support investment in the housing stock, the continuing impact of Right to Buy (RTB) sales on rental income persisted.

The Commission was asked to;

i)             Note the financial pressures on the HRA and comment on the proposals for delivering a balanced budget;

ii)            Note the comments from the Tenants’ and Leaseholders’ Forum; and

iii)           Note rent and service charge changes for 21/22 as follows:

-       1.5% increase to core rent;

-       1.5% increase to garage rent;

-       2.0% increase to service charges;

To provide further context, the Director of Housing referred to detailed information in the appendixes attached to the report to Council, including the comparison of council house rents to private rents in the city. 

It was also clarified and emphasised that 60% of the council’s current tenants would not be affected by any rent increase, as they were in receipt of Universal Credit or other benefit. The average rent increase would only be £1.11 a week.

A breakdown of capital items was submitted and explained, with the continued investment in stock and the significant programme of Council House building /acquisitions being noted.  The changes within   the capital programme were summarised, and it was noted that the housing team worked closely with the Council’s energy team in the delivery of the de-carbonisation agenda.  Work with DeMontfort University in relation to ongoing research in this area of activity was also noted.

The Chair thanked the Director for his report and asked the Assistant City Mayor (Housing and Education) to comment.  Councillor Cutkelvin stated that the achievement to deliver a balance budget year on year was remarkable, particularly alongside ongoing financial pressures and stated that the money from this increase goes straight back in to investing in properties. Cllr Cutkelvin reiterated that60% of the most vulnerable tenants being unaffected.  She also commented on the effect of Covid-19 on the service.  In conclusion Councillor Cutkelvin emphasised that income from the HRA was utilised within the department, with expenditure in the capital programme being invested in property improvement, including access to the STAR Service.

In response to comments, Councillor Cutkelvin also reiterated that the 40% of tenants facing a rent increase were also considered to be vulnerable, but that the most vulnerable would be unaffected.  The issues of ‘in-work poverty’ becoming a greater issue and the increased use of foodbanks and additional external support was recognised.

Councillor O’Donnell suggested that the effect of rent increases on full-time workers with already stretched family budgets would be significant and should have received greater reference and consideration.

Councillor Willmott supported the view that the 40% affected would find the increase hard to find in family budgets.  He also commented on the investment proposals and advised that he was not convinced of the requirement to invest further in IT provision, or to accelerate the work being undertaken in relation to climate change.  He informed the Commission that if these items were removed from the programme, or had reduced ambitions, the recommended rent increase could be reduced to 1%.

The Director of Housing was asked to respond.  He reminded the Commission that should there be no increase approved over 1% then this would impact on potential for further investment in the housing stock and the budget would be required to be balanced.  It was highlighted that rent increases could not be made retrospectively, and the investment capability would be permanently lost.

The Chair then commented on the severe impacts of the governments decisions and he thanked officers for their efforts in delivering a balanced budget year on year.  He advised that he supported the recommendation adding that some tenants’ representatives supported the proposed level of rent increases to ensure that future repairs and maintenance could be undertaken on the stock.

In conclusion the Commission noted the response circulated from the Tenants and Landlords Forum as part of the consultation.

AGREED:

That Council be informed that this Commission supports the budget for 2021/22 being set as a balanced budget, with a core rent increase of 1.5%.