Agenda item
Housing Revenue Account (HRA) rent setting
The report sets out the proposal for the 2018/19 rent and service charges to Cabinet as part of the Rent Report as well as an overview of the Council’s proposed capital investment spend for the housing stock including the travellers site at Lynton Close.
Minutes:
Troy Francis (Head of Housing Management Customer Services) introduced the report and summed up the main points. He explained that the aim of the report was to set out the proposals for 2018/19 rent and service charges, provide an overview of the Council’s capital investment spend for housing as well as an outline of the proposed mitigation strategy prior to full roll out of the Universal Credit (UC), scheduled for November 2018. With regards to the Capital Investment Programme members heard this was dependent upon the completion of the housing asset management strategy which would be taken to Cabinet for approval by Cabinet by December 2018. Similarly, the fire safety programme was due for approval by Cabinet in order to deliver fire safety enhancements for high rise blocks as well as comprehensive fire risk assessments. With regards to changes to the rent charges, Mr Francis explained that local authorities were required by the government policy to reduce rent by 1% each year up to 2020. Brent was in line with this policy and a further 1% reduction was planned for 2018/19 (this is equivalent to £1.15 less rent payable per week, per dwelling). Members heard that service charges were not covered by the rent reduction policy and therefore an increase of 4% would be proposed for the next financial year.
The Committee also discussed the upcoming full rollout of Universal Credit and the potential implications it could have for residents in Brent. In particular the potential impact of changes to payments – i.e. rents would be paid directly to households and not the council who is the landlord. Members were reassured that housing management services has in place a strategy, to review and manage potential increase in arrears , the service was putting in place a range of mitigation activities to ensure agility of rent collection system and to support residents.
As part of the discussion on Lynton Close members heard that there was commitment from the Council to review the mobile home pitches’ rent as well as modernise the site. Officers acknowledged that current rent charges were too high and a proposal would be made to Cabinet to reduce rents levels and make it more affordable for residents. Members were also informed that transition plans were in place with regard to Lynton Close, to transfer site management from Oxford County Council (OCC) back under the control of Brent Council. The planned transfer date is end of April 2018. With regards to potential impact of Universal Credit on Lynton Close residents, members heard that currently no one living on the site was affected. It was anticipated that the impact of the UC would not necessarily be felt until November 2019, as the changes would only apply to residents whose circumstances had changed.
In relation to Lynton Close site repairs and maintenance works, Troy Francis advised that Council was looking to extend investment across the entire site. Planned maintenance repairs were due to be completed by end of 2018, with two pitches requiring more immediate attention. Toilet facilities would be repaired but residents indicated through consultation that there would be no major impact for them , as most mobile homes have their own facilities or they site is home to the same family residents would share facilities with their neighbours. Members were advised the Council was prioritising repairing of the pitches, outer areas, including communal parts would be part of a wider long-term strategy and subject to investigation and assessment before any upgrading works could be commissioned.
Responding to a query from members, officers acknowledged the existing issues in relation to high levels of debt, due predominantly to unpursued arrears but reassured members that plans were in place to modernise the site and review rent levels in order to alleviate this. Bad debt provision was intentionally high to mitigate this as part of the planning process. Currently, nearly 60% of site expenditure is the administrative cost charged by OCC. By bringing the service back in house the Council would no longer be required to pay OCC, making the overall cost of managing the site cheaper. As a result the Council would be in a position to reduce rent charges and lower the debt provision – this would not address any debt on the rent account at present In addition, the Committee heard that most residents lease the mobile homes and by law the mobile home company could only charge up to the maximum amount the Council charges for the pitch. Therefore any reduction of rent by the Council ought to trigger a reciprocal reduction in rent for the mobile homes.
Focusing on the Capital Programme, members discussed issues around the sum allocated for ‘aids and adaptations’ and questioned whether the £1m budget set aside was adequate or representative of the current number or requirements of residents. Officers advised that the £1m set aside for such adaptations was in line with the average spend compared to that of other boroughs and sufficient. Further investments such as replacing of central heating systems, ventilation and energy efficiency insulations would be picked up as part of the ongoing stock condition survey. The survey would be based on a 20% sample internal inspections and used to build a financial plan that meets the needs of the residents. The stock conditions survey would help determine the Council’s property investment profile. Stock condition surveys would include measuring energy efficiency ratings within the sample and depending on the outcome the Council would explore the possibility of directing investment in this direction.
In response to a member query, officers explained that overall the current cost of service charge was considered reasonable. The committee was informed that Brent Council operates a fixed service charge policy which means that the Council could not increase service charges based on the cost of the actual service. The Council had commissioned a soft market exercise to understand how fixed cost aligns with the cost of service and whether any further changes were required in the future. Referencing paragraph 5.2 from the report officers explained that the list of charges was not exhaustive and if any charges such as security were not mentioned, then they should be assumed to be have been included as part of the general rent.
As part of the wider discussion, member also touched upon the Community Investment Fund and whether it would be continued now the housing service had reintegrated with the council. Officers advised that there were no plans to continue the fund because the Housing Revenue Account could not fund such a scheme as money had to be spent only on properties owned and managed by the Council. However, members heard that the Council would continue to support any programme that hard started or for which there had been a commitment in the current financial year as part of the Capital Programme. Any unspent funds would be reviewed and allocated based on outcome of stock survey and subject to consultation with residents. Cllr Long queried status of a specific scheme that was approved and due to start and resident were informed. Officers explained that a structural matter regarding a boundary wall that needed to be resolved before proceeding took longer than anticipated but now a structural engineer and surveyor had been appointed internally to manage the process, the scheme could proceed and associated funds would be available into the next financial year.
In response to a member enquiry, Hakeem Osinaike (Operational Director Housing) explained the sinking fund concept as an alternative leaseholder option for saving funds for potential repairs. Where in place it was used to offset the need of unexpectedly high service charge bills but it was not part of the service charge. Sinking funds involved time and administration and were not widely used across the Council although it was an option worth exploring in the long term.
Finally, in response to another member query, the Committee was advised that on the issue of Wettons employees being paid the London Living Wage had been flagged up by Trade Unions and through the Council. However, officers could not confirm whether or not this was a matter that sits with the Council and there was nothing in the existing contract with Wettons that could be used to hold them into account. However, it was noted that Wettons’ contract was up for renewal and this matter could be addressed at the time.
RESOLVED that:
i. the contents of the report on Housing Revenue Account (HRA) rent setting be noted
Supporting documents: