Housing Revenue Account Overview
This report provides Housing Scrutiny Committee with an overview of the Housing Revenue Account (HRA) within a local and national context, along with
key challenges and how they are being managed.
At the invitation of the Chair, Minesh Patel (Head of Finance, Brent Council) introduced the report which provided members with an overview of the housing revenue account (HRA) budget, focusing on specific aspects of the HRA such as ring-fenced funding, self-financing arrangements and impact on HRA as a result of the lifting of the borrowing cap.
(7.40pm – Cllr Kennelly left the meeting)
The meeting began with the committee questioning aspects of the HRA finances and funding. Members were advised that the approximate total overspend inclusive of admin charges and overheads used from the HRA was close to £2m, which covered of some of the housing corporate elements. In terms of debt, he advised that the Council’s actual debt was £142m, and following changes to legislation, each council was now responsible for managing its own debt based on a starting deposition. A query was also made on funding of the anti-social behaviour (ASB) team on which Mr Osinaike explained that, as part of council reorganisation and due to recognizing the borough wide scope of anti-social behaviour, it was decided to merge existing ASB teams into one and combine funding from HRA and General Fund.
Discussions moved on with the committee spotlighting on the lifting of the borrowing cap – a decision which was made in October 2018. It was noted that the extent to which the borrowing cap could be increased and the type of units to which it applied by were subject to appraisal of each scheme and assessment of repayment viability, with any properties built with HRA money kept within the scheme. Officers added that whilst considered a welcome change and a positive move in the right direction, guidance from central government had been limited with a lot of details around borrowing conditions yet to be clarified.
The committee also focused on the Right to Buy (RTB) scheme with members seeking further clarification on the impact of RTB receipts on HRA loan repayments as well as on the possibility of stopping RTB receipts to Registered Providers (RPs). In terms of loan repayments, the committee was informed that once a property was sold the Council could retain a proportion (up to 30%) of the sale value and use it to pay back some of its debt, with the other 70% having to be re-borrowed. Officers continued by saying that although with the lifting of the borrowing cap, it was expected local authorities would be able to borrow more, this was not a universal solution and due regard should also be paid on individual circumstances including availability and cost of land.
The committee was further informed that a decision on whether or not to stop RTB receipts to RPs had not yet been made as the Council needed to consider the implications of the lifting of the borrowing cap in line with existing interest rate and amount of acquired debt. Officers added that giving a proportion of RTB receipts to RPs was being made on a case by case basis but always on the condition of 100% nominations. This in turn enabled the Council to determine who lived in those properties even if they were under its ownership. Members were informed that a designated team within the Council was in the process of reviewing the existing agreements to ensure compliance and maximisation of nomination opportunities.
Finally, referencing information in the report on net investment returns a question was raised on the possibility carrying further work towards highlighting the amount of savings that could delivered as a result of lifting the borrowing cap. Welcoming the suggestion, officers advised that this was ultimately a political decision but they would be willing to investigate and report back at a later date.
i. That the contents of the HRA Overview report be noted