Agenda item

Housing Revenue Account (HRA) Budget 2023-24


A report outlining the Housing Revenue Account (HRA) budget for 2023-24 was before the Joint Executive Advisory Board (JEAB) for consideration.


The Lead Specialist Finance and the Head of Housing jointly introduced the report, which provided a position statement on the 2023-24 draft budget and made recommendations to the Council in respect of the HRA revenue budget.  Details of the HRA capital programme were set out within the Capital and Investment Strategy, which had been considered as a separate agenda item at this meeting.


The JEAB was reminded that the Council owned the freehold and managed over 5,200 council homes which it rented to tenants who qualified for social housing. The HRA was a ring-fenced account within which the Council recorded the income and expenditure for its operations as landlord to its residents and for the day-to-day management, repairs and maintenance of the Council housing stock.


The report outlined the proposed HRA budget for 2023-24, which had been built upon the estimates and assumptions in the updated 2023 HRA Business Plan.  The annual budget and Business Plan assumed that any surpluses in the HRA would be used to invest in redevelopment and upgrading of the existing stock, invest in new build affordable housing to be retained and rented by the Council within the HRA and then, if sufficient monies were available, the repayment of debt taken on under HRA self-financing.  The Business Plan had been reviewed to reflect changes in relevant legislation and guidance, along with consideration of the Council’s declaration of a Climate Emergency and the ongoing challenges of the wider operating environment.  It showed that there were sufficient resources within the HRA to carry out the Council’s investment plans in addition to repaying the debt over the 30 year plan period and leave a healthy reserve balance at the end of the 30 years for further investment not yet identified.  There were further expected investment needs that were yet to be fully developed in order to meet carbon targets and expected regulatory changes, and work on these continued.  These factors were not fully reflected within the current Plan and would be considered in future reviews.


Although a new Direction issued by the Regulator of Social Housing on 12 December 2022 indicated that rents should be capped at 7%, the Council was proposing to adopt a 5% rent cap in respect of its housing stock in recognition of the challenging wider climate faced by residents.  This reduced cap was achievable due to the ongoing prudential management of the overall HRA to provide households with some additional financial assistance at this time.  Although the Government had not set a rent cap for those living in shared ownership properties, the Council was proposing to cap those rents in line with rented homes at 5%.  A 3% increase in garage rents was proposed to correspond with the wider Council policy concerning fees and charges.


The following points arose from the related discussion, comments and questions for forwarding to the Executive:


1.           Although the Government had set a social rent increase cap of 7%, the report was proposing an increase of 5% in the Borough to reflect balances in the HRA and the impact of the cost of living situation on tenants.  There was no risk that levying a lower rent increase in 2023/24 would lead to more significant compensatory increases in the future as rent levels were currently governed by the Secretary of State and Regulator of Social Housing.  It was understood that the Government would be consulting in respect of a new rent setting strategy in the future.

2.           In line with Government guidance and the findings of the National Housing Federation, it was proposed that people living in shared ownership properties should receive the same level of rent increase as tenants of social housing as they were facing the same cost of living challenges.

3.           All tenants would be advised of the proposed rent increase and offered support and advice if required.  The aid would be provided by two new postholders who would identify where assistance was required and offer the appropriate support liaising with third parties such as job centres and social care where necessary.  Technology enabled tenants’ rent accounts to be closely monitored to identify those possibly in need of assistance.  This method enabled the Council to achieve a low level of rent arrears.

4.           With regard to garage rent levels, a 3% increase was proposed.  The approach that had been adopted in recent years was that garage rental amounts should fall in line with fees and charges set in the wider Council budget.  Although some garages fell within the HRA, others were included in the General Fund and it was felt that there should be consistency in rent increases across both areas.  There was currently a national level debate as to whether any garages should be held within the HRA.  A more significant increase in garage rents was likely to deter people from renting them leading to vacant garages.  The associated licence agreement clearly stated that garages should be utilised for parking, which would relieve parking pressure in residential estates, and not for storage purposes.

5.           A further factor relating to garages was that they were not sufficiently large to accommodate modern vehicles and occupied land which could otherwise be utilised for housing provision.  Although some house building on garage plots had taken place and some more was expected to follow, it did present some challenges such as access issues.

6.           The intention to allocate a further sum of £20 million towards housing stock repairs and improvements was welcomed.  There was confidence that this amount was adequate to meet the Council’s anticipated maintenance responsibilities, although possible changes instigated by the Government could lead to the need to review the funding situation.

7.           The Council continued to pursue a programme of replacing traditional boilers with air source heat pumps in a number of properties.  However, financing was an issue as the installation of heat pumps cost in the region of £9,000 whereas the price of replacement conventional boilers was approximately £1,800.  Future options, such as utilising traditional boilers to burn alternative green fuel which did not emit carbon dioxide, were possibilities.

8.           The Right to Buy initiative had been reviewed by the Government on a number of occasions.  A positive factor of the scheme was that when tenants opted to purchase their home, it provided the Council with funding to invest in providing alternative accommodation for people unable to purchase a home.

9.           It was highlighted that unhealthy living conditions involving factors such as damp, mould and lack of ventilation were not limited to social housing.  The Council’s approach was to expedite related repairs without delay in line with regulators’ guidance and recommendations and also offer tenants advice if their lifestyle appeared to be contributing to unhealthy living conditions.


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