Agenda item

The Joint EAB considered a report which provided a position statement on the proposed Housing Revenue Account (HRA) draft budget for 2021-22 and made recommendations to the Executive in respect of both the HRA revenue and capital programme budget.  The estimates upon which the draft budget was based were predicated on the assumptions, ambitions and priorities contained in the current HRA Business Plan which was to be reviewed in the light of the implications stemming from Brexit and the Coronavirus pandemic.

The Director of Finance advised that the 2021-22 HRA budget was a roll forward of the 2020-21 budget and there had not been any new growth bids or capital bids to date due to changing circumstances including the Council’s transformation programme and therefore previously agreed projects would be pursued.

It was reported that on 31 March 2021, social rent policy requiring social housing providers in England to reduce social rents by 1% per annum for the four years from 1 April 2016, as prescribed in the Welfare Reform and Work Act 2016, would cease.  From April 2021, the rents for 2021-22 would increase in line with the Consumer Price Index (0.8%) plus 1% and would continue to do so in future years.

Attention was drawn to the fact that the HRA did not budget to repay any of its debt, the responsibility for which had been assumed by the Council in 2011 as part of the self-financing HRA settlement therefore the servicing of debt against the HRA was in the form of an interest only mortgage allowing the generation of a significant surplus to invest in the housing stock and new build housing schemes.

Although bad debt provision had been increased in the current year as a result of potential risk associated with the Coronavirus pandemic, no rise in bad debt had occurred to date.

In terms of fees and charges, a 3.4% increase in garage rents was proposed from April 2021 continuing the trend the Council had been following in recent years to bring garage rents more closely in line with rents for storage units instead of parking spaces. 

Appendix 5 to the report set out the capital programme which indicated proposals to invest in the housing stock and new build programme during 2021-22.  It was anticipated that a surplus of £11 million (m) would be generated in the HRA which would, in line with normal policy, be transferred into a combination of reserve for future capital and the new build reserve.  Annually surpluses in the HRA had built up over the past ten years to a current accrual of reserves of over £100m to finance the construction of new social and affordable housing.

The schedule of loans outlined loans against the HRA and the remaining repayment terms.  The majority of the loans were on a fixed interest basis enabling interest charges to be determined with some certainty.

The HRA budget took account of Right to Buy property disposals, over which the Council had no control.  Although typically 20-25 properties would be sold per annum under this legislation, the number in 2020-21 had reduced, presumably due to the Coronavirus pandemic with ten properties sold since April 2020 and a further eight sales being processed.

Councillors were invited to submit questions or comments in respect of points of detail arising from consideration of the report to the Director of Resources for a separate response.

The following points and views arose from related questions, comments and discussion:

·             Becoming an equity sharer or leaseholder of a home offered alternatives to continuing a Council tenancy.  Equity sharing was a matter of individual choice where a tenant preferred to occupy a shared ownership property as a means to progress towards climbing onto the home ownership ladder, possibly utilising the Council’s equity share repurchase scheme.  Leaseholder status occurred where a tenant purchased their Council-owned home, usually a leasehold flat in a block where the freehold was not available for purchase, under the Right to Buy scheme.

·             The general approach to housing repairs was to undertake a stock condition survey which informed a programme of planned maintenance as it was more cost effective to implement a regular programme of planned maintenance than perform reactive repairs and maintenance when the need arose.  Reference was made to a particular flat development where some of the properties in the block were outside the Council’s ownership and some repair issues had been experienced.

·             The possible carry forward into 2021-22 of the underspend of approximately £2 million in the responsive and planned maintenance budget, which was partly due to COVID-19, would be considered at the end of the current financial year when the related accounts were closed.  The decision whether to carry forward funds would take account of work prioritisation and the physical capacity to undertake any backlog of maintenance work from 2020-21 in the next financial year.

Following receipt of supplementary background information from the Lead Councillor for Housing and Development Control concerning the Right to Buy scheme, the low amount of bad debt throughout the pandemic in 2020, the high level of property maintenance enjoyed by tenants and the need to concentrate on providing social housing new build, possibly involving joint ventures, the Chairman summarised the points to be submitted by the Joint EAB to the Executive and Council as set out below:

·             Having recognised the unmet need for social and affordable rented accommodation, the Board agreed that it would be beneficial for a team of relevant Guildford Borough councillors and officers to meet the Secretary of State for Housing, Communities and Local Government, local MPs, and councillor and officer representatives of the other councils in Surrey with a view to requesting the Government to promote the funding and delivery of social and affordable rented accommodation whilst reducing the current emphasis on the Right to Buy scheme.  This initiative could include discussions with the two councillors who were members of the Board of North Downs Housing Ltd when the company had progressed its ambition to develop homes in addition to purchasing existing property to rent.

·             The Housing Team should be thanked and congratulated for providing an excellent service to tenants and homeless people during the extremely challenging circumstances presented by the Coronavirus pandemic.