HRA Rent and Budget Setting 2019/20 1 The Housing Revenue Account - - PowerPoint PPT Presentation

HRA Rent and Budget Setting 2019/20

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The Housing Revenue Account

• The Housing Revenue Account (HRA) is a ring fenced account

which cannot be subsidised from the General Fund and any surplus or deficit in the HRA is carried over to the next financial year

• The HRA operates under the self financing regime introduced

by Government in April 2012

• This required the Council to take on approx. £170m debt and

develop a 30 year business model

• Proposals for this budget setting year continue to be driven by

the financial planning that underpins the model to deliver services and capital investment

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Lambeth Housing Standard

• To date 28,825 tenanted and leasehold properties have

been brought up to LHS standard.

• £35m capital expenditure expected in the current year,

with a further £35m expected in 2019/20.

• This requires careful management of the finances to

ensure there is adequate funding to support the programme whilst maintaining sufficient reserves

• The works have meant more tenants benefitting from

major capital investment to their homes

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Fire Risk Work

• Additional capital costs of £2.173m for Fire Risk work in

2017/18 following the Grenfell Tower disaster.

• Further forecast investment of £1.959m required in 2018/19.
• To date £1.894m has been spent on the removal of cladding

and £0.614m on emergency fire works.

• There will be significant additional fire safety costs in the

future, for example a fire door replacement programme costing £20m over the next four years and fitting sprinklers at a cost of £2.9m.

• These costs are being carefully managed through the HRA

business plan but will require some additional borrowing in the short term.

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• The General HRA balance as at 31 March 2018 was £10.750m
• Aim is to hold General HRA balances of 5-10% (Currently

6.3%), with a minimum level of £10m on a sustainable basis and use balances above that to deliver the capital investment programme

• The Council has a total of 23,934 tenanted properties and there

are a further 9,769 leasehold properties

Housing Revenue Account

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Housing Management: Performance (Sept 2018)

• 94.9% of collectable rent, including arrears, is forecast to

be collected (target 95.1%)

• Voids – In 2018/19 average void lengths for all voids is

22.2 days (target 21 days).

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Setting The Rents: Rent Policy

• Following the Summer 2015 budget there is an enforced rent

reduction of 1% per year for the four years 2016/17 – 2019/20

• Overall goal is to support the HRA 30-year business plan in

terms of service delivery and capital investment

• The reduction in rents compared to the 2015/16 business plan

is expected to create a £28.4m funding shortfall once the full four-year impact is factored in

• Savings options have been delivered to manage this shortfall

within the HRAs management costs and efficiencies, but cuts

• n this scale impact on service provision.

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Setting The Rents: Rent Policy

• The enforced rent reduction of 1% does not apply to any PFI
• properties. There is provision to increase rents for those PFI

properties.

• We have chosen not to increase the rent for those affected

properties and intend to apply the 1% rent reduction in line with the rest of the Council’s homes so that residents in those properties are not adversely affected.

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Impact – 1.0% Decrease

Bedrooms % of dwelling stock Avg weekly rent 2018/19 Avg weekly rent 2019/20 Average Decrease % Decrease Studio 3.79% £77.21 £76.44 £0.77 1% 1 Bed 27.91% £91.41 £90.50 £0.91 1% 2 Bed 35.03% £104.40 £103.36 £1.04 1% 3 Bed 26.34% £120.39 £119.19 £1.20 1% 4 Bed 5.62% £138.91 £137.52 £1.39 1% 5 Bed 0.95% £151.71 £150.19 £1.52 1% Over 5 Bed 0.36% £163.56 £161.92 £1.64 1%

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Service Charges

• Service charges are set on the basis of recovering the

estimated cost of providing the service

• Service charges are made up of two main elements –

costs directly incurred by the Council in providing the service and allowances paid to Tenant Management Organisations (TMO’s) in providing the service.

• In 2017/18 a new TMO model was compiled to calculate

these allowances. There were significant changes to some of the allowance calculations which has impacted

• n the service charge calculations.

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Service Charges

• Overall in 2019/20 there is a reduction in the

common service charges of 6.9%, a reduction of 1.1% in heating and hot water charges and an

• verall increase of 1.1% for specific charges
• Garage and shed charges remain unchanged.

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Service Charge 2018/19 (per week) 2019/20 (per week) Movement

Common service charges Caretaking £0.94 £1.34 £0.40 Grounds Maintenance £1.39 £1.25 (£0.14) Estate Cleaning £6.34 £5.71 (£0.63) Communal Lighting £2.94 £2.48 (£0.46) Disinfestation £0.76 £0.74 (£0.02) Total £12.37 £11.52 (£0.85) Heating and Hot Water (Average) £10.47 £10.35 (£0.12)

Service Charges Proposal

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Service Charge 2018/19 (per week) 2019/20 (per week) Movement

Specific service charges TV Aerial £0.23 £0.13 (£0.10) Concierge £18.03 £16.56 (£1.47) CCTV £2.44 £2.74 £0.30 Door Entry – Audio £1.55 £2.23 £0.68 Door Entry – Video £2.34 £3.19 £0.85 Total £24.59 £24.85 £0.26

Service Charges Proposal (cont’d)

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Garages & Sheds – Charges Proposal

Service Charge 2018/19 (per week) 2019/20 (per week) Movement

Garages Category A – T enants £19.00 £19.00 £0.00 Category B – Resident Leaseholders £22.50 £22.50 £0.00 Category C – Non-Residents £36.00 £36.00 £0.00 Category D – Blue Badge Holders £0.00 £0.00 N/A Category E – Council Interest Dispensations* £0.00 - £36.00** £0.00 - £36.00** £0.00 Sheds General £3.00 £3.00 £0.00

* Garages that are currently let for either community use or under special arrangements due to non-uniform size **Level of charge to be agreed by Director of Housing Services

Comparison of Service Charges

Service Charge 2016/17 Charge (per week) 2017/18 Charge (per week) 2018/19 Charge (per week) 2019/20 Charge (per week) Common service charges Caretaking £1.40 £1.27 £0.94 £1.34 Grounds Maintenance £1.46 £1.38 £1.39 £1.25 Estate Cleaning £6.50 £6.40 £6.34 £5.71 Communal Lighting £2.90 £2.85 £2.94 £2.48 Disinfestation £0.82 £0.77 £0.76 £0.74 Total £13.08 £12.67 £12.37 £11.52 Heating and Hot Water (Average) £15.02 £11.01 £10.47 £10.35

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Comparison of Service Charges

Service Charge 2016/17 Charge (per week) 2017/18 Charge (per week) 2018/19 Charge (per week) 2019/20 Charge (per week) Specific service charges TV Aerial £0.27 £0.26 £0.23 £0.13 Concierge £16.34 £18.53 £18.03 £16.56 CCTV £2.33 £2.42 £2.44 £2.74 Door Entry – Audio £1.47 £1.53 £1.55 £2.23 Door Entry – Video £2.23 £2.32 £2.34 £3.19 Total £22.64 £25.06 £24.59 £24.85

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Comparison of Service Charges

Service Charges (per week) 2016/17 2017/18 2018/19 2019/20 Garages Category A – T enants £12.23 £12.23 £19.00 £19.00 Category B – Resident Leaseholders £12.23 £12.23 £22.50 £22.50 Category C – Non-Residents £21.06 £30.00 £36.00 £36.00 Category D – Blue Badge Holders £0.00 £0.00 £0.00 £0.00 Category E – Council Interest Dispensations* £0.00 £0.00 £0.00 - £36.00 £0.00 - £36.00 Sheds General £1.00 £1.00 £3.00 £3.00

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Income: pence per £1 2019/20

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Dwelling rents, 78p Tenant service charges, 8p Leaseholder service charges, 7p Non-dwelling rents, 3p Interest and other income, 3p Contributio n from Balances, 1p

Expenditure: pence per £1 2019/20

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Management, 37p Provision of services, 9p Repairs, 17p Other Expenditure, 3p Provision for bad debt, 1p Depreciation, 19p Cost of debt, 12p Revenue Financing of Capital, 2p

Comparison of Income: Pence per Pound

Income 2018/19 2019/20 Dwelling Rents 77p 78p Tenants Service Charges 10p 8p Leaseholder Service Charges 7p 7p Non Dwelling Income 2p 3p Interest & Other Income 4p 3p Contribution from Balances 0p 1p Total 100p 100p

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Comparison of Expenditure: Pence per Pound

Expenditure 2018/19 2019/20 Management 34p 37p Provision of Services 8p 9p Repairs 18p 17p Other Expenditure 5p 3p Provision for Bad Debt 3p 1p Depreciation 17p 19p Cost of Debt 12p 12p Contribution to Reserves 3p 2p Total 100p 100p

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The movement in Management costs is the result of the re-mapping of costs under different headings, for example from other expenditure

Meeting Timetable

• Sheltered Housing Forum – 23rd October 2018
• Tenants’ Assembly – 31st October 2018
• Cabinet Meeting – 17th December 2018

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