Agenda item

Report from the Strategic Director of Adult Care, Housing and Public Health.

Recommendations:

1.             Agree that affordable rents are calculated at relet, based on an individual property valuation.

2.             Agree that affordable rents are increased by 4.8% in 2026/27.

3.             Agree that shared ownership rents are increased by 5% in 2026/27.

4.             Agree that charges for communal facilities, parking spaces, cooking gas and use of laundry facilities are increased by 3% in 2026/27.

5.             Agree that charges for garages are increased by 10% in 2026/27.

6.             Agree that the District Heating unit charge per kWh remains at 13.09 pence per kWh.

7.             Agree that the decision to reduce the price of District Heating Charges during 2026/27 be delegated to the Assistant Director of Housing in conjunction with the Assistant Director of Financial Services following consultation with the Cabinet Member for Housing. The delegation would only be used to respond to a change in Government policy or a significant change in the Ofgem price cap that has the effect of a lower unit price.

8.             Approve the draft Housing Revenue Account budget for 2026/27 as shown in Appendix 8.

Consideration was given to the report which presented the Housing Revenue Account (HRA) Plan, Rent Setting and Service Changes 2026-27 for endorsement and recommendation to Council. The Housing Revenue Account (HRA) recorded all expenditure and income relating to the provision of Council housing and related services, and the Council was required to produce a HRA Business Plan setting out its investment priorities over a 30-year period.

From the 1st April 2026, the Government would implement a 10 year social rent settlement. This was the Government's Policy on the annual increase for social housing rents. The 10 year settlement set the maximum rent increase at the Consumer Price Index (CPI) as of September the year prior plus 1%. The 10 year rent settlement had given greater certainty on the level of forecast income to fund the HRA Business Plan going forward. It would enable longer term planning for investment, delivery of services and growth. The rent settlement was part of the Government’s plan for the future of social housing which promised to enable local authorities and housing associations to deliver thousands of new affordable homes to meet need and drive up the safety and quality of existing homes.

The proposed 2026/27 HRA Business Plan incorporated the Council’s commitments to continue and extend the Council’s Housing Delivery Programme, alongside significant additional investment to support decency and thermal efficiency in existing council homes. The Plan included provision for £1.329bn investment in the housing stock over 30 years, an increase of £350m compared to the 2025/26 plan. This was alongside continuing to fund day-to-day housing management, repairs and maintenance costs.

£122.9m would be invested to deliver an estimated 500 further Council homes by 2037/38, in addition to the £90.9m that was earmarked to support the current Housing Delivery Programme which was on track to deliver 1,000 homes by summer 2027. The Business Plan would also provide for additional investment benefitting current and future tenants, with:

• Increased investment up to £60k per home over the 30 year plan period.
• £14m in 2026/27 to continue investment in the external elements of homes e.g. renewing roofs, guttering and facias etc.
• £7m in 2026/27 to be invested in internal refurbishment works such as electrical rewires, replacement boilers, kitchens and bathrooms etc.
• An additional £41 million to ensure 9,300 properties reach Energy Performance Certificate band C by 2030.

Alongside providing the draft HRA budget for 2026/27, the report recommended proposed levels for housing rents, non-dwelling rents, District Heating charges and other service charges for 2026/27. It was recommended to Council that dwelling rents be increased by 4.8% and up to £2 per week (equivalent to CPI+1% and up to £2 per week rent convergence). This was dependent upon a Government decision expected in January 2026, which would clarify the approach to social rent convergence. The 2026/27 average weekly rent based on an increase of 4.8% + £2 per week would be £101.07, an average increase of £6.17 per week.

There were appromixately 15,000 tenancies in receipt of Housing Benefit or Universal Credit (UC) who would not be directly affected by an increase in rent and approximately 4,500 tenancies that would be affected as they would pay rent from their household income. The tenants in receipt of benefits (Housing Benefit or UC) who would see their benefit entitlement adjusted to meet an increase in rent were:

• c10,969 households who are on Universal Credit
• 2,559 households who are on full Housing Benefit entitlement
• 1,404 households who are on part Housing Benefit entitlement

It was noted that rent convergence would only be applied to properties that were not currently at Formula Rent. Formula Rent for social housing was a calculation based on property value and size (number of bedrooms) and local affordability (earnings). The additional income generated from convergence would ensure the viability of the HRA Business plan, particularly in the early years of the plan where there was a significant amount of investment required to ensure compliance with increasing regulatory standards. In the absence of an announcement from Government confirming the availability of convergence as an option, the proposed rent increase would be the current rent settlement level of CPI+1% (4.8%).

Cabinet was fully supportive of the proposals. The Leader specifically noted the investments in existing stock, the investments in new builds and the investments in energy efficiency. He stated that it was good to be able to propose a HRA business plan under a Government that supported Council Homes. The Leader also reiterated that the rent increase would not impact all Council tenants and some would be paying less than the average increase.

The report was considered by the Overview and Scrutiny Management Board who advised that the recommendations be supported. Discussions focussed on damp and mould, robustness of reserve levels, the convergence, cost rise, advice services, risk, shared ownership, government assistance and bill delays.

Resolved:

That Cabinet recommends to Council to:

1.    Approve the proposed 2026/27 HRA Business Plan.

2.    Note that the Business Plan will be reviewed annually to provide an updated financial position.

3.    Agree that Council dwelling rents are increased by 4.8% and, dependent upon the Government announcement in January 2026, implement a policy of rent convergence. Allowing rents for social housing properties that are currently below the Government-calculated formula rent to increase by an additional £2 per week in 2026/27. If convergence is capped below £2 that will be the level applied.

4.    Agree that the Council should retain the policy of realigning rents on properties at below formula rent to the formula rent level when the property is re-let to a new tenant.

5.     Agree that affordable rents are calculated at relet, based on an individual property valuation.

6.    Agree that affordable rents are increased by 4.8% in 2026/27.

7.    Agree that shared ownership rents are increased by 5% in 2026/27.

8.    Agree that charges for communal facilities, parking spaces, cooking gas and use of laundry facilities are increased by 3% in 2026/27.

9.    Agree that charges for garages are increased by 10% in 2026/27.

10. Agree that the District Heating unit charge per kWh remains at 13.09 pence per kWh.

11. Agree that the decision to reduce the price of District Heating Charges during 2026/27 be delegated to the Assistant Director of Housing in conjunction with the Assistant Director of Financial Services following consultation with the Cabinet Member for Housing. The delegation would only be used to respond to a change in Government policy or a significant change in the Ofgem price cap that has the effect of a lower unit price.

12. Approve the draft Housing Revenue Account budget for 2026/27 as shown in Appendix 8.

Councillor Cusworth and Councillor Williams declared a non-pecuniary interest in Minute No. 90 (HRA Business Plan, Rent Setting and Service Charges 2026-27) on the grounds that family members were Council tenants. Both remained in the Chamber and voted on the matter.