Agenda item

-           Strategic Director of Neighbourhoods and Adult Services to report.

Further to Minute No. 62 of the meeting of the Cabinet Member held on 6th January, 2014, Councillor McNeely, Cabinet Member for Safe and Attractive Neighbourhoods, introduced a report by the Strategic Director of Neighbourhoods and Adult Services, which sought approval for the proposed housing rent, new build rents, garage rent and communal facilities increases for 2014/15 to go forward for consultation, and subject to the outcome of that consultation to be presented at Cabinet for decision.

This year it was proposed to implement an annual increase of 3.2% for non-housing rent issues and 6.57% for rent in accordance with the prescribed formula issued by Government. Members were asked to also note the draft Housing Revenue Account Budget for 2014/15. In anticipation of a Scrutiny recommendation being accepted by Cabinet, the proposed charges for district heating were considered within a separate report, considered within this agenda.

The report set out in detail the proposed housing rent, new build rents, garage rent and communal facilities increases for 2014/15.  The rents had been calculated in accordance with the national rent setting regime requiring all local authorities to use the prescribed formula and apply annual increases to actual rents to achieve the Formula Rent.  Applying this formula for 2014/15 produced an average rent increase for Council tenants of 6.57%. There would be major financial implications for the Council of not following this formula as the Government expected that all similar properties in the same local area would have equitable rent levels, even if properties were owned by different social landlords. This process was known as ‘rent convergence’. The Government set a target for Authorities to achieve rent convergence by 2015/16. 

The average rent for 2013/14 was £68.24 over 52 weeks (2013/14 being a 53 week year). The proposed 2014/15 average weekly rent using the Government formula, collected over 52 weeks would rise to £72.78, an average increase of £4.54 per week.

Total housing rent income generated through the proposed revised weekly rents was estimated to be £77.428m in 2014/15 assuming 100 Right to Buy sales, and voids and rent adjustments at 2%.

The Council completed the building of 132 new energy efficient properties in 2011/12. For these dwellings, the funding model assumed that rents would be aligned to the Council’s existing rent structure based on these dwellings having a higher property value (than existing stock). These rents were assumed to be fully converged and were, therefore, set higher than those of the existing Council stock. Consequently the proposed average rent to be charged across these properties would be £94.47 over 52 weeks based on the rent formula of Retail Price Index (RPI) plus 0.5%, an increase of £3.52 per week.

Recommended:-  (1)  That the average rent increase by 6.57% based on the Central Governments (DCLG) Rent Formula which results in an average increase of £4.54 per week collected over 52 weeks.  

(2)  That an average rent of £94.47 be set for new build Council properties.

(3)  That in line with the Retail Price Index garage rents, communal facility charges including where applicable laundry charges and the cooking gas charge be increased by 3.2%

(4)  That the draft Housing Revenue Account Budget for 2014/15 be noted.