Agenda item

-           Strategic Director of Resources and Transformation to report.

Further to Minute No. 98 of the meeting of the Cabinet Member for Safe and Attractive Neighbourhoods held on 12th January, 2015, Councillor Godfrey, Cabinet Member for Safe and Attractive Neighbourhoods introduced a report by the Director of Housing and Neighbourhoods which sought agreement for the proposed housing rent, new build rents, garage rent and communal facilities increases for 2015/16 to go forward for consultation, subject to the outcome of that consultation, for decision.

This year it was proposed to implement an annual increase of 1.2% for non-housing rent issues and 2.2% for dwelling rent in accordance with the new prescribed formula issued by Government.  Members were asked to also note the draft Housing Revenue Account Budget for 2015/16. 

It was noted that wherever possible the Council had sought to restrain annual charge increases and Rotherham rents still ranked as some of the lowest in the country. Since 2002/03 DCLG had, however, required all local authorities to use a prescribed formula to calculate each tenants rent and to apply annual increases to actual rents to achieve the Formula Rent (Formula Rent was the rent set under rent restructuring). The formula rent from April 2015 had been revised and would now be linked to Consumer Price Index (CPI) which was consistent with other inflation measures used in policy by the Government including benefits and pensions. Applying this new formula for 2015/16 produced an average rent increase for Council tenants of 2.2%.

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. However, changes to the rent formula had removed the flexibility to increase rents by an additional £2 above the increase in formula rent where rent was below convergence, therefore, 2014/15 was the final year to achieve full convergence.  Rents in Rotherham would not have reached full convergence.

The average rent for 2014/15 was £72.79 over 52 weeks. The proposed 2015/16 average weekly rent using the new Government formula, collected over 52 weeks would rise to £74.39, an average increase of £1.60 per week.

Total housing rent income generated through the proposed revised weekly rents was estimated to be £79.558m in 2015/16 assuming 120 Right to Buy sales, and voids and rent adjustments at 1.8%.

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 £96.40 over 52 weeks based on the new rent formula an increase of £1.93 per week.

Cabinet Members, in noting the fact that the Council could not achieve full convergence on rents, welcomed the 2.2% increase as this was lesser increase to ones proposed in previous years.

The inclusion of the 132 new energy efficient properties to the Council housing stock was welcomed, but it was noted that the new right to buy rules would add to the costs pressures on rent income and would be closely monitored as part of the Thirty Year HRA Business Plan.

(1)  Resolved:-  That the report be received and the contents noted.

(2)  Recommended:- (a)  That an average dwelling rent increase of 2.2% in accordance with Central Governments (DCLG) Rent Formula which results in an average increase of £1.60 per week collected over 52 weeks. 

(b)  That an average rent of £96.40 for new build (energy efficient) Council properties.

(c)  That rents be set at formula rent when the property is re-let after vacancy.

(d)  That the increase be in line with the Consumer Price Index of 1.2% for garage rents, communal facilities and the cooking gas charge.

(e)  That the draft Housing Revenue Account Budget for 2015/16 be noted.