Agenda item

To consider and approve the HRA Business Plan, Rent Setting and Service Charges 2024-25.

Further to Minute No. 126 of the meeting of the Cabinet held on 22nd January, 2024, consideration was given to the report which was seeking approval for the Housing Revenue Account Budget for 2024/25 and proposed increases in housing rents, non-dwelling rents, District Heating charges and other service charges. It was recommended that Council dwelling rents be increased by 7.7%. 

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 an HRA Business Plan setting out the investment priorities over a 30-year period. Following the introduction of HRA self-financing in 2012, the Council was awarded control over its HRA in return for taking on a proportion of national housing debt.

The proposed 2024/25 HRA Business Plan made funding provision of £126m for hundreds more Council homes by 2026 and committed £856m to investment in the housing stock, alongside day-to-day housing management and repairs and maintenance costs. Over the short to medium term forecast, the Business Plan was operating at or around the minimum balance, with a small surplus of £9.432m by Year 30 of the Business Plan period. However, it was likely that investment in decency and energy efficiency would need to increase over the coming years: the Business Plan made provision for enhanced stock condition surveys which will support future investment decisions.

The HRA Business Plan was updated annually to ensure it reflected the current operating environment and in moving the report Councillor Allen outlined how the current year’s Business Plan prioritised investment in the following areas:-

·          Continued delivery of housing growth.

·          Safety and quality of the housing stock, including damp and mould.

·          Preparation for proactive consumer regulation from April 2024

·          Meeting statutory minimum energy performance standards in the housing stock by 2030.

·          Refreshing the Council’s stock condition data by 2026.

The overall position remained challenging. Substantial inflationary pressures were evident in some costs increasing by more than 15% over the last two years, pressures felt most acutely in the Housing Delivery Programme.

The Government’s decision to limit rent increases in 2022/23, led to a permanent reduction of financial capacity within the Business Plan. It was likely that investment in the quality and energy efficiency of the Council stock would need to increase over the coming years, putting further strain on the Business Plan. At the same time, the Council wanted to support tenants to manage their finances during a cost-of-living crisis, recognising that housing costs were often the largest single financial outgoing residents face.

The Government’s rent setting policy allowed social housing providers to increase rents by Consumer Price Inflation (CPI) plus 1%, i.e. 7.7% in 2024-25. Around two-thirds of tenants in Rotherham were in receipt of Housing Benefit or Universal Credit which wholly or partially covered their rent. Given the rate of inflation in 2023-24, a one-off rent cap was introduced for one year and was set at 7%, which the Council followed.

As at 31st March, 2023, the Council owned 19,963 homes, 614 leasehold homes, 108 shared ownership homes and 3,406 garages with a turnover from rents and other sources approaching £96.7m per annum (excluding the sale of new properties).

The report also considered the potential increase in HRA non dwelling rent fees and charges for 2024/25 and proposed a 6% increase. A full list of Fees and Service charges for the HRA for 2024/25 was included at Appendix 4.

In July 2023, the Council took the decision to match the average District Heating bill to the Ofgem price cap for July-September 2023. This was due to the volatile energy prices. It was proposed that this approach be continued for 2024-25.

Resolved:-  (1)  That the proposed 2024-25 Base Case Option C for the HRA Business Plan be approved.

(2)  That the Business Plan will be reviewed annually to provide an updated financial position be noted.

(3)  That Council dwelling rents be increased by 7.7% in 2024/25 (Option 3).

(4)  That the Council should retain the policy of realigning rents on properties at below formula rent to the formula rent level when the property was re-let to a new tenant.

(5)  That shared ownership rents be increased by 9.4% in 2024/25.

(6)  That charges for garages and parking spaces, communal facilities, cooking gas and use of laundry facilities be increased by 6% in 2024/25.

(7)  That the District Heating unit charge per Kwh be set at 15.27 pence per kwh, a decrease of 4.2% (0.67 pence per khw).

(8)  That the decision to reduce the price of District Heating Charges further during 2024-25 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 necessitating a lower unit price.

(9)  That the draft Housing Revenue Account budget for 2024/25, as shown in Appendix 6, be approved.

Mover:- Councillor Allen                          Seconder:- Councillor Alam

(Councillor McNeely declared a disclosable pecuniary interest on the grounds of being a Council tenant and was granted a dispensation to vote)