Agenda item

Housing Revenue Account (HRA) Draft Budget 2023-24 and Medium Term Financial Plan (MTFP) Proposals

Decision:

RESOLVED

KEY DECISION

That the Executive recommended to Full Council the following:-

a. The draft 2023/24 Housing Revenue Account Budgets consisting of the Corby Neighbourhood Account and the Kettering Neighbourhood Account as set out in Appendix A of the report.

b. An increase in dwelling rents for 2023/24 of 7% which adheres to the Department for Levelling Up, Housing and Communities (DLUHC) amended Policy statement on rents for social housing for both the Corby Neighbourhood Account and the Kettering Neighbourhood Account.

c. The draft Housing Revenue Account Medium Term Financial Plan consisting of the Corby Neighbourhood Account and the Kettering Neighbourhood Account, for 2024/25 to 2027/28 as set out in Appendix B of the report.

That the Executive

d. Noted the forecast reserves for the Corby Neighbourhood Account and the Kettering Neighbourhood Account up to 2027/28 as set out in Appendix C of the report.

Reason for Recommendations: To ensure that the Council complies with its Constitution in setting the budget for North Northamptonshire.

Alternative Options Considered – The HRA Budgets have been subject to a formal budget consultation and comments from the consultation have been considered as part of this process.

Minutes:

The Chair, Cllr Jason Smithers invited Cllr Lyn Buckingham to address the Executive. Cllr Buckingham spoke to seek clarification on specific elements of the budget, querying why leaseholders were not mentioned as part of the Housing Revenue Account (HRA). Cllr Buckingham also referenced services charges for Corby tenants not being increased, queried what was involved with the Hidden Homes project and why the Decent Homes project was only undertaken in Corby and not Kettering.

The Chair then invited the Executive Member for Finance and Transformation, Cllr Lloyd Bunday to introduce the report, the purpose of which was to present the proposed housing revenue budget and medium-term financial plan to Executive. Cllr Bunday responded to Cllr Buckingham to note that leaseholder income was included within the HRA. Cllr Bunday clarified that non-increases in service charges for Corby tenants were historic and not planned for the future as suggested.

Cllr Bunday noted that Council tenants had been consulted on the proposals before members through a targeted consultation via their respective Tenant Advisory Panels.

Cllr Bunday further noted that the HRA did not directly impact on the Council’s wider General Fund budget or on the level of Council Tax, with income to the HRA primarily received through the rents and other charges paid by tenants and leaseholders. The Council was required to run a single HRA, but for a short period continued to operate two neighbourhood accounts to reflect stock holding from the two legacy councils of Kettering and Corby.

The Council had commenced work on consolidating these two accounts into a single HRA, however this required a 30-year business plan that would be informed by the Housing Strategy for North Northamptonshire. This strategy was currently in development and due to be reported to members during 2023/24.

The meeting noted that the HRA formed a ring-fenced account within the Council for the income and expenditure associated with its housing stock. The Council owned 8160 properties ranging from one to four bed houses, bungalows and flats, with a further 893 leasehold properties. This amounted to a projected annual rental income in excess of £35m.

Details of historic Government guidelines regarding rent increases were provided to the meeting, who noted that the current formula was CPI plus 1%. CPI in July 2022 had been 10.1% meaning that rent increases for April 2023 would be 11.1%, however, after consultation it had been announced by the Chancellor in September 2022 that social housing rent increases for 2023/24 would be capped at 7%. In line with previous years, the proposed increase in rent for both Neighbourhood Accounts would be the maximum permitted helping to maintain and protect levels of service. Taking into account this proposed increase, the draft Neighbourhood Accounts for 2023/24 showed a balanced position.

The medium-term position showed the Corby HRA in deficit and the Kettering account in surplus, resulting from the structuring of the self-financing of loans associated with the housing stock. The medium-term position also assumed an annual rent increase of 4% going forward.

The meeting heard that the Council was required by law to avoid budgeting for a deficit on the HRA. In practice, the Council was expected to maintain a reasonable balance of reserves to cover contingencies, with the Chief Finance Officer reviewing the level of balances required to support the HRA spend annually as part of their risk assessment of the budget. It was proposed that the assessed minimum level of balances, taking all known risks into account, should remain unchanged at £800k for the Corby Neighbourhood Account and £650k for the Kettering Neighbourhood Account, around 4% of the total budget.

Cllr Bunday stated that the numbers of Right to Buy (RTB) properties and the number of empty properties must also be taken into account. The number of RTB sales assumed during 2023/24 and the medium-term for the Corby Neighbourhood Account was 50, and for the Kettering Neighbourhood Account was 30. Void property levels were assumed at 0.9% of stock for Corby and 1.5% for Kettering.

The meeting heard that the current economic climate made provision of new social housing challenging, however it was envisaged that a further 18 homes would be added to the Corby stock at Cheltenham Road during 2023/24. Further schemes would be reflected in the Medium-Term Financial Plan when there was more certainty around the timed delivery of future housing schemes.

Cllr Bunday made reference to the Council’s approach to the self-financing of the two neighbourhood accounts, with the Council holding a depreciation charge which was then used to support the capital programme. It was noted that holding social housing stock did come with risk, with provisions for bad debts due to rent arrears set out in the report and the cost of employment within the HRA also detailed.

Cllr Matt Binley, Executive Member for Housing, Communities and Levelling-up spoke to thank the team involved for its work in relation to the HRA budget. Cllr Binley highlighted the plan to address the backlog of inherited housing repairs and to provide a housing service aspired to by the Council for its tenants. In response to Cllr Buckingham, Cllr Binley noted that leaseholders were referred to within the report and made reference to the historic lack of service charge increases for Corby residents, stating that this issue would need to be resolved as the service moved towards a unified neighbourhood account. Cllr Binley outlined the purpose of the Hidden Homes project, the definition of compliance and noted the two different names for similar projects between Decent Homes and Homes for the Future. Cllr Binley also noted the proposed plan to upgrade communal areas for sheltered housing in Corby.

Cllr Bunday concluded discussion by noting that the proposed 7% rent increase was lower than inflation, with every penny of rental income used towards the upkeep of the Council’s housing stock.