Agenda item

Housing Revenue Account Draft Budget 2024-25 and Medium-Term Financial Plan Proposals

Decision:

RESOLVED

KEY DECISION

That the Executive:

a. Noted the draft 2024/25 Housing Revenue Account Budgets consisting of the Corby Neighbourhood Account and the Kettering Neighbourhood Account as set out in Appendix A, which will be consulted upon with Tenants, which includes:

i) an increase in dwelling rents for 2024/25 of 7.7% which adheres to the Department for Levelling Up, Housing and Communities (DLUHC) rent setting formula.

b. Noted the draft Housing Revenue Account Medium Term Financial Plan beyond 2024/25 consisting of the Corby Neighbourhood Account and the Kettering Neighbourhood Account, for 2025/26 to 2028/29 as set out in Appendix B.

c. Noted the forecast reserves for the Corby Neighbourhood Account and the Kettering Neighbourhood Account up to 2028/29 as set out in Appendix C.

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

Alternative Options Considered – This is the start of the formal budget consultation for the HRA and any comments from the consultation will be considered as part of this process.

Minutes:

The Chair invited Cllr Lyn Buckingham to address the meeting. Cllr Buckingham spoke to query the proposed rent increase of 7.7% and the potential impact this could have on Council tenants.

The Chair thanked Cllr Buckingham for her contribution before inviting Cllr Lloyd Bunday, Executive Member for Finance and Transformation to introduce a report that presented the draft Housing Revenue Account (HRA) budget and Medium-Term Financial Plan and set out the proposals for a rent increase in 2024/25

In response to Cllr Buckingham’s comments, Cllr Bunday noted that in setting rent levels, consideration had to be given as to how collectable rents were. Any rent increase was ring-fenced for use to improve the Council’s housing stock and therefore benefitted those living in Council accommodation.

Cllr Bunday 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, however this required a 30-year business plan that would be informed by the Housing Strategy for North Northamptonshire that was currently in development.

The draft HRA budget had been presented to the Tenants Advisory Panel on 16^th November 2023, with a further meeting on 18^th January 2024 ahead of the panel making formal recommendations pertaining to rent levels and the budget itself to the Executive for its meeting on 8^th February 2024. It was noted that the Corporate Scrutiny Committee would also consider the draft at its meeting on 23^rd January.

Following the 8^th February meeting of Executive, recommendations would be made to Full Council at its meeting on 22^nd February where it would be invited to approve the 2024/25 HRA Budgets consisting of the Corby and Kettering Neighbourhood Accounts, and an increase in dwelling rents for 2024/25 for both the Corby and Kettering accounts. Full Council would also consider the HRA Medium Term Financial Plan for 2025/26 to 2028/29.

It was noted that the two neighbourhood accounts comprised 8132 properties, consisting of flats, houses and bungalows. The former councils of East Northants and Wellingborough had no housing stock, having made the decision to sell their stock many years prior to unitarisation.

Cllr Bunday stated that the Council was required by law to avoid budgeting for a deficit on the HRA, therefore the budget must not be based on total HRA revenue reserves falling below zero. In practice the Council was expected to maintain a reasonable balance of HRA reserves to cover contingencies.

The Chief Finance Officer had reviewed the level of balances required to support the HRA spend annually as part of their risk assessment of the budget, and, taking all known risks into account, these should remain unchanged at £800,000 for the Corby Neighbourhood Account and £650,000 for the Kettering Neighbourhood Account. The minimum balances for the two Neighbourhood Accounts were around 3.5% of the total budget.

Numbers of Right to Buy (RTB) properties and the number of empty properties must also be taken into account in the budget setting process. The number of RTB sales assumed during 2024/25 and the medium term for the Corby Neighbourhood Account was 40 and for the Kettering account was 20.

It was further assumed that 0.9% of the Corby housing stock and 2% of the Kettering housing stock would be void at any one time and therefore rent could not be charged on these properties, reducing the total income expected to be achieved by £205,000 for the Corby Neighbourhood Account and £375,000 for Kettering.

Acquisition and new-build programmes would increase housing stock numbers for the HRA. It was anticipated that within Kettering a further eight homes would be delivered at The Grange during 2024/25 and the part-year effect had been reflected into the revenue account for 2024/25. Further schemes would be reflected in the Medium-Term Financial Plan when there was more certainty around the timed delivery of these.

The HRA budget for 2024/25 showed a balanced position for both Corby and Kettering neighbourhood accounts separately, amounting to a total overall budget of £42.425m.

The Corby Neighbourhood Account indicated a deficit over the period of the Medium-Term Financial Plan to the end of the 2028 financial year of £736,000 whilst over the same period the Kettering account showed a surplus of just over £2m. The main reason for this difference was a result of how loans for self-financing were structured. The Corby account was increasing its contribution for the repayment of the loans whereas the Kettering account was reducing.

To achieve a balanced state, the proposal was for an average rent increase of 7.7%, in line with the recommendations from central government and amounting to an average increase of £6.68 and £7.05 per week for Corby and Kettering respectively.

Cllr Mark Rowley spoke to welcome the balanced budget and noted that even a 1% rent reduction would have an impact of £11m across the 30-year HRA business plan resulting in reduce maintenance. Tenants would be provided with the opportunity to consider the increase, but the proposal was inline with the Government formula.

Cllr Matt Binley also spoke to make reference to the formula for rent setting, noting that a reduction in the level of the increase would impact the level of service that could be offered to tenants.