Decision Maker: Council Special Meeting

Outcome: Recommendations Approved

Is Key Decision?: No

Is Callable In?: No

Date of Decision: February 26, 2026

Purpose:

Content: Noted that there is increased pressure on the finances of the Housing Revenue Account (HRA) in 2026/27 due to the cost of repairs, increased requirements for regulatory compliance, and the impact of inflation. See section 4.2 below for more details on these pressures and the risks that they pose to the HRA.   Noted that a HRA Voluntary Revenue Provision on amounts above the Major Repairs Reserve will not be provided in 2026/27, to assist the HRA in achieving a balanced budget and adequate Minimum Working Balance. This aligns with the Treasury Management and Capital Strategy, with further detail contained in the Minimum Revenue Provision Policy.   Agreed to the following changes to rents and charges which partially mitigate the financial pressures on the HRA:   ·        To follow the national rent policy, as set out in the Rent Standard, and to approve an increase in rents for council homes by 4.8% (September's CPI + 1%), the maximum allowed by government. This will increase the average weekly rent to £118.35. ·        To note that the government made an announcement in relation to rent convergence on 28 January 2025 (see section 4.3.2): o   to commence from 2027/28 at a rate of £1 per week (included in the calculations within this report) o   increasing to £2 per week from 2028/29 (not included in the calculations within this report, but which provisionally could provide a further £0.850m of rental income from that year and further sums beyond). ·        To agree an increase in Tenant Service Charges for council homes by 5.3%, resulting in an increase of 93p per week, according to the methodology set out in section 4.4.3 below. This will increase the service charge to £18.65. ·        To agree to increase rents for tenants in HRA and General Fund temporary accommodation by 3.8% (CPI) to an average of £310.55 for a 2 bed flat. ·        To agree to increase garage rents by £1 a week, between 6.5% and 8.4% depending on garage tier. ·        To agree to increase parking charges on estates by £3 per year for an annual permit, an increase of 5.2%, and by 50p per 10 visitor permits an increase of 14.3%.   Noted that even with these proposed increases, the HRA will still be under significant financial pressure.   Agreed to the following proposals, which address the financial pressures on the HRA, described in detail in section 4.6:   ·        To moderate the amount spent on legal disrepair cases (where tenants take legal action against the council for issues in their homes) by intervening earlier during cases. ·        To reduce spend on voids works (maintenance to homes before new tenants move in) through improved project management and contract management. ·        To improve rent collection levels and reduce arrears rates for tenants in HRA and General Fund temporary accommodation by improving processes and maximising use of technology. ·        To resolve technical issues with incorrect energy bills that have been paid by the HRA.   Noted progress on the following existing savings proposals, which were agreed by previous HRA rents reports, described in detail in section 4.5.2.   o   Increased rent collection and reduced arrears for council tenants. o   Increasing income collection from garages. o   Efficiencies in repairs and compliance services. o   Replacing some proposed new-build properties for the HRA with acquisitions. o   New lettings at formula rent plus 5%. o   Estate regeneration   Noted that the 2025-26 HRA MTFS report agreed to rephase 10% of capital expenditure (£40m of £400m) on the Housing Capital Programme, so it finishes in 2030/31 rather than in 2028/29, which was projected to reduce revenue borrowing costs by £1.479m by 2028/29.    Agreed to an amendment to this reduction and reduce the rephasing to £20m (5%), which will allow us to maintain spend on safety critical and environmental improvements, reducing the associated savings to £562k by 2028/29.   Noted that the savings lost (c£917k) as a result of the reduced rephasing will be made instead in the repairs and investment service efficiencies PID, so that the change is cost neutral to the HRA. More detail in section 4.5.2.   Noted that the savings agreed from the following proposals in last year’s HRA rents report have now been achieved, and the projects will be closed down. More detail in section 4.5.1.   o   Reduction in funding to Tenant Management Organisations. o   Increase in rents for temporary accommodation to 2024 LHA levels. o   Converting HRA void properties to temporary accommodation.   Noted that (subject to agreement by the Pension Fund Investment & Administration Panel) (section 4.1.5 of the report):   ·        the council’s pension fund is now 118% funded ·        an ongoing saving of around £1m per year will arise from a reduction in future pension costs ·        a saving of £1.28m is also available to the HRA each year in 2026/27, 2027/28 and 2028/29 only, as a result of the surplus.   Agreed to funding of £200,000 for the Hardship Fund in 2026/27, to support tenants in financial difficulty. More detail in section 4.7.1 of the report.   Agreed to funding of £170,000 to extend the Downsizing Incentive Programme, driving quality of life improvements and savings to the General Fund. More detail in section 4.7.2 of the report.   Delegated authority to the Director of Housing and Safer Communities to make decisions related to HRA finances for two of the proposals in this report (subject to the overall HRA budget having sufficient resources available):   ·        To set reasonable rents for garages let in pilot schemes under the Garages MTFS project to community groups and local businesses, in cases where they have not been let to tenants. More detail in section 4.5.2 of the report. ·        To amend the levels of incentives and support available to tenants who wish to downsize, allowing for increases of up to 50% on this year’s incentive payments and reductions of any amount. More detail in section 4.7.2 of the report.   Noted that if the recommendations set out above are accepted, the forecast 2026/27 closing balance position of the Housing Revenue Account (HRA) is forecast to be £4.547m, which would be above the HRA Minimum Working Balance requirement of £4.305m.   Noted the financial risks and mitigations in section 4 of the report, alongside the comments of the finance team.