HRA Rent and Budget Setting

2015/16 2015/16

1

The Housing Revenue Account

• The Housing Revenue Account (HRA) is a ring fenced account

which cannot be subsidised from the General Fund and any

surplus or deficit in the HRA is carried over to the next financial

year

• The HRA operates under the self financing regime introduced • The HRA operates under the self financing regime introduced

by Government in April 2012

• This required the Council to take on approx. £170m debt and

develop a 30 year business model

• Proposals for this budget setting year continue to be driven by

the financial planning that underpins the model to deliver

services and capital investment

2

Lambeth Housing Standard

• The full LHS programme totals £490m, one of the highest

such schemes nationally

• The programme is supported by Decent Homes

Government Grant Funding totalling £101m

• £99m capital expenditure planned in the current year, • £99m capital expenditure planned in the current year,

increasing to £126m in 2015/16 and then £60m in 2016/17

• This requires careful management of the finances to

ensure there is adequate funding to support the

programme whilst maintaining sufficient reserves

• The works have meant more tenants benefitting from

major capital investment to their homes3

Lambeth Housing Standard (cont’d)

• As at September 2014 3,162 homes have been brought

up to the full LHS standard

• From April 2014 to September 2014 internal

improvements include installation of 1,395 new kitchens,

1,416 new bathrooms and 1,498 properties getting 1,416 new bathrooms and 1,498 properties getting

internal rewiring.

• The delivery of health and safety works and mechanical

and electrical works includes 758 homes receiving

communal electrical supply renewals, 396 homes

benefitting through upgrade door entry systems and 603

homes having new heating systems installed.

4

• The General HRA balance as at 31 March 2014 was £8m

• HRA projected outturn for 2014/15 includes a £2m contribution

to HRA balances

• Aim is to hold General HRA balances of 5-10% (Currently £8m)

on a sustainable basis and use balances above that to deliver

Housing Revenue Account

on a sustainable basis and use balances above that to deliver

the capital investment programme

5

Lambeth Living: Performance (Sept 2014)

• 95.3% of collectable rent, including arrears, has been

collected (target 95.1%)

• Voids at 2.3% – it takes less than 33 days to re-let empty

homeshomes

6

Setting The Rents: Rent Policy

• Overall goal is to support the HRA 30-year business plan

in terms of service delivery and capital investment

• Existing tenants’ rents increase in line with Government

policy, though we may converge rents where the increase

is minimal

• No rents are set above the government target rent

• When a property becomes void, the rent moves to target

rent before a new tenant moves in, as per Government

guidance

7

Rent options for consultation

• Option1 – Rent increase of 2.2%

• Option 2 – Rent increase of 2.9%

• Option 3 – Rent increase of 3.8%

8

Rent options for consultation (Cont.)

• Option 1 is based on Government guidance using

September CPI + 1% which gives an average rise of 2.2%

but would result in a shortfall of £300k for 2015/16 in the

HRA Revenue Budget

• Option 2 is based on flexibility in the guidance to apply an

average rent rise of 2.9%, under this option 88% of

properties would be converged with target rents and a

£600k contribution to Capital Expenditure could be made

9

Rent options for consultation (Cont.)

• Option 3 is based on maintaining the previous years

contribution to Capital Expenditure of £2m and a

continuing strong position for the HRA and would require

an average rent rise of 3.8%

• 2014/15 rent increase for Lambeth tenants averaged 4.9%

• Early indications that increases of 2-5% are being

considered by other London Boroughs

10

Rent Summary

Option 1 Option 2 Option 3 4.9 %

Average rent PW (£) £109.68 £110.43 £111.43 112.58

Average increase PW (£) £2.35 £3.12 £4.14 £5.25

Average increase PW (%) 2.2% 2.9% 3.8% 4.9%

• Option 1 results in a shortfall of £300k for 2015/16 in the HRA Revenue

Budget

• Option 2 results in a minimal contribution to Capital Expenditure of £600k

compared to £2m in the previous year

• Option 3 maintains the previous years contribution to Capital Expenditure

of £2m and a strong position for the HRA

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Option 1 Impact – 2.2% Increase

Bedrooms % of dwelling

stock

Avg weekly rent

2014/15

Avg weekly rent

2015/16

Increase %

Studio 3.9% £79.29 £81.09 £1.80 2.3%

1 Bed 28.2% £91.99 £94.01 £2.02 2.2%

2 Bed 34.9% £104.67 £107.03 £2.36 2.3%

3 Bed 26.2% £121.82 £124.59 £2.77 2.3%

4 Bed 5.6% £139.97 £143.24 £3.27 2.3%

5 Bed 0.9% £152.70 £156.16 £3.46 2.3%

Over 5 Bed 0.3% £163.55 £166.22 £2.67 1.6%

12

Option 1 - Increases for individuals

Bracket No. of occupied

properties

% of occupied

properties

Decrease 53 0.2%

Increase £0.00 - £0.99 0 0.0%

Increase £1.00 - £1.99 3,636 15.3%

Increase £2.00 - £2.99 18,130 76.5%

Increase £3.00 - £3.99 1,900 8.0%

Increase £4.00 - £4.99 6 0.0%

Increase £5.00 - £5.99 0 0.0%

Increase £6.00 - £6.99 0 0.0%

Increase £7.00 - £7.99 0 0.0%

Increase £8.00 - £8.99 0 0.0%

Increase £9.00 - £9.99 0 0.0%

Increase £10 or greater 0 0.0%

Subtotal – occupied properties 23,725 100.0%

Void properties 680

Totals – all properties 24,405

13

Option 2 Impact – 2.9% Increase

Bedrooms % of dwelling

stock

Avg weekly rent

2014/15

Avg weekly rent

2015/16

Increase %

Studio 3.9% £79.29 £81.44 £2.15 2.7%

1 Bed 28.2% £91.99 £94.67 £2.68 2.9%

2 Bed 34.9% £104.67 £108.02 £3.35 3.2%

3 Bed 26.2% £121.82 £125.33 £3.51 2.9%

4 Bed 5.6% £139.97 £143.74 £3.77 2.7%

5 Bed 0.9% £152.70 £156.62 £3.92 2.6%

Over 5 Bed 0.3% £163.55 £166.49 £2.94 1.8%

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Option 2 - Increases for individuals

Bracket No. of occupied

properties

% of occupied

properties

Decrease 53 0.2%

Increase £0.00 - £0.99 0 0.0%

Increase £1.00 - £1.99 2,830 11.9%

Increase £2.00 - £2.99 10,723 45.1%

Increase £3.00 - £3.99 5,380 22.7%

Increase £4.00 - £4.99 2,551 10.8%

Increase £5.00 - £5.99 1,412 6.0%

Increase £6.00 - £6.99 730 3.1%

Increase £7.00 - £7.99 45 0.2%

Increase £8.00 - £8.99 1 0.0%

Increase £9.00 - £9.99 0 0.0%

Increase £10 or greater 0 0.0%

Subtotal – occupied properties 23,725 100.0%

Void properties 680

Totals – all properties 24,405

15

Option 3 Impact – 3.8% Increase

Bedrooms % of dwelling

stock

Avg weekly rent

2014/15

Avg weekly rent

2015/16

Increase %

Studio 3.9% £79.29 £81.74 £2.45 3.1%

1 Bed 28.2% £91.99 £94.90 £2.91 3.2%

2 Bed 34.9% £104.67 £109.08 £4.41 4.2%

3 Bed 26.2% £121.82 £126.61 £4.79 3.9%

4 Bed 5.6% £139.97 £146.24 £6.27 4.5%

5 Bed 0.9% £152.70 £163.54 £10.84 7.1%

Over 5 Bed 0.3% £163.55 £177.75 £14.20 8.7%

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Option 3 - Increases for individuals

Bracket No. of occupied

properties

% of occupied

properties

Decrease 53 0.2%

Increase £0.00 - £0.99 0 0.0%

Increase £1.00 - £1.99 2,781 11.7%

Increase £2.00 - £2.99 8,328 35.1%

Increase £3.00 - £3.99 4,946 20.8%

Increase £4.00 - £4.99 2,551 10.8%

Increase £5.00 - £5.99 1,412 6.0%

Increase £6.00 - £6.99 1,082 4.6%

Increase £7.00 - £7.99 786 3.3%

Increase £8.00 - £8.99 524 2.2%

Increase £9.00 - £9.99 204 0.9%

Increase £10 or greater 1,058 4.5%

Subtotal – occupied properties 23,725 100.0%

Void properties 680

Totals – all properties 24,405

17

Service Charges

• Service charges are set on the basis of recovering the

estimated cost of providing the service

• Heating and Hot Water charges to stay unchanged

• The cost of the concierge service is based on a three-year

phasing in of full cost recovery and will increase by 66p in phasing in of full cost recovery and will increase by 66p in

this (the final) year as per the Concierge Review Report

agreed by Housing Scrutiny in October 2013

• Parking and garage charges to stay unchanged

18

Charge 2014/15

(per week)

2015/16

(per week)

Movement %

Common service charges

Caretaking 2.24 1.57 (0.67) (30.00%)

Grounds Maintenance 1.83 1.46 (0.37) (20.00%)

Estate Cleaning 6.34 6.34 0.00 0.00%

Service Charges Proposal

Estate Cleaning 6.34 6.34 0.00 0.00%

Communal Lighting 2.72 2.82 0.10 3.50%

Disinfestation 0.69 0.97 0.28 40.00%

Total 13.82 13.16 (0.66) (4.78%)

Heating and Hot Water (Average) 13.83 13.83 - -

19

Charge 2014/15

(per week)

2015/16

(per week)

Movement %

Specific service charges

TV Aerial 0.73 0.33 (0.40) (55.00%)

Concierge 13.10 13.76 0.66 5.00%

CCTV 2.09 2.35 0.26 12.50%

Service Charges Proposal (cont’d)

CCTV 2.09 2.35 0.26 12.50%

Door Entry – Audio 1.32 1.49 0.17 12.50%

Door Entry – Video 2.00 2.25 0.25 12.50%

Total 19.24 20.18 0.94 4.89%

Grand Total 46.89 47.17 0.28 0.60%

20

Concierge

• A full review of the Concierge service was conducted and

reported to Housing Scrutiny in October 2013

• The review agreed a three year phased increase of 66p

per annumper annum

• The final increase in 2015/16 will be 66p

21

Parking Proposals (North & Central Areas)

Charge 2014/15 2015/16 Movement %

Garage rents tenants (per week) £12.23 £12.23 - -

Garage rents private tenants

(per week)

£19.06 £19.06 - -

Dedicated parking spaces tenants

(per week)

£5.29 £5.29 - -

Estate parking permit (per year) £31.79 £31.79 - -

Visitors’ parking (per day) £1.50 £1.50 - -

22

Proposed Budget Growth and Savings

Growth (£m) Savings (£m)

Growth: Welfare Rights service £0.240m

Universal Credit transition contingency £0.250m

Waste collection £1.650m

Recycling containers £0.250m

Housing regeneration (14/15 Budget £1.645m) £0.350m

Contribution to Capital Expenditure £1.203m

PFI revenue contribution (14/15 Budget £2.750m) £0.300m

Pension backfunding (14/15 Budget £3.550m) £0.150m

Savings: Leasehold service charges (£0.500m)

URH residual budgets (£0.252m)

LL management fee – 5% efficiencies (£1.184m)

LL delegated budgets – 5% efficiencies (£2.457m)

Totals: £4.393m (£4.393m)

23

‹#›

Expenditure: pence per £1 2015/16 – Option 2

Management 28p

Provision of services 16p

Revenue financing of

Cost of debt 13p

Contribution to reserves 0.4p

Repairs 19p

Other expenditure 4p

Provision for bad debt 2p

Depreciation 14p

financing of capital 4p

25

Voting

Which rent increase does the area forum support?

• Option 1 (2.2%)

• Option 2 (2.9%)

• Option 3 (3.8%)• Option 3 (3.8%)

Does the area forum agree the proposed service charges?

Does the area forum agree the proposed parking charges?

26

Meeting Timetable

• Area Housing Forums

- Central Area 11 November

- North Area 11 November

- South Area (Norwood) 12 November

- South Area (Streatham) 12 November

• Tenants’ Council – 20 November

• Cabinet Meeting – 8 December

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