Agenda item

To consider a report by Councillor Rhys Thomas, Lead Member for Housing and Communities (copy enclosed) seeking Cabinet approval for the Denbighshire Housing annual rent increase, the Housing Revenue Account Capital and Revenue Budgets for 2023/24 and Housing Stock Business Plan.

RESOLVED that –

(a)       the Housing Revenue Account Budget for 2023/24 (Appendix 1 to the report) and the Housing Stock Business Plan (Appendix 2 to the report) be adopted;

(b)       rents for Council dwellings be increased in accordance with the Welsh Government Policy for Social Housing Rents by 5% with effect from Monday 3 April 2023;

(c)        the additional report (Appendix 3 to the report) on Affordability, Cost Efficiencies, and Value for Money be noted, and

(d)       Cabinet confirms that it has read, understood and taken account of the Well-being Impact Assessment (Appendix 4 to the report) as part of its consideration.

Councillor Rhys Thomas presented the report seeking Cabinet approval for the Denbighshire Housing annual rent increase, the Housing Revenue Account (HRA) Capital and Revenue Budgets for 2023/24 and Housing Stock Business Plan.

Some context was provided to the report including the economic background with the cost of living crisis and rise in UK Inflation (CPI) to 10.1% and increases of up to 30% for maintenance and capital programme costs.  Consequently, Welsh Government had set a maximum rent increase of 6.5% in Wales (7% set by the UK Government for England), together with some additional amendments to be agreed with the housing sector.  It was proposed to increase weekly rents by 5%, resulting in an average weekly rent of £102.31 (average weekly rent increase £4.87).  In reaching the proposal a balance had been met between maintenance and investment in housing stock, and the impact on tenants as a result of the increase.

The Lead Officer Community Housing guided Cabinet through the report detail and impact of the current economic climate both in terms of investment in housing stock to meet Welsh Housing Quality Standards (including environmental targets/fuel efficiencies) and funding new build programmes together with the impact on tenants and household finances.  As part of the rent setting process, an assessment of cost efficiencies, value for money and affordability for tenants had been carried out, and there was confidence that work had demonstrated rents were affordable, with Denbighshire’s rents at the lower end of the target rent and continually monitored. 

The report included the forecast outturn for the HRA for 2022/23 in line with the monthly monitoring report with balances at year end forecast to be £2,157m.  The impact of a rent increase on the Housing Stock Business Plan (HSBP) was also explained, with each 1% rent increase providing £170k revenue income year on year to enable £3.5m of borrowing for investment over the period of the HSBP.  The recommendation to apply a 5% increase and not 6.5% would cost the HRA around £250k for every year of the HSBP.  A 5% increase would be worth £850k resulting in £8.5m investment over ten years.  It was noted that 72% of tenancies were in receipt of welfare benefit and housing costs support with any rent increase being covered by that support, and assurances were provided regarding ongoing work to support tenants as much as possible.  There was a commitment to no evictions due to financial hardship and provision of targeted support for tenants.

Cabinet recognised the need to balance the level of rent increase to meet future investment needs of housing stock against affordability for tenants.  Councillor Julie Matthews advised that Cabinet had asked for further detail which had not been included in the report in terms of options appraisals of other percentage increases for comparison purposes in order to evaluate the impact at the different levels and make a fully informed decision.  During debate, it appeared there had been some misunderstanding regarding the dissemination of that data which had been readily available and circulated to members on request, and officers apologised that the modelling data had not reached Councillor Matthews.  The point had been made in the report that every 1% increase in rent equated to £170k each year for investment borrowing, with a 3% increase severely impacting the capital programme.

In terms of balancing the impact on housing investment and affordability for tenants, the Head of Finance and Lead Officer Community Housing responded as follows –

·       the proposed 5% had been put forward following extensive modelling of different options to ensure council housing was maintained to an appropriate standard whilst also fulfilling contractual obligations with regard to new builds; any lesser increase would result in a reduction in those standards which would require additional investment in future years, and withdrawal from new builds given the impact on borrowing capacity for future investment.  Whilst a higher increase would be preferable to fund higher capital expenditure and investment, it was accepted that a balance needed to be made against affordability for tenants

·       a report on efficiency, value for money and affordability had been attached as Appendix 3 to the report and detailed those calculations.  The proposed 5% was half the inflation rate, the minimum wage and welfare benefits were increasing by 10%, and most salaries should increase by 5%.  Other local authorities and housing associations were taking a similar approach.  It was accepted that every household was different and each case would be treated differently with targeted support for tenants.  If the maximum 6.5% increase was applied the council would still be worse off next year with fewer improvements to council housing due to increases in maintenance and capital costs and lack of rent increase to meet those levels.  Less than a 5% increase would result in more tenants losing out on investment in their homes and reduced housing standards.

Cabinet discussed the issue in detail and overall was satisfied that due care and attention had been given to finding the correct balance, although given the current pressures on household finances, no increase at all would have been preferable.  It was noted that the increase would be covered by welfare benefit and housing costs support for 72% of tenancies, but there would be a greater impact on the remaining 28% and Cabinet was pleased to note the comprehensive targeted support for tenants and the fact that there would be no evictions due to financial hardships.  The importance of ensuring the best possible services for tenants and investment in their homes was highlighted, particularly in terms of fuel efficiencies given the energy crisis which could generate cost savings, and it was vital that work continued to benefit tenants.  Reference was also made to the Council’s priority to invest in new builds to meet the significant housing need in the county.

Officers responded to further questions and comments as follows –

·       confirmed 2100 people on the housing waiting list with a desperate need for social housing and work was ongoing between the authority and local housing associations to best meet those needs in the current challenging housing market

·       the modelling of weekly rents by property type had been included in Appendix 3 to the report based on 5% and 6.5% increases by property type; for a three-bedroom house the 5% increase would equate to a weekly increase of £5.53

·       provided assurances that a 5% increase would enable the council to keep up with progress in maintaining housing standards based on the current trajectory and meet the target of 170 additional homes over the five-year period.  However, the new WHQS, including net zero by 2033, would be unattainable without significant financial support from the Welsh Government and discussions were ongoing between local authorities, housing associations and Welsh Government in that regard given the future uncertainties.

Councillor Matthews acknowledged the need for a rent increase and valid arguments put forward but reiterated concerns that data modelling of all options had not been shared with Cabinet at the outset to inform decision making, particularly given that any increase would have a detrimental impact on households, with a greater impact on the 28% of households in work and not in receipt of benefits.  She also felt a more holistic approach should be taken with other decisions which would impact on people’s incomes.  There were mixed views as to whether the full data modelling of options should have been included in the report or made available to members separately.  The Leader’s preference had been for an options report but he felt the data supplied in the report was sufficient to reach a decision.

Councillor Rhys Thomas apologised that the data had not reached Councillor Matthews.  He felt there had been a good debate of the issues, reiterating that it was a difficult decision and a balance needed to be made, and stressed that all the money in the HRA was used to benefit tenants in Denbighshire.  A rent increase lower than 5% would detrimentally impact on future improvement works and plans to build new homes to meet housing need.  On being put to the vote it was –

RESOLVED that –

(a)      the Housing Revenue Account Budget for 2023/24 (Appendix 1 to the report) and the Housing Stock Business Plan (Appendix 2 to the report) be adopted;

(b)      rents for Council dwellings be increased in accordance with the Welsh Government Policy for Social Housing Rents by 5% with effect from Monday 3 April 2023;

(c)      the additional report (Appendix 3 to the report) on Affordability, Cost Efficiencies, and Value for Money be noted, and

(d)      Cabinet confirms that it has read, understood and taken account of the Well-being Impact Assessment (Appendix 4 to the report) as part of its consideration.

[Councillor Julie Matthews voted against the above resolution.]