Agenda item

To consider a report by the Lead Officer – Community Housing (copy attached) to examine the process for determining the recommendations on the level of weekly rent increases for community housing tenants.

 

The Lead Member for Housing and Communities introduced the report (previously circulated) to consider the social housing rent review and the Housing Revenue Account (HRA) finance. The proposed increase in rent for Community Housing Tenants was 2.7% - a lower increase than in previous years. The Lead Member referred to the pressures upon the HRA annual capital spend – which had not been matched by external funding – and subsequent need to source additional borrowing.

 

The Head of Housing and Community Services explained that every year a report was presented to Cabinet to support a rent increase to manage the income required to manage the Council’s housing stock. It was important to ensure that any proposed rental increase was affordable to tenants. Appendix 3 set out the procedure for determining housing rent increases.

 

The Lead Officer – Community Housing summarised the report as follows:

 

·      Weekly rents remained low and within strict affordability measures.

·      There were significant budget pressures – Welsh Housing Quality Standard.

·      Investments benefitted tenants.

·      Less than the maximum possible increase in rent meant less investment in homes.

·      Denbighshire’s tenants Value for Money satisfaction was amongst the highest in Wales.

·      Tenants’ satisfaction with the overall service was amongst the highest in Wales.

 

The Committee were reminded that the maximum rent increase allowed was set every year by Welsh Government, generally based on the September CPI figure plus 1%. In September 2024 CPI was comparatively low compared to previous years at 1.7%.

 

In consideration of rent increases an affordability assessment was undertaken taking into account the following:

 

·      Joseph Rowntree Foundation (JRF) Living Rent Model.

·      Office of National Statistics data from October 2024 on average household incomes within Denbighshire.

·      Lowest 30^th Percentile of earned income.

·      Rent being no more than 28% of the lowest earned income.

 

The Authority’s rents were well within those levels. An infographic (page 65) showed what the increased rent would be for various types of rental property available, all of which proposed rents remained below the Living Rent Model.

 

The Finance and Assurance Officer explained how rising costs had impacted on the maintenance and new build of housing stock. The grant received from Welsh Government had remained static resulting in the need to borrow. A graph in appendix 3 (page 68) highlighted debt financing costs (interest) rising over the next 7 years with forecasts deficits going into debt in the next 3 years. Hence, a thorough review of the HRA and Capital programme would commence in the new year to ensure that capital projects were financially sustainable.

 

The Lead Officer: Housing Property reminded members of the Welsh Housing Quality Standards 2023 which drove the maintenance programmes for the housing stock. To be compliant with WHQS there were a number of other new budget pressures including:

 

·      Air Source Heat Pumps.

·      Solar Panels.

·      External Wall Insulation.

·      Kitchen & bathroom refurbishments.

·      External storage facility.

·      Flooring changes and

·      Water butt installation.

 

Moving forward focus would be on affordable warmth, with the Target Energy Pathways EPC C 75 being the new standard by 2027.

 

The impact from that investment was improved energy efficiency and likely energy fuel savings to households who responded positively in regard to tenant satisfaction in respect of their rent being value for money.

 

Responding to members’ questions the Head of Service advised that the review in the new year would be to identify how to achieve the WHQS standards plus deliver new social housing given the financial constraints. It was anticipated that a ‘deep dive’ review would identify efficiencies that could be made and failing to meet WHQS would jeopardise future WG grant funding.

 

The Committee heard that in addition to work on the housing stock the Service was proactively involved in assisting tenants who may face difficulties in rent payments. The majority of issues arose where the tenant faced a change in circumstances. Housing officers had a dedicated area to support and liaise with tenants, identifying issues at the earliest opportunity. Every effort was made to assist the tenant, with legal recourse being the last option if tenants failed to engage. Rent arrears within the County were similar to all registered social landlords throughout Wales. It was not anticipated that the proposed increase in rent would increase the rate of rent arrears in Denbighshire.

 

The void rate of properties was approximately 10% of the stock. If a property became void consideration was given to whether to remodel or dispose of the property – depending on the cost of bringing them up to WHQS. Conversely, the service was pursuing a programme of buy back ex council houses (partly funded by Welsh Government) as a cost effective way to add to the housing stock.

 

The Committee thanked officers for their presentation, the thoroughness of the report presented and excellent work being achieved by the Service.

 

RESOLVED: that

 

      I.         the Committee have considered and agreed the content of the report and

 

    II.         the Committee commend the positive work carried out.