Agenda item
Housing Revenue Account Amended Rent Setting Report 2009/10 (CAB 145/089)
Decision:
Councillor S. Islamdeclared a personal interest in Agenda item 11.1 Housing Revenue Account Amended Rent Setting Report 2009/10” (CAB 138/089). The declaration of interest was made on the basis that the report contained recommendations relating to the level of housing rent for properties in the ownership of the Authority (managed by Tower Hamlets Homes also known as the ALMO) and Councillor Islam was a tenant of Tower Hamlets Homes.
Councillor O Ahmeddeclared a personal interest in Agenda item 11.1 Housing Revenue Account Amended Rent Setting Report 2009/10” (CAB 138/089). The declaration of interest was made on the basis that the report contained recommendations relating to the level of housing rent for properties in the ownership of the Authority (managed by Tower Hamlets Homes also known as the ALMO) and Councillor Ahmed was a representative of the Authority on the governing body of Tower Hamlets Homes.
Reasons for Special Circumstances and Urgency agreed.
Resolved:
1. That in accordance with the requirements of the Department of Communities and Local Government’s guidance, it be agreed that it was the Authority’s intention to pass on the reduced rent increases to tenants; and it also be agreed that the Authority wished to take up the offer of the receipt of additional HRA Subsidy, in order to do this.
2. That the decision of the Cabinet, taken at its meeting held on 14th January 2009 [in relation to Agenda item 10.4 “Housing Revenue Account - First Budget and Rent Setting Report - 2009/10 (CAB 097/089)] to increase rents by a weekly average of £4.47, from the first rent week in April 2009, not be implemented;
3. That the 2009/10 rent increase be deferred until rent week 9 (which begins on 1 June 2009) in order to facilitate the introduction of the lower rent increase [referred to in resolution 1. above];
4. That the Corporate Director, Development & Renewal be authorised to bid for additional subsidy following the decision to lower the average rent increase in 2009/10 to equal or lower than 3.1%;
5. Subject to the subsidy referred to in resolution 4. above being secured, that an average weekly rent increase of £2.80 per week with effect from the 1st June 2009 (i.e. rent week 9) be agreed. Also that it be noted that In conjunction with resolution 3 above, this would equate to an average rent increase of 2.9% over a full year if implemented from 1st April 2009;
6. That the Corporate Director, Development & Renewal, after consultation with the Lead Member for Housing and Development, be authorised to implement the rent increase, referred to in resolution 5. above, having regard to the final Government settlement of Housing Subsidy with such variation as that may require; and
7. That the amended 2009/10 Housing Revenue Account Budget, as set out in Appendix 1 to the report (CAB 145/089), be approved.
Action by:
CORPORATE DIRECTOR DEVELOPMENT AND RENEWAL
(A. DALVI)
Services Head Resources, Development and Renewal, (C. Holme)
Finance Manager, Development & Renewal (P. Leeson)
Minutes:
Councillor S. Islamdeclared a personal interest in Agenda item 11.1 Housing Revenue Account Amended Rent Setting Report 2009/10” (CAB 138/089). The declaration of interest was made on the basis that the report contained recommendations relating to the level of housing rent for properties in the ownership of the Authority (managed by Tower Hamlets Homes also known as the ALMO) and Councillor Islam was a tenant of Tower Hamlets Homes.
Councillor O Ahmeddeclared a personal interest in Agenda item 11.1 Housing Revenue Account Amended Rent Setting Report 2009/10” (CAB 138/089). The declaration of interest was made on the basis that the report contained recommendations relating to the level of housing rent for properties in the ownership of the Authority (managed by Tower Hamlets Homes also known as the ALMO) and Councillor Ahmed was a representative of the Authority on the governing body of Tower Hamlets Homes.
The Chair informed members of the Cabinet that the special circumstances and reasons for urgency associated with the proposals were detailed on the front page of the report. The Cabinet subsequently agreed the special circumstances and reasons for urgency as set out on the front page of the report and also set out below:
· On 6th March 2009, the Minister of State for Housing and Planning announced that she intended to reduce the national average guideline rent increase as a consequence of the “unprecedented global downturn in the economy.”
· On the 26th March 2009, Communities and Local Government (DCLG) published a consultation document setting out its proposals for amending Housing Subsidy Determination 2009/10. The consultation document invites Local Authorities to bid for additional subsidy if they are prepared to reduce their actual rent increase to 3.1% or less. Authorities wishing to take up the offer must notify the Department of Communities & Local Government by Friday 24th April, 2009. Members consideration of the Minister of State’s offer is therefore urgently required in order satisfy this requirement.
· The report was unavailable for public inspection within the standard timescales set out in the Authority’s constitution for the reasons set out above.
· The report has been completed prior to the issue of the Department of Communities and Local Government’s final amended Subsidy Determinations. The figures within the report are based on an assessment of the implications contained within the consultation document published on the 26th March 2009. Any significant changes between the draft and final determinations could have a major impact upon the Housing Revenue Account. Members will be notified of any significant changes.
· If the Council fails to indicate a wish to pass on reduced rent increases to tenants, then the guideline rent increase will remain unaltered from that notified in December, and no additional subsidy will be made available.
Councillor Francis, Lead Member Housing and Development, in introducing the report, summarised the salient points contained therein commenting that:
· Cabinet had considered a report in January 2009 in relation to the setting of a housing rent level for properties in the ownership of the Authority. At the time, Government had issued a national guideline that rent increase by 6.2%. However after taking advice and deliberating the matter Cabinet had considered that a lower rent increase was appropriate and had approved an average rent increase of 5.5% approximately £4.50 per week for a household. This would have resulted in a £320,000 deficit in the Housing Revenue Account, which the Authority had intended to mitigate through efficiencies and drawing down reserves.
· He had sought support from Cabinet for the lobbying of Government to change their guidance relating to rent increases, because it had been calculated on the basis of historic level of inflation which was much higher than was actually the case in January. Ministers had now bowed to national pressure and 3 weeks previously had revised their guideline rent increase to 3.1% and had also made available additional subsidy to facilitate implementation of this by local authorities.
· To reflect the change in Government guidance the report proposed that Cabinet now approve a revised average weekly rent increase of £2.80 per week equating to 2.9% in 2009/10.
· The average rent increase for Registered Social Landlords in 2009/10 had been 7 to 8% three times higher than that now proposed for homes owned by Tower Hamlets. He considered that RSL’s should be lobbied further to reduce their rent increases in line with Government guidance, so that their tenants also benefitted.
· There remained the option for the Authority to allocate additional resources to effect an even lower rent increase. However he considered that this would divert resources which could otherwise be invested in estates for example the Estate Improvement Programme encompassing the block cleaning programme (or deep clean of estates), when the proposed rent increase was manageable.
· Letters had been issued to tenants indicating the rent level would not be set, because the Council was awaiting details of the permitted levels of rent increase from Government. However if Cabinet approved the proposal in the report letters would be issued to tenants in week beginning 13 April 2009 giving notification of the rent increase in 2009/10.
· Urged members to continue to support the lobbying of Government for lower increases in housing rent in future and ultimately an end to the annual rent review system.
Members of the Cabinet commended Councillor Francis, Lead Member Housing and Development, for his clarity of vision, dedication and hard work in the delivery of the Administration’s aspirations relating to housing and delivering for vulnerable elements of the Community in a time of recession.
Clarification was sought and given as to how the Authority could work in partnership to achieve a low rent increase for tenants of RSL’s.
The Chair, in Moving the recommendations, as set out in the report:
· Formally thanked Mr Holme, Service Head Resources Development and Renewal, and his Officer Team for their efforts in developing the revised proposals.
· Welcomed the lower rent increase proposed commenting that this would assist many local residents a great deal in coping with the impact of the severe economic downturn.
And it was:-
Resolved:
1. That in accordance with the requirements of the Department of Communities and Local Government’s guidance, it be agreed that it was the Authority’s intention to pass on the reduced rent increases to tenants; and it also be agreed that the Authority wished to take up the offer of the receipt of additional HRA Subsidy, in order to do this.
2. That the decision of the Cabinet, taken at its meeting held on 14th January 2009 [in relation to Agenda item 10.4 “Housing Revenue Account - First Budget and Rent Setting Report - 2009/10 (CAB 097/089)] to increase rents by a weekly average of £4.47, from the first rent week in April 2009, not be implemented;
3. That the 2009/10 rent increase be deferred until rent week 9 (which begins on 1 June 2009) in order to facilitate the introduction of the lower rent increase [referred to in resolution 1. above];
4. That the Corporate Director, Development & Renewal be authorised to bid for additional subsidy following the decision to lower the average rent increase in 2009/10 to equal or lower than 3.1%;
5. Subject to the subsidy referred to in resolution 4. above being secured, that an average weekly rent increase of £2.80 per week with effect from the 1st June 2009 (i.e. rent week 9) be agreed. Also that it be noted that In conjunction with resolution 3 above, this would equate to an average rent increase of 2.9% over a full year if implemented from 1st April 2009;
6. That the Corporate Director, Development & Renewal, after consultation with the Lead Member for Housing and Development, be authorised to implement the rent increase, referred to in resolution 5. above, having regard to the final Government settlement of Housing Subsidy with such variation as that may require; and
7. That the amended 2009/10 Housing Revenue Account Budget, as set out in Appendix 1 to the report (CAB 145/089), be approved.
Supporting documents: