Agenda item

This report provides information on the proposed rent and other charges made to council tenants and leaseholders for the financial year 2021/22. The report also provides information on the Housing Revenue Account (HRA) budget for the financial year 2021/22, detailing the way in which the rent and other income is spent.

The Finance Manager for the Housing Revenue Account (HRA) introduced the item and informed the panel that she was introducing a paper the was titled The Housing Revenue Account Rent, Service Charge, Garage Rent and Budget Setting and the budget that was discussed was for 2021/22.

The Finance Manager acknowledged the financial troubles that had impacted Croydon in 2021 and stated that this was the reason for the slight changes in the 2021/22 budget. This was due to the fact there has not been a large capacity for non-urgent changes.

The Finance Manager stated that the main challenge during COVID-19 for the HRA had been to keep up with the planned maintenance programme; it had been forecasted that there would be an under-spend on planned maintenance that they would have to catch up on in the coming years. They also suffered some financial losses due to reduced rent collection causing the debt within the HRA to rise slightly higher than in previous years. Some of the debt had already been paid back and they were not expecting to begin the new-year with any significant financial pressures.

The Finance Manager informed the Panel that they would be recommending to Cabinet and Council to increase rent in 2021; the increase would become Consumer Price Index (CPI) from September plus 1% which amounts to a 1.5% rise in rent. This would also be the case for garage rent and service charges.

These decisions had been taken with the expectation that housing benefits will be changed which would allow tenants to be able to meet the increased rent charges. The increase in rent will provide just over £1,000,000 additional income for the HRA to be spent on tenant services, which will mainly be used to cover staff costs.

There had been an increase in pension costs due to employer contributions to pensions rising, and this would be covered by the additional funds generated from the increased rent. There are also inflationary pressures for utility costs and increase on-costs as a result of repairs and disrepair claims.

The Finance Manager told the Panel that the HRA were still recovering from the 1% reduction in rent for the past four years. If the rent reduction had not been in place then the HRA would have recovered £30 million more rent for their tenants.

The problem had been exacerbated due to the inflationary pressures which had caused costs to increase whilst the income for the HRA from rent was decreasing, and there was no possibility to reduce the services provided to their tenants.

The Finance Manager informed the Panel that the HRA intended to retain some of the receipts from right to buy sales, however they can only use them towards new affordable housing. The HRA planned to acquire new properties in 2021/22 and would use part of their GLA grant to purchase some of those new properties. This would help to increase the amount of housing stock for the HRA helping them to meet the rising demand for homes throughout the country.

The Finance Manager stated that the HRA had also expected that there would be a need for additional work to be carried out for higher level fire safety assessments and new fire doors. This would be a key factor in the long term planning of the HRA, as they would need to find a way to cover these additional costs.

The Chair asked the Finance Manager to elaborate on her points regarding the increase in costs that the HRA had to endure due to rising pension and staffing costs. The Chair was of the belief that these costs were covered by central funding. In response to the Chair the Finance Manager stated that there were management costs which covered the staff who ran the HRA on a day to day basis. This included staff members who were responsible for collecting rent from tenants, the staff that worked as caretakers and staff that ran their maintenance programmes.

A resident present enquired that given the HRA’s plan to increase rent, would there be a situation in which the Cabinet and Council would consider going beyond the HRA’s recommended rent increase due to the current financial position of Croydon Council. The Finance Manager responded by informing the resident that there was a statutory cap on the amount that they could increase the rent by. Therefore it was not possible for the rent to be increased further than the recommended amount.

The resident further queried whether the report included the recent declaration of sites that Brick By Brick had withdrawn which they were originally planning to develop. In response the Finance Manager stated that she did not believe that it included the recent declaration, but agreed to confirm this at the next Tenant and Leaseholder Panel.

Resolved - That the Tenants and Leaseholder Panel agreed to note the report.