Agenda item

To approve the Director of Housing to adjust council rents and housing related charges with effect from 3 April 2023.

Agreed:-

(1)     That approval is given to authorise the Director of Housing to adjust council rents and housing related charges with effect from 3rd April 2023 as follows:

(a)   Increase rental charges by 5%, which is 2% below the government’s social rental cap of 7%.

(b)   Increase housing service charges by the consumer price index (CPI) + 1%, equivalent to a 11.1% increase.

(c)   That subject to consultation with the residents of the site, to increase rent at the traveller’s pitch in Hills View, Tipton by 5%

(d)   That properties managed by Riverside under the Private Finance Initiative (PFI) agreement receive a 5% rental increase and a 11.1% increase in service charges, which need to match the councils rent and service charge increases.

(e)   That properties that sit outside the Housing Revenue Account (including service tenants for Parks, Sandwell Valley and Caretaking) receive a 11.1% increase in rental charges and service charges, which is equivalent to CPI plus 1%.

(f)    That the leaseholder annual fee be increase by 11.1%, CPI + 1% in 2023/24 from £104.10 to £115.66.

(g)   That the Director of Housing undertake a further review on garage rents and submit a further report to Cabinet in due course.

(2)     That the Director of Housing be authorised to establish a hardship fund for HRA tenants (to support them in their tenancy) and to allocate £100k of HRA reserves, to be reviewed annually.

Approval was sought to authorise the Director of Housing to adjust council rents and housing related charges with effect from 3 April 2023. A 5% increase was proposed to help battle inflation and ensure that the Local Authority was able to continue to maintain, modernise and manage social housing properties within a ringfenced budget.

The Chair of the Budget and Corporate Scrutiny Management Board requested further information on what would be the likely impact as a result of the increase in charges on the ability of tenants to pay them. It was also questioned why the increase in garage fees proposed a further 5% increase when they were significantly increased last year.

The Cabinet Member for Housing clarified that It was estimated that 70.2% of Sandwell tenants were in receipt of full or partial housing benefit or housing element of Universal Credit that would mitigate the impact of rent increases. The Establishment of a hardship fund to support those on low incomes not in receipt of benefits would provide further targeted support. This would be in addition to a wider package of hardship interventions.

Regarding the increase in garage fees, it was stated that it was normal practice to review and revise fees and charges annually. The increase to garage rents last year was done in recognition that the charges had not been reviewed for some time and were low in comparison to charges by other Local Authorities. The proposals for this year was to enable the charges to meet inflationary pressures, although as with the social housing rent increase it was recommended that this would be capped at 5% rather than much higher rate of CPI. A lower increase would create a budget pressure on the general fund that would need to be met from other General Fund budgets. Garages were a discretionary rather than essential service, 62% were rented by home owners and tenants with more than one garage.

The Chair of the Safer Neighbourhoods and Active Communities Scrutiny Board asked if Sandwell’s rent rates were in line with neighbouring authorities. Comparisons were also requested for the increase in garage rental rates with other authorities.

The Cabinet Member for Housing confirmed that Local Authorities in the region were asked to share details on their current rent levels, only Dudley MBC responded. The Housing Regulator had recently published a report on Local Authority Stock and rents, this reports an average social rent in England of £89.53 and a regional average rent for the West Midlands of £81.28. Sandwell’s average rent was £83.32. Whilst this was a helpful benchmark, members were minded that caution should be exercised as data on average rents would have a large degree of variation driven by the number of Local Authorities in each region and the difference in type of properties which would impact on the overall average.

Rent levels were benchmarked in 2021 when increasing the charges and all were comparable with others in the region and remained very favourable when compared to other storage hire options in the private sector. The uplift proposed was capped below the level of CPI and was in line with proposals for other fees and charges across the Council.

Following queries raised, the Cabinet Member for Housing was minded to further review the proposal to increase rental charges for garages for consideration at a future meeting. 

Reasons for recommendations

Each year council tenants, leaseholders and other residents are notified of the rent and other related housing charges to be set from the following April. The Council had to achieve the right balance between supporting tenants in hardship and protecting the Housing Revenue Account (HRA) to ensure that the Council could continue to provide affordable social housing to residents.

The recommendations were reported to the Safer Neighbourhoods and Active Communities Scrutiny Board in September. Members of the Board were understanding and supportive of increases to rent and service charges, whilst acknowledging the current difficulties posed by the national financial situation.

Alternative options considered

It was recommended from April 2023 to increase rents by 5% for tenants within the Riverside managed PFI estate of Wednesbury. The council had the discretion to set PFI rent. It would be seen to be very unfair for other council tenants in neighbouring areas to have had council rent increased and not have the same with the PFI estate in Wednesbury.

The Department of Levelling Up Housing and Communities (DLUHC) policy allowed social landlords to increase their annual rents by 7% which is in line with the recent government rental cap. It is recommended that rents are increased rents by 5%, 2% lower than the cap to support tenants with the cost of living.

Increasing rents below the rate of inflation would create financial pressures for the council to deliver key services. The provision of good quality Housing and Neighbourhoods were key to improving lives and life chances for Sandwell residents. Reducing the level of income to the HRA would seriously impact the 30-year business plans and would mean less funding for new homes provision.

An alternative would be to increase rents by 3%. The budgetary pressures from this would impact the Council’s ability to deliver key services and may result in reduced services where costs can’t be met through operational budgets.

Agreed:-

(1)          that approval be given to authorise the Director of Housing to adjust council rents and housing related charges with effect from 3 April 2023 as follows:

(a)  Increase rental charges by 5%, which is 2% below the government’s social rental cap of 7%;

(b)  increase housing service charges by the consumer price index (CPI) + 1%, equivalent to a 11.1% increase;

(c)   that subject to consultation with the residents of the site, to increase rent at the traveller’s pitch in Hills View, Tipton by 5%;

(d)  that properties managed by Riverside under the Private Finance Initiative (PFI) agreement receive a 5% rental increase and a 11.1% increase in service charges, which need to match the councils rent and service charge increases;

(e)  that properties that sit outside the Housing Revenue Account (including service tenants for Parks, Sandwell Valley and Caretaking) receive a 11.1% increase in rental charges and service charges, which is equivalent to CPI plus 1%;

(f)    that the leaseholder annual fee be increase by 11.1%, CPI + 1% in 2023/24 from £104.10 to £115.66;

(2)          that the Director of Housing be authorised to establish a hardship fund for Housing Revenue Account tenants (to support them in their tenancy) and to allocate £100k of HRA reserves, to be reviewed annually;

(3)          that a further report be submitted on an increase in Council garage rent following review.