Housing finance and rents 2007/08
Released: 18 January 2007
Wolverhampton City Council has received from Government details of the 2007/08 Housing Subsidy Determination.
Even on a “best case scenario”, the council will pay over to Government some £2.4 million next year. This reflects the requirements of a national scheme which distributes resources from those Housing Revenue Accounts considered by Government to be in surplus to those considered to be in deficit.
In terms of the impact on resources available to deliver day-to-day management and maintenance services to tenants, next year’s Housing Subsidy settlement will be £2.8 million worse than the current year’s settlement.
In addition, the council’s Housing Revenue Account, and all of the partners that deliver housing services to tenants, are experiencing a number of financial pressures caused by pay and price inflation, implementing a national pay agreement to deliver “equal pay for work of equal value” and the impact of continuing Right-to-Buy sales by tenants and other disposals.
All of these financial pressures must be addressed by the council to ensure that its Housing Revenue Account avoids an overall deficit. Similarly, each of our partners - Wolverhampton Homes, the various Tenant Management Organisations and Estate Management Boards - must operate maximise the efficiency of their services to avoid an overall deficit occurring at the end of each financial year.
Uppermost in the council’s deliberations has been the over-riding objective of giving the Wolverhampton Homes Board the best possible opportunity of securing (and then retaining) a 2-star inspection result; and to delay for as long as possible any need for any of our housing service providers having to implement service reductions.
On January 9th, the council received confirmation from Government that an allocation of £39.3 million is available for 2007/08 to deliver Decent Homes across the City. This will be the first tranche of over £300 million.
This allocation is conditional on Wolverhampton Homes securing, and then retaining, a 2-star rating. It is imperative therefore that the Council does everything possible to assist Wolverhampton Homes.
It is clear from the last inspection that solid progress is being made and Wolverhampton Homes are well on the way to achieving a successful re-inspection result.
The recommendations that will go forward to Council in early February are designed to support the Wolverhampton Homes Board in delivering those additional improvements necessary to secure 2-stars.
Accordingly, the council on 7th February is being recommended to:-
(a) increase average rents by 4.25% from April 2007
(b) defer any change to existing service charges, garage rents and other charges until at least April 2008
(c) agree that future reviews of rents and charges will now take place annually from April 2008.
Tenants will receive new rent books immediately before rents rise on April 2nd.
These will show the net amount payable after allowing for Rent Rebates. For those tenants in receipt of a Rent Rebate, the amount of rent they have to pay will not change because of the rent review.
If benefit changes from April because of the annual Government up-rating, or because of changes in individual circumstances, each tenant will receive an individual letter from the council’s Housing Benefit Division in March.
Some 15,200 tenants will be shielded from the change in rents in April by higher rent rebate entitlement.
Wolverhampton, like all housing authorities, is also having to calculate rents on a new basis - the so-called rent restructuring. This has to be phased-in over a ten year period, and has been included within the average rent increase figure of 4.25%.
Under rent restructuring it is very difficult to cushion or cap large rent rises for some tenants. The Government has requested that no rent increase should be more than 4.1% plus £2.08 (on a 50 week basis). Wolverhampton is meeting this requirement.
Councillor Peter Bilson
Executive Member for Regeneration and Enterprise (with Strategic Responsibility for Housing)
Issued by the press office.