Agenda item

The Portfolio Holder for Housing and Communities to submit a report seeking approval to adopt a formal Rent and Service Charge Setting Policy for the Council’s landlord function, which will confirm the Council’s approach to rent setting, providing clarity for partners, tenants and leaseholders.

Andrew Cotton, Director for Housing and Communities introduced the report, the purpose of which was to seek approval to adopt a formal Rent and Service Charge Setting Policy for the Council’s landlord function, which would confirm the Council’s approach to rent setting, providing clarity for partners, tenants and leaseholders.

 

Mr. Cotton highlighted that the Policy recognised the importance of the rent and service charge income, which funded the services tenants and leaseholders received.  Due to statute and regulation the Council’s options on rent setting were limited.  The Policy provided a framework of principles for service charge setting and recovery, based around transparency and reasonableness.

 

Mr. Cotton highlighted consideration to the financial impact on tenants, the Council’s approach to recovery and the summary of responses to consultation.  Following approval of the Policy, preparation for the next financial year (2021/22) would start.

 

During discussion the following points were noted:

 

·         Members thanked Mr. Cotton and his team for their work.

·         The Council’s approach on this issue had been well considered, fair to tenants (e.g. those paying electricity charges were benefiting from the provision) and consistently inclusive and consultative.

·         The Council needed to balance compassion for tenants with care for its housing stock to ensure it provided for future tenants.

·         This approach placed the HRA in a more sustainable position to enable the Council to provide good housing to those in need.

 

Cabinet:

 

1)    NOTED the report and the responses received to the consultation on the Policy;

 

2)    APPROVED the proposed Rent and Service Charge Setting Policy with effect from April 2021;

 

3)    APPROVED the continued work on Service Charges;

 

4)    DELEGATED to the Director for Housing and Communities:

 

a)    Decision-making in relation to Service Charge de-pooling and disaggregation and consultation with affected tenants and leaseholders;

b)    Authority to make minor amendments to the Policy if required by future changes to legislation and regulation.

 

 

 

 

Reason for the decision

 

Each year local authority housing landlords must set rents and budgets for the forthcoming financial year and provide each individual tenant with a statutory notice of any proposed rent change.  The Council has established practice in respect of rent setting and its discretion is limited by regulation but no clear policy statement.

 

In relation to service charges, the Council has established custom and practice in recharging tenants and leaseholders for the additional property-related services they receive but no clear policy statement.  Section 9 of the Policy draws together and makes explicit the principles the Council adopts in terms of service charges collection and calculation:

 

a) It is right the Council collects income to pay for the services it provides.

b) The Council will act lawfully and reasonably in the setting and recovery of service charges.

c) Service charges will be de-pooled i.e. they will be payable only by those tenants or leaseholders who receive additional services.

d) Service charge costs will be calculated on a block-by-block basis, unless it is impracticable to separate costs to that level of detail. If that is the case, costs will be aggregated (i.e. the total cost of the service is to be divided by the number of properties that benefit from the service to calculate the charge).

e) Information will be provided on service charges, including the costs that the charges cover, how charges are budgeted, and how increases/decreases calculated.

f) Tenants and leaseholders will be involved in the procurement of contracts for the services they pay for.

 

The adoption of these principles with effect from April 2021 provides a clear framework for work in the remainder of the financial year 2020/21 to de-pool and where appropriate disaggregate property-related service charges.  This will enable preparation for the annual charges to be considered and reflected as part of the normal decision making processes.  This work will involve further consultation with affected tenants and leaseholders.

Andrew Cotton, Director for Housing and Communities introduced the report, the purpose of which was to seek approval to adopt a formal Rent and Service Charge Setting Policy for the Council’s landlord function, which would confirm the Council’s approach to rent setting, providing clarity for partners, tenants and leaseholders.

 

Mr. Cotton advised that the policy recognised the importance of the rent and service charge income, which funded the services tenants and leaseholders received.  The policy provided a framework of principles in relation to service charge setting and recovery, which was based around transparency and reasonableness.  Due to statute and regulation, the Council’s options on rent setting were limited.

 

Mr. Cotton highlighted the consideration to the financial impact on tenants, the Council’s approach to recovery and the summary of responses to consultation.  Following approval of the Policy, preparation for the next financial year (2021/22), would start.

 

 

During discussion the following points were noted:

 

·         Members thanked Mr. Cotton, his team and Councillor Pearson for their work.

·         It was noted that the policy was well thought out and fair to tenants.  It had been consultative and had consistently engaged with stakeholders.

·         The policy set out improved charges (eg targeted to those in receipt of facilities rather than to all), which would be reinvested in the property, putting the HRA on a more sustainable footing.

 

Cabinet:

 

1)    NOTED the report and the responses received to the consultation on the Policy;

 

2)    APPROVED the proposed Rent and Service Charge Setting Policy with effect from April 2021;

 

3)    APPROVED the continued work on Service Charges;

 

4)    DELEGATED to the Director for Housing and Communities:

 

a)    Decision-making in relation to Service Charge de-pooling and disaggregation and consultation with affected tenants and leaseholders;

b)    Authority to make minor amendments to the Policy if required by future changes to legislation and regulation.

 

Reason for the decisions

 

Each year, local authority housing landlords must set rents and budgets for the forthcoming financial year and provide each individual tenant with a statutory notice of any proposed rent change.  The Council has established practice in respect of rent setting and its discretion is limited by regulation but no clear policy statement.

  

In relation to service charges, the Council has established custom and practice in recharging tenants and leaseholders for the additional property-related services they receive but no clear policy statement.  Section 9 of the Policy draws together and makes explicit the principles the Council adopts in terms of service charges collection and calculation:

a)    It is right the Council collects income to pay for the services it provides.

b)    The Council will act lawfully and reasonably in the setting and recovery 

       of service charges.

c)    Service charges will be de-pooled i.e. they will be payable only by

       those tenants or leaseholders who receive additional services.

d)    Service charge costs will be calculated on a block-by-block basis, 

       unless it is impracticable to separate costs to that level of detail.  If that       

    is the case, costs will be aggregated (i.e. the total cost of the service is to be divided by the number of properties that benefit from the service to calculate the charge).  

e)    Information will be provided on service charges, including the costs that the charges cover, how charges are budgeted, and how increases/decreases calculated. 

f)     Tenants and leaseholders will be involved in the procurement of contracts for the services they pay for.

 

The adoption of these principles with effect from April 2021 provides a clear framework for work in the remainder of the financial year 2020/2021 to de-pool and where appropriate disaggregate property-related service charges. This will enable preparation for the annual charges to be considered and reflected as part of the normal decision making processes.  This work will involve further consultation with affected tenants and leaseholders.