Agenda item

Housing Policy Developments: 1% social rent reduction and Pay to Stay

Report of:  Director of Housing and Regeneration and Director of Policy, Performance and Communications 



8.1       The Committee received a report that outlined the Government’s current proposals on the 1% social rent reduction and the introduction of a mandatory Pay to Stay scheme, considered the potential impacts of these proposals for Westminster and set out the Council’s response so far.


8.2       Barbara Brownlee, Director of Housing & Regeneration, introduced the report and explained that the paper had been submitted to the committee meeting following the cancellation of the first Housing Task Group meeting. The Task Group had been established to scrutinise the implications for the Council of the Housing and Planning and Welfare Reform and Work Bills.  She informed the committee that the next two meetings of the Task Group would consider supply (Right to Buy, Starter Homes and High Value Voids) and welfare reforms respectively.


8.3       Carol Maduka, Finance Manager, introduced a PowerPoint presentation on the financial consequences of the 1% social rent reduction. Martyn Jones, Head of Asset Strategy & Regeneration, CityWest Homes, outlined the impacts to the housing capital programme and the related risks and implications.


8.4       The Committee considered the information and submitted questions to officers.


            Financial Consequences


8.5       Officers were asked in relation to service charges whether enough was being done to recoup and maximise costs.  Miss Maduka informed the committee that the Council’s policy was to recover costs only and not to apply additional charges to generate revenue.  She explained that a detailed analysis of expenditure on the Council’s housing stock was undertaken each year and that CityWest Homes set service charges for the following year to cover these.  Miss Brownlee informed the committee that the process for setting service charges was complex and she suggested that it would be useful for the Council and CityWest Homes to review the process to ensure that all costs were being properly recouped.


8.6       Concern was expressed about the rent assumption in the Housing Revenue Account (HRA) Business Plan.  Officers were asked whether the Council had undertaken modelling based on a number of possible inflationary outcomes for comparison.  Miss Maduka advised that the 30 year business plan was developed in line with the Bank of England’s objective of a Consumer Price Index (CPI) of 2% plus 1% based on the Government’s previous Guarantee issued in 2014.


8.7       The Committee asked for details about the internal loan protocol between CityWest Homes and the Council including future projections.  Miss Brownlee agreed to provide the committee with a note on this matter.





            Implications for the Housing Capital Programme


8.8       Miss Brownlee advised that the previously advertised programme would go ahead as planned.  Any re-profiling or reduction to the Capital Programme would take effect from the fourth year of the 30 year programme.


8.9       The Committee questioned whether the Council could make its regeneration and renewal projects less ambitious in order to reduce some of the possible implications arising from the 1% social rent reduction.  Miss Brownlee advised that while this was possible, it was not desirable as the renewal programme will generate capital receipts for the HRA and General Fund through the delivery of new developments.


8.10    Miss Brownlee was asked whether forward projections of income included estimates of future numbers of social housing units.  She clarified that this was the case and that the business plan included assumptions on the number of social units that would be sold each year under the Right to Buy provisions.  Similarly, the business plan included assumptions on the number of high value void properties that will be sold. This will result in fewer kitchens and bathrooms that will require refurbishment in future years.


8.11    The Committee asked whether the financial impact was likely to result in a reduction in the ability to manage ad-hoc repairs.  Martyn Jones, informed Members that there was no intention to change the budget for repairs. He also informed the Committee that there was no intention to change the operating model for cyclical renewal/replacements, merely an intention to extend life cycles by approximately five years.  CityWest Homes would undertake an analysis of the stock and its life span and ensure that the fabric of buildings and fittings would be replaced before they failed.  He confirmed that the consideration of using cheaper replacement components would be considered in addition to when renewal takes place.


8.12    Sarah Monaghan, Principal Policy Officer, provided a Powerpoint presentation on the mandatory Pay to Stay scheme.  This would require social landlords to charge tenants with incomes over a set figure equal to or a proportion of the market rent.   


8.13    Miss Monaghan was asked how the definition of a market rent was to be determined.  She explained that the Government had published very limited information about how the scheme will operate in practice.  The City Council agreed its own discretionary policy in 2013.  In its consultation submission to Government on the mandatory scheme, the Council had used the GLA Rents Map to define market rents in Westminster in comparison to social rent levels.


8.14    In response to further questions, Miss Monaghan advised that the Council had not tabled any amendments to the Housing and Planning Bill.  It was lobbying for a taper system that increases rents as incomes grow to prevent excessive rent increases in high value areas, which would result in tenants becoming eligible for Housing Benefit.  The Council has referenced its own scheme as an example of how a Pay to Stay scheme may work in a central London context.


8.15    It was noted that tenants will be required to provide information about their household income to a social landlord and that Her Majesty’s Revenue and Customs (HMRC) may disclose this information. The Committee asked what plans the Council had to provide assistance to elderly and other vulnerable residents in calculating and providing details of their annual income.  Miss Brownlee clarified that it was unclear whether the legislation would apply to all social housing tenants or would be limited to those of working age. She advised that the Council had not lobbied for the exemption of any particular group.  Jonathan Cowie, Chief Executive, CityWest Homes advised that the legislation could affect up to 3,500 Westminster tenants who don’t claim Housing Benefits.  950 these were over 65 years old.  CityWest Homes would aim to support tenants through the process. However, he highlighted as a concern, the challenging timetable for its implementation which was currently April 2017.


8.16    Members expressed concern about the challenging timetable for the policy’s implementation and the administrative challenge this was likely to pose for CityWest Homes staff. 


8.17    The Committee also raised the issue of fraud in relation to the disclosure of tenant income and asked about the Council’s liability for failing to detect such fraud.  Officers stated that there was currently no information about this particular aspect of the policy.


8.18    RESOLVED:


1.          That the current legislative proposals and the Council’s response to           them to date be noted.


2.                        That the Committee and Housing Task Group be kept updated on future lobbying and changes to the Bills as they progress through Parliament.


8.19    ACTION:


1.          Provide the Committee with a written note on internal loans between          CityWest Homes and the Council including any future projections   (Action for Barbara Brownlee, Director of Housing and      Regeneration).


2.                        Provide the Committee with details of the Council’s Discretionary Pay to Stay policy (Action for: Sarah Monaghan, Principal Policy Officer).


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