Decision details

Housing Revenue Account Estimates for 2023/24 to 2027/28 and Proposed Outturn for 2022/23

Decision Maker: Cabinet

Decision status: For Determination

Is Key decision?: Yes

Is subject to call in?: Yes

Decisions:

Consideration was given to a report of the Director of Finance which set out for the Housing Revenue Account (HRA), the detailed budget estimates for 2023/24, the strategic estimates for the four years 2024/25 through to 2027/28 and outturn estimate for 2022/23. The report also set out the recommended dwelling, non-dwelling rents and service and concierge charges to be applied from April 2023.

The report sets out the HRA 2023/24 proposed original budget and the forecast outturn for 2022/23. The opportunity was also taken to present the provisional strategic budgets for 2024/25 through to 2027/28.

HRA activities were a key element of the Council’s Housing Strategy (approved by Council on 10 July 2019) which aimed to provide a diverse Oldham housing offer that was attractive and met the needs of different sections of the population at different stages of their lives.

After taking all relevant issues into account, the projected financial position for 2022/23 was estimated to be a £1.796m positive variance when compared to the original budget forecast for 2022/23 approved at the Budget Council meeting, 2 March 2022.

Of this variance,£0.570m was attributable to a lower than anticipated brought forward balance from 2021/22 with this being offset by £2.366m owing to the cessation of previously planned HRA funded capital schemes. The estimated balance at the end of 2022/23 was projected to be £22.279m.

The closing financial position for 2023/24 showed an estimated HRA closing balance of £20.852m which was sufficient to meet future operational commitments and the potential financial pressures identified in the risk assessment.

The 2023/24 position had been presented after allowing for an increase in dwelling rents of 5%, an increase in non-dwelling rents in line with individual contracts, a nominal increase of 2% on service charges and the setting of Extra Care Housing concierge charges to fully recover costs.

As part of the Autumn Statement, the Government announced plans to cap social housing rents at 7% for 2022/23. Previous policy guidance for the period 2020-2025 was that all rents were to be calculated based on a maximum of the Consumer Prices Index (CPI) rate at September of the preceding year plus 1%. The Department for Levelling Up, Communities

and Housing (DLUHC) had since confirmed that due to the majority of Oldham’s HRA estate being contained within two Private Finance Initiative (PFI) schemes the Council is exempt from the social housing rent cap. Despite this, Oldham Council recognised the impact on tenants that a rent increase of 11.1% would bring. Therefore, Oldham’s projections for the

2023/24 budget had been set assuming rental increases of just 5% which was 6.1% lower than if it were to follow the maximum uplift (September 2021 CPI rate being 10.1% plus 1%).

The Council had opted to propose this reduced rate given the current healthy levels of HRA balances and the on-going pressures, including inflation, on household incomes.

The financial projections for the HRA over the period 2022/23 to 2027/28 showed an overall reduction in the level of balances from £21.721m at the start of 2022/23 to £16.253m at the end of 2027/28. HRA resources would be used to support several capital projects including the development of several sheltered housing sites and further works on green projects.

The HRA detailed budget for 2023/24 and strategic estimates for the four years 2024/25 to 2027/28 and the outturn estimate for 2022/23 were presented to the Policy Overview and Scrutiny Committee on 26 January 2023. The Committee was content to commend the report

to Cabinet without amendment.

 

Options/alternatives considered

For the Council to comply with legislative requirements, it must consider and approve a budget for the HRA for 2023/24.

Three options regarding rent levels were presented.

Option 1 - Proposed rent increase of 11.1%

Option 2 - Proposed rent increase of 5%

Option 3 - Rents are frozen for 2023/24.

 

RESOLVED – That:

1.    The Forecast HRA outturn for 2022/23 (as per Appendix A) of the report be approved and commended to Council.

2.    The proposed HRA budget for 2023/24 (as per Appendix B) of the report be approved and commended to Council.

3.    The strategic estimates for 2023/24 to 2027/28 (as per Appendix D) of the report be approved and commended to Council.

4.    Proposed increase to dwelling rents for all properties of 5%.be approved and commended to Council.

5.    Proposed increase to non-dwelling rents as per individual contracts be approved and commended to Council.

6.    The proposal that service charges are increased by 2%.be approved and commended to Council.

7.    The proposal to set Extra Care Housing concierge charges to fully recover actual costs.be approved and commended to Council.

Publication date: 15/02/2023

Date of decision: 13/02/2023

Decided at meeting: 13/02/2023 - Cabinet

Effective from: 23/02/2023

Accompanying Documents: