Agenda item

To present 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.

Consideration was given to a report of the Director of Finance which sets 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 sets 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 is also taken to present the provisional strategic budgets for 2024/25 through to 2027/28. HRA activities are a key element of the Council’s Housing Strategy (approved by Council on 10 July 2019) which aims to provide a diverse Oldham housing offer that is attractive and meets 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 is 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 is 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 is projected to be £22.279m.

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

The 2023/24 position has 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.

In response to a question relating to the use of some of the Reserves to create more social housing. The Director of Finance informed Members that there is a contribution to the capital scheme which is included which is a little reduced from what was initially planned. The report does outline some initiatives which would include more social housing. One of these initiatives is to roll out the empty homes scheme where a pilot model scheme working with Homes England has been successful and the Council would be looking to expand that model with Homes England where matched funding would be required from the HRA reserves.

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 Price Index (CPI) rate at September of the preceding year plus 1%. The Department for Levelling Up, Communities and Housing (DLUHC) has 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 recognise the impact on tenants that an 11.1% rent increase would bring. Therefore, Oldham’s projections for the 2023/24 budget have been set assuming rental increases of just 5% which is 6.1% lower than if it were to follow the maximum uplift (September 2021 CPI rate being 10.1% plus 1%). The Council has opted to propose this reduced rate given the current healthy levels of HRA balances and the ongoing pressures, including inflation, on household incomes.

The financial projections for the HRA over the period 2022/23 to 2027/28 show 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 will be used to support several capital projects including the development of several sheltered housing sites and further works on green projects.

RESOLVED that the following be accepted and commendedto Cabinet, the

1. Forecast HRA outturn for 2022/23 (as per Appendix A);

2. Proposed HRA budget for 2023/24 (as per Appendix B);

3. Strategic estimates for 2023/24 to 2027/28 (as per Appendix D)

4. Proposed increase to dwelling rents for all properties of 5%;

5. Proposed increase to non-dwelling rents as per individual contracts;

6. Proposal that service charges are increased by 2%; and  

7. Proposal to set Extra Care Housing concierge charges to fully recover

    actual costs