Tenant Rent Reduction but Housing Budget Faces Future Deficit

January 12, 2017 by Southend Borough Council

Tenant rents will be reduced by 1% again next year, although the council has warned of the implications of this national policy on the council’s housing revenue account (HRA) and future house-building plans.

The proposals are part of the draft HRA budget for 2017/18 which will be discussed by the council’s cabinet next week (19th January) as part of the council’s overall budget setting process.

The rent reduction forms part of the Government’s Welfare Reform and Work Act 2016, where tenants rents have to be reduced by 1% per annum through to 2019/20. Previous Government plans to introduce a Pay to Stay policy, where higher rents would have been imposed on tenants with household income over £31,000 have been scrapped.

A further £6.2m will be put into the Decent Homes capital programme for 2020/21 which is managed by South Essex Homes, taking the total investment in council housing stock to £25.4m over the next four years.

Mark Flewitt, Executive Councillor for Housing, says: “I am very pleased that we are able to present a balanced HRA budget for 2017/18, and have identified a further £6.2m to ensure that we can continue to deliver decent homes for our tenants in the future.

“Whilst rent reduction looks like good news for tenants, for the 75% that are on housing benefit it will make no difference at all, but from our perspective unfortunately it severely reduces the funds we have available to build new council housing. Our current projections are that we will have around £3.8m less in HRA resources each year for the next three years.

“Other major challenges we face are the recent national changes extending the right to buy to housing associations and the duty of councils to consider selling higher value vacant social housing when it becomes vacant to help fund this. We have received confirmation that there will be no levy imposed next year, but the possibility remains for future years, so some financial uncertainty remains for the HRA budget.”