Councils Hold Back From New HRA Borrowing

Billions of pounds in potential housing investment are being shored up by councils for fear of further changes to rent-setting rules. A survey of 141 councils that run social housing found just 43% have made use of their official permission to borrow more money for housing since 2012. As a result of this widespread reticence, these 141 councils’ collective borrowing power has actually increased from £2.5bn in 2012 to £2.6bn in 2016/17 amid urgent demand for new housing across England. The findings are the most extensive analysis of the multibillion pound borrowing powers awarded to councils as part of the coalition’s historic Housing Revenue Account (HRA) self-financing settlement. Read more on Inside Housing.

ALMOs call for Pay to Stay data access

Arm’s-length management organisations (ALMOs) are calling for changes to enable them to access tenants’ income data in order to ensure correct rent-setting under Pay to Stay. This relies on providers being given access to HM Revenue & Customs (HMRC) data to determine the income of their tenants as their circumstances change, so they can ensure they are charged the correct rent. However, under the Housing and Planning Bill, housing associations, councils and other public bodies will be granted access to the HMRC data, but ALMOs won’t be. Under the current wording of the bill non-registered providers - including most ALMOs - would instead have to request the data through a council, which could slow the process of rent-setting. Read more on Inside Housing.

Rent Plan Blows Hole in Council Coffers

Councils are planning inflation-busting rent hikes in an attempt to plug multi-million pound holes in their business plans caused by proposals to change rent-setting rules. Analysis of the business plans of more than 40 English councils reveals that the majority will apply the maximum rent increases allowed in 2014/15. The average increase will be 5.16 per cent. They are doing this to minimise predicted losses of hundreds of millions of pounds over their 30-year business plans as a result of an early end to the government’s policy to align social housing rents. Under government plans, from April 2015 councils will no longer be able to increase rents gradually by £2 until they meet optimum, known as target rent. This means 2014/15 is the last year they can use the formula of the retail price index (3.2 per cent) plus 0.5 per cent, plus up to £2 per week. Instead, for the next 10 years rents will be set using the consumer price index plus1 per cent. Read more on Inside Housing.