[Report of the Director of Finance. To be introduced by the Cabinet Member for Finance and Strategic Regeneration.]
Cabinet approval sought for additional housing revenue capital expenditure for the remainder of 2019-20. This will be to increase the level of budget within the capital programme for the construction of new build properties, the acquisition of homes on new build schemes and the acquisition of existing properties to house homeless households. This report will also address the revenue implications. This report will be for onward approval by Full council in November.
The Cabinet Member for Finance and Strategic Regeneration introduced the report which proposed increasing the Housing Revenue Account’s (HRA) Capital Programme funding envelope to finance the construction of new build properties; the acquisition of new build properties for affordable housing and the acquisition of existing properties to house homeless households.
This was an essential step in ensuring that the Council can deliver on key housing commitments. The additional funding would also allow the Council to acquire properties to house homeless households – and re-municipalise former Council homes lost under the right to buy over the past few years.
The Cabinet Member referred to paragraph 4 on the options that were considered when considering these proposals and highlighted the statutory officer comments contained in the report at section 8, including equalities comments.
In response to questions from Cllr das Neves, the following information was provided:
To recommend to Full Council that it approves additions to the 2019/20 HRA capital programme of £70.4m to finance: the construction of new build properties (£4.1m); the acquisition of new build properties for affordable housing (£8.7m) and the acquisition of existing properties to house homeless households (£57.6m).
Reasons for decision
On 10 September 2019, Cabinet approved a re-profiled HRA capital budget of £77.8m, for 2019/20. This included £62.8m for existing stock, £2.9m for the Council housing delivery programme and £12m for new homes acquisition. There is also a £41.4m in the General Fund capital budget to acquire existing properties to be used to house homeless households.
The construction of new build properties is now moving at a faster pace than anticipated in February 2019. The current budget provision of £2.9m for new build properties as outlined in the quarter 1 (period 3) budget monitoring report for 2019/20 to Cabinet dated 10 September 2019 has become insufficient to cover the cost of the accelerated works in this year.
Hence, the need for an increase of £4.1m within the 2019/20 HRA budget for the construction of new build properties by the Council. This is following a reassessment of the budget required given the faster speed and greater progress on these projects by the Council than projected in February 2019.
New opportunities have come forward to acquire properties under development by other organisations that were not previously foreseen. Thus, the need for an increase of £8.7m within the 2019/20 HRA budget, for the acquisition of new homes.
In respect of the acquisition of existing properties to be used as temporary accommodation for homeless households, the Council recently received legal advice that acquisitions of such properties should be purchased within the HRA, rather than the General Fund. A decision is needed to regularise the current year’s purchases and historic purchases. Further details are outlined in the report to Cabinet on 12 November 2019: ‘Update on the Community Benefit Society’.
An additional capital provision of £57.6m within the 2019/20 HRA budget is required for the actioned, identified and potential purchase of existing properties, to be used to house homeless households. Further details are outlined in the report to Cabinet on 12 November 2019: ‘Update on the Community Benefit Society’.
This report requests that Cabinet recommends Full Council approves a total sum of £70.4m of additional funding within the 2019/20 HRA budget to finance the activities detailed above and set out in in more detail in section six.
Alternative options considered
Not allowing an increase in the programme of new build or acquisition of new build properties: This option was rejected because there is a need to press ahead rapidly on the 1,000Council homes target and to deliver the interim target of 500 having planning permission and 350 having a start on site by May 2020.
Not allowing additional provision for the purchase of properties to be used to house homeless households: This option was rejected because there is a need to ensure there is a supply of good quality, long term housing for homeless households.