Agenda item

To approve the minutes of the previous meeting. 

In response to a point captured in the minutes, the Chair sought clarification about the term council rents and what exactly this meant. The Chair sought clarification as to whether this term was specific to formula rents, or whether there were other forms of rent used under the category council rents and whether the Council was considering using alternative rent calculations in any of its new council homes.  In response, the Cabinet Member for Housing Services, Private Renters and Planning clarified that:

Council rents applied to secure council tenancies, but didn’t apply to other forms of social housing e.g. housing associations. Social rents, therefore, applied to a larger envelope of housing provision. Council rents only applied to council properties. It used to be the case that all council rents were formula rents, which were based on a formula set by central government. However, the Mayor of London set up another form of council rent, which also only applied to secure council tenancies, called London Affordable Rent. In order to receive funding from the GLA, you had to build homes at either of these two rent formulas. Both of these rent formulas came under the umbrella of the term council rents.

Haringey Council had other properties which were not let at council rents, such as temporary accommodation and the HCBS. London Affordable Rent was a higher calculation of rent, but it used to be very similar in terms of the amount to formula rent. However, the government have followed a policy of reducing formula rents by 1% a year, whilst London Affordable Rents have increased by CPI +1%, therefore the amount of rent charged under each calculation has diverged. The current gap was estimated to be between £30-£35 per tenure. This was still significantly lower than other forms of social rents and was below the London Housing Allowance. Some forms of social rent could exceed LHA rates.

In response to a follow up, the Cabinet Member advised that to date the Council’s house building programme had been based on formula rents. However, the financial situation had gotten a lot worse, with rising costs for materials and building combined with interest rates from the Public Works Loan Board having doubled. The Panel was advised that the council was allowed to borrow money to build houses using the HRA, for as long as the HRA remained sustainable. This meant that increased interest rates had to be paid for by future rental income and at present the increased interest costs would not be met by formula rents. The Cabinet Member set out that the administration was looking at building some homes at London Affordable Rents in order that those sites were viable

The Cabinet Member set out that most boroughs had moved to using London Affordable Rents for new builds, but there was some speculation that the GLA may remove London Affordable Rent as an option, which meant that the Council would not be able to use it going forwards. The Cabinet Member emphasised that the viability of the house building programme required grants from the GLA and that they would continue to build homes on the basis of meeting the relevant grant criteria. The Cabinet Member advised that the most important factor in all of this was that the Council was able to build new homes of a type and tenure that its residents needed. The Chair questioned whether there were any specific new schemes that were being considered for London Affordable Rents. In response, the Cabinet Member advised that the Cranwood scheme was currently not viable without using London Affordable Rents.

In response to a further follow-up question, the Director of Place Making and Housing clarified that the GLA had two house building programmes in place and that the programme funding was being sought from determined which rent formula you were allowed to use. The 2019-23 scheme allowed London Affordable Rents, whilst the 2021-25 scheme would be more restrictive in terms of the funding formula used. The Director advised that a piece of work was under way to look at which schemes were being built under which funding scheme as part of the update to the HRA business plan.

The Panel requested a further written briefing on London Affordable Rents and any changes to the current practice of using formula rents towards calculations based on London Affordable Rents. (Action Cllr Gordon).

RESOLVED

That the minutes of the meeting on 29^th September were agreed as a correct record.