Issue - meetings

To enable the Cabinet to consider the recommendations made by the Resources and Services Overview & Scrutiny Committee following that Committee’s scrutiny of housing matters.

RESOLVED that the recommendations of the Resources and Services Overview and Scrutiny Committee be noted and the comments of the Housing Portfolio Holder, in response thereto, be endorsed.

Cabinet was aware that, at the meeting of the Resources and Services Overview and Scrutiny Committee held on 1 February 2021, that Committee had been provided with a report in response to the enquiry scope set out in the Committee’s Work Programme. 

In respect of this item, that Committee heard how the housing acquisition strategy had been adopted by Cabinet in October 2020 which set out a framework around which the council owned housing stock would be increased to achieve a target of 200 additional homes.

Members of the Committee were informed that, when added to the housing stock held within the Council’s Housing Revenue Account (HRA), the impacts of right to buy had to be taken into consideration and factored into the financial planning.

The total discount figure was essentially the financial loss to the HRA compared to the market value of the properties sold. Sales had peaked in 2017/18 and had now returned to a lower level. The addition of newer and more desirable properties to the Council’s housing stock could have led to an increase in sales.

The current maximum discount was £84,200 or £112,300 if you lived in London.

Houses: Discounts started at 35% when you have been a public sector tenant for three years and the discount remained at 35% until five years spent as a public sector tenant. After year five, the discount went up by 1% for every year up until a maximum of 70% or £84,200 across England (excluding London) whichever was the lower.

Flats: Discounts started at 50% for three years as a public sector tenant and remained at 50% until five years spent as a public tenant. After year five, the discount went up by 2% for every year until a maximum of 70% or £84,200

Cost floor rule: Discounts could be reduced by the ‘cost floor’ rule. That may apply if the property had recently been purchased or built by a landlord or they had spent money on repairing or maintaining it. Discount could be reduced to nil if the cost floor was more than the value.

It was reported to the Committee that the cost floor period for council properties was either a 10 year period prior to receipt of the RTB application form or 15 years if the home was built or acquired by the Council after 2 April 2012.

That meant that a house bought through right to buy after year 15 could subject the HRA to a loss of over £80k.

Extending the cost floor to 30 years would alleviate that risk and put the Council onto a much lower risk position.  Officers had discussed that with civil servants however it required a change of Government policy and legislation so at this time all decisions around acquisitions and development had to be taken on the basis of the current 15 year cost floor.

The Committee welcomed the Portfolio for Housing and the Assistant Director for Housing and the Environment to the meeting and  ...  view the full minutes text for item 136