Independence...Integrity...Value

January 2016

Jan 8th 2016, 11:49

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25th January 2016

This week we have published the January 2016 edition of the ‘AWICS Housing News’. It includes articles on:

  • Business Planning in the Housing Revenue Account
  • Self-Financing, Depreciation and the Private Finance Initiative
  • Service Charges and Value for Money
  • Spending Review and Autumn Statement 2015: The Implications for Housing
  • Lambeth Borough Council sets up ‘Homes for Lambeth’
  • The Housing Budget in Scotland
  • Housing in Wales – Update

Your copy can be freely downloaded from HERE

The recent announcement of the local government finance settlement for 2016/17 has led me to think about the Council Tax and to do some interesting calculations of my own. It is often said that Council Tax is regressive because the amount charged at the level of the individual authority is not proportionate to the value of people’s houses because of the way that the bands work. As property values increase the amount of Council Tax paid does not increase proportionately so as a proportion of the house value it actually reduces.

However, the incidence of Council Tax is also markedly different geographically. I have compared average Council Tax per property with average property values for 2015/16 for various English cities. The average charge per £1,000 of property value is £5.81 across England. However, the figure varies significantly in different places. Relatively high rates of tax are found in Carlisle (£8.36), Newcastle-on-Tyne (£6.82) and Nottingham (£9.51). In contrast relatively low rates are found in Bristol (£5.02), Wandsworth (£1.02) and Westminster (£0.69). Now, why should people in Nottingham pay ten times as much in Council Tax as people in Westminster?

Tom Stannard, Director of Enterprise & Skills at Oldham Council (that is one of our principal clients) has made an interesting contribution to an article in the ‘Local Government Chronicle’ this week in which he identifies a need for a more ambitious approach to enterprise and skills by the government as well as local authorities. He says that:

“Greater Manchester is an example of what happens if the work programme is treated, as it still is by some at the Department for Work & Pensions, as something that creates employment as an end in its own right rather than having a sense of the quality of employment or progression as one of the measures within that.

“If we forget the skills but, we’re solving less than 50% of the problem. In Oldham we’ve got disgracefully poor performance on the proportion of our residents who are way below the skills national average. More worryingly, we’ve got equally poor performance of our residents who have no qualifications at all.

“We have to solve skills and work and career progression hand in glove with employment support. Otherwise, what we’re going to end up doing in ‘work programme two’ is getting more bums on seats in jobs, but they’re going to continue to be low-skilled, low-wage jobs.”

Another of our principal clients, Lambeth Council, has received a remarkable number of nominations in this year’s Local Government Chronicle awards. The Council is nominated as digital council of the year, environment, innovation (twice) and team of the year. Among our other principal clients Newham Council is nominated for efficiency and Swindon Council for environment. We obviously wish all our clients all the best in these awards.

Mike Muir, Chief Executive of Impact Housing Association, where I used to be Chair, is joining John Clasper from Eden Housing, Cath Purdy from South Lakes Housing and Stephanie Murphy of Two Castles Housing Association in sleeping out for the Big Sleep that raises money through the Cumbria Community Foundation for elderly people in Cumbria during the cold winter months. Anyone who would like to make a donation can visit:https://www.justgiving.com/cxbigsleep/?utm_source=Sharethis&utm_medium=fundraisingpage&utm_content=cxbigsleep&utm_campaign=pfp-email.

Next month we will be holding seminars on ‘All You Want to Know about Service Charges in Social Housing’. There will be sessions in London on 16th February and Leeds on 24th February. Both sessions are proving popular but there are still some places available. For further information or to book your place please clickHERE

18th January 2016

This week I will present a webinar on service charges. I have also published a briefing paper on the same subject. My briefing paper ‘Service Charges – Update’ covers the following subjects:

  • Service Charges and the Welfare Reform & Work Bill
  • Recent Court Cases
  • National Housing Federation Conference on Service Charges
  • Limits on what Local Authorities can charge Leaseholders
  • Service Charges in Wales
  • Value for Money

Your FREE copy can be downloaded from HERE

Next month we will be holding seminars on ‘All You Want to Know about Service Charges in Social Housing’. There will be sessions in London on 16th February and Leeds on 24th February. Both sessions are proving popular but there are still some places available. For further information or to book your place please clickHERE

For some time, I have been expressing my concerns about the ending of the transitional period for accounting for impairment, depreciation and major repairs in local authority housing revenue accounts in England. The problem is that, when the government introduced self-financing in 2012 it decided that impairment and depreciation would become real charges in the housing revenue account and that the amount of money that councils have to set aside for major repairs would have to be equal to depreciation. This could make impairment and depreciation unaffordable for some authorities and could also make new build and buy-back schemes unviable. The government recognised that these problems existed and so in 2012 agreed that there would be a transitional period during which impairment and depreciation charges could be ‘reversed out’ and the amount set aside for major repairs could be based on the old major repairs allowance. However, this transitional period comes to an end in 2017. I have written a briefing paper on this that can be freely downloaded from HERE

However, I have recently realised that the ending of the transitional period will also have an adverse effect on local authorities with housing revenue account private finance initiative schemes because they will be obliged to pay twice for major repairs and accumulate significant amounts of money in the major repairs reserve which they would be unable to spend. This situation will arise because:

  • Under the terms of Private Finance Initiative agreements, properties remain in the ownership of the Council and therefore the Council is required to calculate depreciation and to charge this to the housing revenue account and to credit it to the major repairs reserve.
  • Under the housing subsidy system, however, Councils made a further transfer to or from the major repairs reserve so that the amount transferred was equal to the major repairs allowance that the Council received. As Councils received no major repairs allowance for Private Finance Initiative schemes this meant that any depreciation charged for these schemes was ‘reversed out’. These arrangements were continued under the transitional arrangements that were introduced with self-financing but that will come to an end in April 2017.
  • From April 2017 depreciation charges will not be ‘reversed out’ unless the transitional arrangements are extended or other arrangements are introduced.
I have raised the implications for authorities with Private Finance Initiative schemes with the Department for Communities & Local Government and have received the following response from a civil servant in the local authority housing finance division:

“As promised, we have discussed with colleagues and believe that your interpretation of the provisions concerning the depreciation charges on PFI properties is correct. Options are currently being considered for when the transitional arrangements finish, and we shall engage with interested parties when any revisions to the provisions are proposed.”

I will keep readers of my blog updated with developments but if anyone would like to discuss this issue further please contact me at Adrian.waite@awics.co.uk

4th January 2016

I hope that the readers of this blog had a Merry Christmas and Happy New Year and that 2016 will prove a good one. At AWICS we will continue to support our clients by providing high quality, value for money services including seminars, webinars and management advice.

The Prime Minister, David Cameron, has announced today that in future the government will directly commission the development of new affordable housing and has said that:

“Today’s package signals a huge shift in government policy. Nothing like this has been done on this scale in three decades – government rolling its sleeves up and directly getting homes built. Backed up with a further £1.2billion to get homes built on brownfield sites, it shows we will do everything we can to get Britain building and let more people have the security that comes with a home of their own.”

The plans include a £1.2billion starter home fund to prepare brownfield sites for new houses. This is intended to fast-track the creation of at least 30,000 new starter homes and up to 30,000 market homes on 500 new sites by 2020.

It appears to me that this announcement is significant for a number of reasons including that:

  • The government is by-passing the traditional delivery vehicles of local authorities and housing associations in favour of a centralised approach - I am not sure how this connects with the government’s commitments to localism and devolution.
  • All the schemes that have been identified to date are in London, the East or the Southeast.
  • The new homes will be for subsidised home ownership whereby buyers will receive discounts of up to 20% on properties valued at up to £250,000 (£450,000 in London) – the scheme will not provide social or affordable homes to rent.

On Friday I will be presenting our webinar on service charges in social housing. This webinar gives an introduction and overview of service charges in social housing and is fully up to date with all developments. It will look at:

  • How service charges work in housing associations and local authorities
  • How service charges work for tenants and leaseholders
  • How service charges are calculated
  • How to de-pool service charges
  • Eligibility of service charges for housing benefit / universal credit

The webinar is proving popular, but you would also be welcome. For further information or to make a booking please click HERE

The webinar will be followed by seminars in London and Leeds that will look at service charges in social housing in more detail.

Service charges are an integral part of landlords’ work in financing value for money services and sustaining customer satisfaction. They have always been relatively complex but with increased financial challenges and legal and financial complexity there is an increased need to understand how service charging works.

Housing Associations have traditionally levied service charges with most local authorities in England introducing them in the ‘noughties’. In Wales, local authorities have introduced service charges as part of the Welsh government’s new rent policy. The rolling out of Universal Credit is having an impact on benefit entitlement for service charges.

These seminars are suitable for people who are not experts in service charges, but who need to understand the basics and achieve an overview of what is going on. For more information or to make a booking please clickHERE

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