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Decision Maker: Executive Councillor for Housing
Decision status: Recommendations Approved
Is Key decision?: Yes
Is subject to call in?: No
1. To combine separate charges made to Council tenants for gas and electrical and mechanical maintenance, into the total rent payable for each property, from April 2024. For most tenants this will simplify their rent statements.
2. To delegate to officers the ability to reduce individual property rents, either where including these charges would otherwise mean the total rent is greater that the legally determined Formula (or Target) rent for the property or where the charge has been added mid-tenancy causing too high an increase in one year.
3. To authorise officers to draw on HRA reserves to create a budget to allow the employment of staff and other resources to complete this work, with the draw down to be approved by the Chief Finance Officer and Director of Communities.
4. To request that officers report back to Housing Scrutiny Committee with more details of the financial impact of these rent reductions, and of the scale of refunds due to tenants whose rent has breached formula rent or been increased by too great a sum in previous years, along with proposals for a refund scheme.
Record of Executive
Councillor Decision
Social Rents and
Service Charges Recalculations 2024
Decision of: Councillor Gerri Bird, Executive Councillor for Housing
Reference: 24/URGENCY/HSC/1
Date of decision: 26.2.2024 Published:
27.2.2024
Decision Type: Key
Matter for Decision:
Why the Decision had to be made (and any
alternative options):
The Council has been labelling some
property costs as “service charges” when they should have properly been
included in the rent. These charges relate to maintenance of gas and electrical
/ mechanical installations, but do not relate to the supply of utilities.
For some tenants, combining these charges
into the rent, means their rent breaches levels set by government, and they
have therefore been overcharged (or would be overcharged from April 2024). The
Council is not permitted to charge more than the Formula rent for each property
so is legally required to refund any overpayments that have been made, either
to the tenant or to the Department of Work and Pensions, depending on who paid
the charge. For others the charge has been added mid-tenancy resulting in a
rent increase in the relevant year which will have exceeded the allowable
maximum. These will also need to be refunded as above.
The Council has sought legal advice on this
matter from two independent sources. Keeping the charges separate from rent
means that the Council is overcharging some customers and the Council has no
option but to reduce rents to prevent further overcharging. The Council will
need to refund customers, but further work is required before the details of a
refund scheme can be approved.
The Council could have decided to remove
all the charges from rent accounts irrespective of whether a rent breach has
occurred, but the income is required to support services to tenants. For many
tenants an overcharge has not occurred with no financial detriment to the
tenant. Removing all charges would
significantly reduce the income to the Council’s Housing Revenue Account which
is used only for housing purposes including repairs, maintenance, and retrofit
works for tenants’ benefit.
Further details about the decision, and
risks considered, are set out in a briefing paper Document 240226Briefing Paper on Rents and Service Charge
Recalculations 2024 - Cambridge Council.
The Executive Councillor’s decision:
To approve
1. Combining separate charges
made to Council tenants for gas and electrical and mechanical maintenance, into
the total rent payable for each property, from April 2024.
2. To delegate to officers
the ability to reduce individual property rents, either where including these
charges would otherwise mean the total rent is greater that the legally
determined Formula (or Target) rent for the property or where the charge has
been added mid-tenancy causing too high an increase in one year.
3. Authorisation to officers
to draw on HRA reserves to create a budget to allow the employment of staff and
other resources to complete this work.
4. To request that officers
report back to Housing Scrutiny Committee with more details of the financial
impact of these rent reductions, and of the scale of refunds due to tenants
whose rent has breached formula rent or been increased by too great a sum in
previous years, along with proposals for a refund scheme. combining previously separate charges for gas
and electrical and mechanical maintenance, into the total rent payable for each
property,
Reason for the decision: As set out in the
officer’s briefing note. Document 240226Briefing Paper on Rents and Service Charge
Recalculations 2024 - Cambridge Council
Scrutiny Consideration: The Chair and
Spokes Councillors and Vice-Chair Tenant Representative of Housing Scrutiny
Committee were consulted prior to the action being authorised.
Report: Document 240226Briefing Paper on Rents and Service Charge
Recalculations 2024 - Cambridge Council
Conflict of interest: None.
Comments: Consultees noted the proactive
notification of the matter with the Housing Regulator and steps taken by
officers to correct the issues. It was noted that the urgent decision would be
published on the council’s website and would be reported back to the 12 March
2024 Housing Scrutiny Committee. Officers would provide a verbal update to
Housing Scrutiny Committee and Housing Scrutiny Committee could ask questions
on the urgent decision at the meeting.
Publication date: 27/02/2024
Date of decision: 26/02/2024