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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.
Decision type: Key
Reason Key: Expenditure > £300,000;
Decision status: Recommendations Approved
Notice of proposed decision first published: 27/02/2024
Decision due: 12 Mar 2024 by Executive Councillor for Housing
Contact: Julia Hovells, Head of Finance and Business Manager Email: Julia.hovells@cambridge.gov.uk.
Background Information: 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
