Purpose of Report
To consider a proposed increase in council house rents in line with the Government’s Rent Policy for social housing from 1 April 2020 onwards and to seek approval for the introduction of revised rents from Monday 6 April 2020.
That Council be recommended to approve the following increases to ensure that rent notices can be sent to tenants prior to the start of the new financial year and provide them with the requisite 28 day notice period:
(1) The basis of rent calculation for changes to individual council house rents, as set out in paragraph five of the report, representing an increase in the average calculated 52 week council house net rent in 2020/21 of 2.7% for social housing rents at £1.83 per week and affordable rents at £2.85 per week increase per property.
(2) The increase of garage rents for 2020/21 in accordance with the proposal in paragraph 6.1 of the report by 3%.
Alternative Options Considered and Rejected
Reason for Decision
In keeping with the Housing Business Plan approved by the Council and the Government’s rent guidelines, the formula rent rise for 2020/21 was based on the Consumer Price Index in the previous September plus 1.0%. In Lincoln’s case this meant an average rent increase of 2.7% from Monday 6 April 2020, although this was an average rent increase across the Council’s stock.
As a result of the continued erosion of stock numbers as a result of the Right to Buy regime, despite increasing rents as above, budgeted rental income would drop by £296,000 from £28.319 million in 2020/21. Despite actively buying back properties, stock numbers continued to reduce due to Right to Buy and to date 18 purchases had been completed on a range of one, two and three bedroomed properties.
Between April and December 2019, 42 properties had been sold under the Right to Buy, the majority of which were two bedroomed properties but ranged from one, two, three and four bedroomed properties.
There had therefore been a net reduction in stock of 24 properties which had a direct impact on rental income.
The average weekly increase for the City Council based on data at 12 December 2019 for net social housing rent, calculated over 52 weeks, would be £69.57 per week for 2020/21 compared to £67.74 per week for 2019/20. This represented an average equivalent increase of income per property of £1.83 per week over 52 weeks, with the 50 week average rent being charged at £72.35.
There were currently 208 properties charged at an affordable rent which was higher than social housing rent. Based on data as of 12 December 2019 the increase on the average weekly rent over 52 weeks would result in an increase from £105.52 per week in 2019/20 to £107.87 per week for 2020/21. This equated to an average equivalent increase of income per property of £2.35 per week over 52 weeks, with the 50 week average rent being charged at £112.18.
It was noted that the Tenants’ Panel at a recent meeting was supportive of the proposals and understood the reasons for the increase.