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Waverley Borough Council Committee System - Committee Document

Meeting of the Executive held on 07/02/2006
TRICKLE TRANSFER OF COUNCIL HOUSING



Summary & Purpose
This report proposes that the Council should adopt a programme of Trickle Transfer of up to 20 void Council homes each year to Registered Social Landlords.

ANNEXE 2
Waverley Borough Council

HOUSING SPECIAL INTEREST GROUP
– 18th January 2006
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Title:
TRICKLE TRANSFER OF COUNCIL HOUSING
[Wards Affected: All]
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Summary and purpose:

This report proposes that the Council should adopt a programme of Trickle Transfer of up to 20 void Council homes each year to Registered Social Landlords.
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Note pursuant to Section 100B(5) of the Local Government Act 1972

The annexes to this report contain exempt information by virtue of which the public is likely to be excluded during the item to which the information relates, as specified in paragraph 3 of Part I of Schedule 12A to the Local Government Act 1972, namely:-

Information relating to any particular occupier or former occupier of, or applicant for, accommodation provided by or at the expense of the authority.

Environmental implications:

Properties that are transferred to Registered Social Landlords will be improved up to and beyond the Decent Homes Standard.

Social / community implications:

Decent homes improve the quality of life for the occupants – increases life expectancy, health and well-being and educational attainment. Well-maintained homes also improve the attractiveness of the local area, helping to reduce crime and vandalism. This proposal retains affordable homes for people who are in housing need.

E-Government implications:

There are none arising from this report.

Resource and legal implications:

Trickle Transfer enables the Housing Revenue Account to avoid significant capital investment in void properties that have major structural defects or require major improvement/modernisation works that are costly. Over the last three years, the Council has spent c442,000 each year bringing only 14 homes back into lettable condition. Were the Council to avoid such expenditure through Trickle Transfer, capital resources amounting to around 442,000 could be released and invested in other Council homes, contributing to meeting the Decent Homes Standard.

The Council would also receive a modest capital receipt. The value would reflect the fact that the property would remain as social housing available for affordable rent and that the Council would have nomination rights. The value would take account of the major works costs, as well as the improvement costs bringing the home up to the Decent Home Standard in a sustainable and long-term fashion.

However, the loss of housing stock through Trickle Transfer will result in the loss of rental income, which, in turn, will impact on the HRA. If 20 homes were transferred in any one year (assuming an average weekly rent of 80) the HRA would lose 83,200 of revenue income per annum and Management and Maintenance Allowances would also reduce. In addition, the Major Repairs Allowance (which affects the capital programme) would also reduce proportionately, at 2006/07 rates this would be 682.70 per property.

The Office of the Deputy Prime Minister (ODPM) has issued a General Consent for this type of scheme so long as no more than 50 homes are transferred in any one year. Larger numbers need to be covered by a specific consent from the ODPM.
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Introduction – What is Trickle Transfer?

1. The Office of the Deputy Prime Minister’s (ODPM) Housing Transfer Manual states that “a trickle transfer occurs when an authority arranges to transfer a small number of its properties to an RSL as and when they become vacant.”

2. In 2005, the ODPM issued a number of General Consents, which allow local authorities to dispose of certain assets. Where a local authority intends to transfer 50 or fewer dwellings (in need of repair) each year at best consideration that can reasonably be obtained to a registered social landlord there is no need to seek formal Consent from the Secretary of State so long as the criteria of the General Consents are met.

Expensive Void Properties

3. The Council owns some 5,000 homes in the Housing Revenue Account. Each year approximately 300 homes become vacant and available for re-letting, following any necessary works. Such works can be fairly minor and properties can be turned around relatively quickly and at reasonable cost.

4. However, of the Council properties that become vacant each year around 15 homes need considerable expenditure on them before they can be relet. Very often these are family homes where a longstanding tenant has not wanted nor asked for works to the home over many years. Others have structural or damp problems.

5. During the period April 2005 – December 2005 there were 12 properties that became vacant which needed expenditure in excess of 20,000 (Table 1). The total capital expenditure on these properties was 402,500. This equates to 33,541 per property. There are three months of the financial year to run.

6. In 2004/05, 15 properties became vacant which required expenditure of over 20,000 each (see Table 2). The total expenditure in that financial year was 478,800. This equates to 31,920 per property.

7. In 2003/04, 14 properties became vacant which required expenditure of over 20,000 each (see Table 3). The total expenditure in that financial year was 445,700. This equates to 31,835

8. The capital budget for 2005/06 contains a provision of 560,000 in order to fund major works to void properties prior to re-letting them. All properties are brought up to the Decent Homes Standard. However, a disproportionate amount of this budget is applied to relatively few homes.

9. However, given the need to try to meet the Decent Homes Standard and to undertake works to tenanted homes, officers consider that this budget would be better applied elsewhere, were it possible to avoid expenditure on costly void homes.

10. It is therefore being proposed that one of the courses of action that the Council could adopt is that of ‘Trickle Transfer’ to registered social landlords of void Council homes that would cost in excess of 20,000 to bring back into lettable condition.

Advantages and Disadvantages of Trickle Transfer

11. The approach that could be adopted is that of ‘Trickle Transfer’. The advantages of Trickle Transfer are that:

it accelerates progress towards the Decent Homes Standard for that property; it transfers the repairs and improvement cost to the Registered Social Landlord, and so the Council can use the ‘freed-up’ money on its remaining stock; the properties remain in the affordable housing sector; the rent for the property would be the same whether owned by the Council or RSL rents are based on the same Government formula; the Council retains nomination rights; no capital funding is required from the local authority; the Council would receive a capital receipt for each of the properties transferred.

Loss of rental income to the Housing Revenue Account and the need to make commensurate cost savings; A further reduction in the number of homes owned by the Council and a continuing decline of the landlord service; Waverley tenants, particularly families, on the “Transfer List” will have rather less choice or opportunity to be transferred to a Waverley property and will have to seriously consider a move to a housing association home.

Transferring Void Properties

12. The Council would need to determine which housing association(s) it would wish to transfer the properties to. It is suggested that transfer should be to registered social landlords that already operate in the Waverley area. It is suggested that void properties in:

Cranleigh, Farnham Godalming and Haslemere be trickle-transferred to Downland Housing Association – as they already own homes for rent in Cranleigh, Haslemere and Farnham and have experience of trickle transfer elsewhere; Homes in villages be trickle-transferred to English Rural Housing Association as they have particular experience of developing, owning and managing homes in villages and rural settlements.


13. In the light of recent experience, it is likely that each year around 15 or so properties will cost over 20,000 each to bring back into lettable condition. A Trickle Transfer programme can be reviewed at any time, should circumstances require.

Resource Implications

14. Trickle Transfer enables the Housing Revenue Account to avoid significant capital investment in void properties that have structural defects or require major improvement works that are costly. Over the last three years, the Council has spent an average of 442,000 from its HRA capital programme each year bringing 14 homes back into lettable condition. Were the Council to avoid such expenditure through Trickle Transfer, capital resources amounting to around 442,000 could be released and invested in other Council homes, contributing to meeting the Decent Homes Standard.

15. The Council would also receive a capital receipt and under the terms of the General Consent must negotiate the best consideration that can reasonably be obtained. The Tenant market Value (TMV) would reflect the fact that the property would remain as social housing available for affordable rent and that the Council would have nomination rights. The value would take account of the major works costs, as well as the improvement costs bringing the home up to the Decent Home Standard in a sustainable and long-term fashion.

16. However, the loss of housing stock through Trickle Transfer would result in the loss of rental income, which, in turn, would impact on the HRA. If 20 homes were transferred in any one year (assuming an average weekly rent of 80) the HRA would lose 83,200 of revenue income. As the number of properties reduce in the HRA so do the Management and Maintenance Allowances by 1,367 per property at 2006/07 rates, an additional 27,000 loss of revenue for 20 properties. This would be mitigated by a reduced depreciation charge to the HRA. The Major Repairs Allowance (which affects the capital programme) would also reduce proportionately. At 2006/07 rates this would be 682.70 per property.

17. In 2005, the ODPM issued a General Consent for this type of scheme so long as no more than 50 vacant homes are transferred in any one year to a registered social landlord and the dwelling houses are in need of substantial works of repair or improvement. Larger numbers need to be covered by a specific consent from the ODPM. The scheme being proposed comes within these General Consents.

18. There would also be legal costs or resource implications in the Legal Section in respect of each disposal. There would need to be a Nomination Agreement between the Council and each of the RSLs involved.

19. The rents charged by the RSLs would be based on the same Government Rent Policy, which applies to both councils and RSLs. Tenants of transferred homes will have an Assured Tenancy.

Recommendation

It is recommended that the Housing Special Interest Group:

1. considers whether there is merit in pursuing a policy of Trickle Transfer of void homes that would be costly for the Council to bring back into lettable condition;

2. advises the Executive that, in the current circumstances:

2.1 Trickle Transfer has merit and so:
2.2 permission be granted for the Director of Housing to authorise the of up to 20 void dwellings per annum, which would cost more that 20,000 to bring into lettable condition, under a Trickle Transfer programme;
2.3 that Downland Housing Association, Peerless Housing Association and English Rural Housing Association be invited to make proposals as detailed in paragraph 13 to receive transferred properties in exchange for nomination rights; and
2.4 a review of this programme be undertaken in the financial year 2007/08.

Background Papers (DoH)

There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.


CONTACT OFFICER:

Name: David January Telephone: 01483 523361

E-mail: djanuary@waverley.gov.uk



Comms/exec/2005-06/278