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L'înformâtion et les sèrvices publyis pouor I'Île dé Jèrri

States Social Housing Rental Charges: 2.15% Increase with effect from 7 October 2013

A formal published “Ministerial Decision” is required as a record of the decision of a Minister (or an Assistant Minister where they have delegated authority) as they exercise their responsibilities and powers.

Ministers are elected by the States Assembly and have legal responsibilities and powers as “corporation sole” under the States of Jersey Law 2005 by virtue of their office and in their areas of responsibility, including entering into agreements, and under any legislation conferring on them powers.

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A decision made 16 July 2013:

Decision Reference:      MD-H-2013-0056 

Decision Summary Title :

DS – Increase in Social Housing Rental Charges October 2013

Date of Decision Summary:

30th May 2013

Decision Summary Author:

 

Finance Director

Decision Summary:

Public or Exempt?

(State clauses from Code of Practice booklet)

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

 

Written Report

Title :

WR - Increase in Social Housing Rental Charges October 2013

Date of Written Report:

30th May 2013

Written Report Author:

Senior Management Accountant      

Written Report :

Public or Exempt?

(State clauses from Code of Practice booklet)

Public

Subject: Increase in social housing rental charges with effect from 7th October 2013.

Decision(s):

The Minister

  1. Approved the increase in Social Housing rental charges by 2.15% with effect from 7th October 2013.
  2. Requested the Minister for Treasury & Resources to agree an adjustment to the Department’s cash limit of £148,700, £600,200 and £622,300 in 2013, 2014 and 2015 respectively.

Reason(s) for Decision:

  1. P33/2013 – The Reform of Social Housing which was approved by the States Assembly on 16th May 2013 proposes that rents be increased at a rate of RPI + 0.75% on an annual basis. RPI at March 2013 was 1.4%. An additional 0.75% brings the percentage increase to 2.15%.
  2. The increase is lower than expected in the MTFP 2013-2015 and will have an impact on the income for the Department in 2013, 2014 and 2015. The shortfall in income from that forecast in the MTFP is £148,700, £600,200 and £622,300 in 2013, 2014 and 2015 respectively.  In addition the omission of this adjustment will leave a shortfall of income in the assumptions of R15/2013 – States of Jersey Housing Transformation Programme: Full Business Case.

Resource Implications:

Financial: An increase in income of £219,200 in 2013 and £876,800 in 2014.

Action required: Finance Director to implement the increase and agree an adjustment to the Department’s cash limits in 2013, 2014 and 2015 with the Minister for Treasury & Resources.

Signature:

 

Position:

Minister

Date Signed:

 

Date of Decision (If different from Date Signed):

 

States Social Housing Rental Charges: 2.5% Increase with effect from 7 October 2013

Date of report 30th May 2013

 

REPORT FOR THE MINISTER FOR HOUSING

 

Increase in Social Housing Rental Charges October 2013

 

Purpose

 

To consider an increase in social housing rental charges for States tenants of 2.15% with effect from 7th October 2013.

 

Background

 

The Housing Department manages approximately 4,500 properties.  Weekly rental charges vary depending on property type and other factors. The maximum rents which the Department charges are currently capped in line with the maximum level of the Housing Component of Income Support (HCIS).  This maximum level extends also to the housing trusts in the island.

 

The last increase in social housing rentals was in October 2012 at 3.5%.

 

The Medium Term Financial Plan 2013-2015, agreed by the States Assembly, contains an expectation of an increase in rentals of 3.61% in the base calculation of the Department’s cash-limit, being half-way between forecast average earnings and RPI. The RPI figure for March 2013 is 1.4% and the average earnings increase in 2012 was 1.5%.

 

The States have recently debated and approved P33/2013 - The Reform of Social Housing. This proposition sets the future strategy for social housing in Jersey and included annual rental increases at RPI plus 0.75%. The Department intends to introduce this metric, as approved, in the course of the transition to its new status.

 

As a result of the foregoing information the increase in rent proposed for October 2013 is 2.15%, being 1.4% inflation rate and the additional 0.75%. The lower than expected increase will have an impact on the income for the Department in 2013, 2014 and 2015. The shortfall in income from that forecast in the MTFP is £148,700, £600,200 and £622,300 in 2013, 2014 and 2015 respectively. 

 

It would be appropriate for the Department’s cash limits for those years to be adjusted to account for this change bearing in mind that there will be a compensatory saving in the housing component of Income Support as both social and private sector subsidies will be lower than expected. It is suggested the Department seeks an agreement with the Minister for Treasury & Resources for such an adjustment, reducing the amount of the return to the Treasury for 2013, 2014 and 2015 to mitigate this loss for the Housing Department.

 

If this budget transfer does not take place the Department will be faced with a shortfall in income of £600,000 in R15/2013 – States of Jersey Housing Transformation Programme: Full Business Case.

 

Increases to Maximum Rentals by Unit Type

 

It should be noted that, as a result of Income Support being calculated on a daily rate basis, the weekly increase in benefit for certain properties falls slightly above or below a literal 2.15% increase. Housing properties set at the maximum rent rate should follow the exact Income Support rates and those below the maximum be increased by 2.15%.  The difference between a literal 2.15% increase and a tie-in to the maximum IS level is +/- £0.03p per week on a property’s rent. It is thought better that the two departments are operating to the same standard rate in order to reduce the risk of error inherent in dealing with differing rates.

 


The table below sets out the impact of such an increase on the maximum levels of weekly rental charges:

Accommodation

 

Number of Bedrooms

 

Current Maximum Rent

 

Weekly Increase

 

New Weekly Rent

 

 

 

 

 

 

 

 

 

Bed sitter

 

0

 

113.26

 

2.45

 

115.71

 

 

 

 

 

 

 

 

 

Bungalow

 

0

 

113.26

 

2.45

 

115.71

 

 

1

 

183.82

 

3.92

 

187.74

 

 

2

 

239.40

 

5.18

 

244.58

 

 

3

 

267.05

 

5.74

 

272.79

 

 

 

 

 

 

 

 

 

Flat

 

1

 

161.77

 

3.50

 

165.27

 

 

2

 

203.49

 

4.41

 

207.90

 

 

3

 

231.21

 

4.97

 

236.18

 

 

4

 

245.14

 

5.25

 

250.39

 

 

 

 

 

 

 

 

 

House

 

1

 

183.82

 

3.92

 

187.74

 

 

2

 

239.40

 

5.18

 

244.58

 

 

3

 

267.05

 

5.74

 

272.79

 

 

4

 

288.96

 

6.23

 

295.19

 

 

5

 

314.37

 

6.79

 

321.16

 

 

6

 

329.42

 

7.07

 

336.49

 

 

 

 

 

 

 

 

 

Maisonette

 

1

 

172.76

 

3.71

 

176.47

 

 

2

 

221.35

 

4.76

 

226.11

 

 

3

 

249.06

 

5.35

 

254.41

 

 

4

 

266.99

 

5.74

 

272.73

 

Recommendations

 

That the Minister;-

 

  1. Approve the increase in social housing rental charges by 2.15% with effect from 7th October 2013.
  2. Approve an application being made to the Minister for Treasury & Resources for an adjustment to the Department’s cash limit of £148,700, £600,200 and £622,300 in 2013, 2014 and 2015 respectively.

Housing Department

 

Report Prepared By: -

 

Jason English

Senior Management Accountant

 

………………………………                  Date:                                         2013

 

 

Report Checked By: -

 

J C Hamon

Finance Director

 

……..……………………….                   Date:                                        2013

 

 

Authorised By: -

 

Ian Gallichan

Chief Officer

 

……………………………….                 Date:                                        2013

 

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