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;-
- Approve the increase in social housing rental charges by 2.15% with effect from 7th October 2013.
- 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 |