HRAs need certainty over their future sustainability

By Simone Hines | 14 July 2020

We have had the announcement on the third tranche of COVID funding. The lack of certainty over collection fund losses is disappointing, especially as many councils will already be thinking about budget-setting for 2020/21.

Another omission in the package is the absence of any funding for the Housing Revenue Account (HRA). Councils are already seeing their rental collection rates struggling. Rental income has been under pressure for some time due to Universal Credit. There are also increased costs related to COVID – due to social distancing requirements for repairs and maintenance and pressures in the supply chain.

From analysis of May DELTA returns, the HRAs of district councils forecast almost £100m of overall pressures – £15m due to expenditure pressures and £81m from income losses.

HRA business plans are finely balanced – still paying the debt costs from self-financing and having lost vast amounts of rental income from the Government’s 1% rent reduction policy. The fallout is likely to be delays to works to ensure homes remain decent, including plans to make homes more energy-efficient.

Many HRAs have prioritised building new council housing – maximising the borrowing that their business plans can afford to ramp up building plans to reduce their waiting lists and the number of households in temporary accommodation.

HRAs need certainty over their future sustainability. As well as commitment for funding towards COVID-related pressures there are other flexibilities we have asked Government to consider: a fundamental review of Right to Buy and HRAs could do more to increase their stock if the 30% limit on use of Right to Buy receipts was abolished. A re-think of future rent policy is needed.

The links between good housing and health are well known. Without adequate funding and new flexibilities, the impact on the health of our communities could go beyond the COVID pandemic.

Simone Hines is president of the Society of District Treasurers and executive director – resources at Nuneaton and Bedworth BC

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