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Sunday, April 14, 2024

Kirklees Council grapples with financial strain in social housing sector

Last year, Kirklees Council announced that it would be increasing tenants’ rental payments by 7.7 per cent from 1 April 2024.

The finances underpinning Kirklees Council’s social housing are under “significant pressure”, but the local authority has spoken of its “absolute commitment” to improve the standard of living for its tenants.

An update on the financial management of the council’s Housing Revenue Account (HRA) was given at yesterday’s (9 January) meeting of the Overview and Scrutiny Management Committee.

The HRA is a ring-fenced account, with the bulk of its annual income – around £99.5m – made up of rent payments and service charges from the council’s social housing stock of over 21,000 homes. The main areas of expenditure include repairs and maintenance, housing management, and property services.

The HRA’s budget for the current financial year is £105m which includes a planned use of reserves to meet current funding pressures. Cabinet Member for Housing and Highways, Cllr Moses Crook said that the use of reserves is “clearly unsustainable” for any length of time but that costs are being reduced to ensure a balanced budget.

A number of areas were highlighted as key contributors to the strain being placed on the HRA. These include the ageing housing stock requiring maintenance, and inflation in construction projects being significantly higher than was forecast.

In addition, tighter safety regulations, particularly those being brought in following the tragic death of two-year-old Awaab Ishak due to prolonged mould exposure, and the fire at Grenfell Tower, were welcomed by the council but are set to incur higher costs.

Tackling the issue of mould and dampness has already upped costs for the local authority, with this cited as the primary reason for a projected £448k overspend on the area of repairs and maintenance in Quarter 2.

Last year, Kirklees Council announced that it would be increasing tenants’ rental payments by 7.7 per cent from 1 April 2024. Despite this hike in fees and the stark 40 per cent of tenants in arrears, the council’s Director of Homes and Neighbourhoods, Naz Parkar, told the meeting that Kirklees’ rent is around the third lowest in the country.

He said: “Some people wear that as a badge of pride but it does hamper our ability to invest if we don’t generate the income levels that we need to be able to maintain our stock”.

This saw questions raised by a member of the committee, Cllr Andrew Cooper (Newsome, Greens) who wanted to know if tenants were benefiting from the low rates of rent in Kirklees if their payments were being covered by the government, or if the council was losing out.

Mr Parkar explained that around 70 per cent of all social housing tenants receive some form of rental benefit, with around half having their full rent costs covered, and the other half, partially covered. He said that the council had to consider the impact of increasing the rent on those who don’t get their fees fully covered.

Cllr Crook continued: “I guess on balance, we would want to have a higher rent so that we could deliver faster improvements and higher quality, and perhaps higher than an EPC C rating minimum, but we also need to consider rent arrears within that.”

On the matter of rent arrears, Cllr Crook said that around £3.19m is owed to the council. He explained that tracking has shown that despite the large percentage of tenants receiving benefits, people are being forced to choose between paying their housing costs or feeding their children during the school holidays and Christmas time.

The councillor added: “I would like to see a higher rent scenario where we also, nationally provided more support so that the people who are the most vulnerable in society were able to feed their children and pay their rent and we were able to sustain a better quality housing stock so they had somewhere better and warm and safe to stay.”

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