Agenda item - Rent policy for new build council homes

Report of Executive Director for Neighbourhoods, Communities & Housing and Executive Director for Economy, Environment & Culture (copy attached).

(1)            That Housing and New Homes Committee agrees the proposed principles for a rent setting policy for new council homes as set out in paragraph 3.27 of this report, inclusive of amended bullet points 2, 4 & 5 as follows:  

·       Rents for new build council homes shouldbe set above Target Social Rents to reflect their take into consideration the high quality, amenities, standards and energy efficiency compared to older homes built in previous decades;

·       Rental income from new homes should support an ongoing development programme to continue to build much needed new council homes for rent on council owned land. Schemes with fewer site constraints and/or free HRA land will may cross subsidise others that prove more costly to develop due to payments for General Fund land and/or greater site constraints and pressures;

·       The amount of HRA subsidyfor new homes should be minimised over the programme as a whole, with subsidy considerations and calculations taking into account the costs and projected income over the whole 60 year period;

(2)            That Housing and New Homes Committee approves a rent policy for new build homes as set out in paragraph 3.28 of this report as amended below.

3.28 Proposed rent policy

Rents for proposed new schemes of new build council homes will be modelled as below, with the option of a mix of rents to achieve a spread of affordability on any one scheme to be available:

·        Affordable rents capped at LGA rates

·       37.5% Living Wage Rent

·       27.5% Living Wage Rent and

·       Target social rent levels

For each scheme officers will recommend one of these three four as appropriate for that scheme and based on the rent principles above, for housing and new homes committee to agree the rents when it approves the scheme.

55.1   The Committee considered a report of the Executive Director, Neighbourhoods, Communities & Housing and Executive Director Economy, Environment & Culture which outlined rent options for future schemes, identified other factors to consider in agreeing a rent policy and proposed a rent setting policy for new council homes. The report was presented by the Lead Programme Manager, City Regeneration, and the Project Manager. 

55.2     Councillor Gibson had submitted the following amendment which was seconded by Councillor Druitt as follows (the wording below includes slight amendments to the original to provide clarity – This wording was agreed by the Green Group:

“To amend the recommendations as below, as shown in bold italics:

-                  2.1 The Housing and New Homes Committee agrees the proposed principles for a rent setting policy for new council homes as set out in paragraph 3.27 of this report, inclusive of bullet points 2, 4 & 5:

-                  Rents for new build council homes shouldbe set above Target Social Rents to reflect their take into consideration the high quality, amenities, standards and energy efficiency compared to older homes built in previous decades;

-                  Rental income from new homes should support an ongoing development programme to continue to build much needed new council homes for rent on council owned land. Schemes with fewer site constraints and/or free HRA land will may cross subsidise others that prove more costly to develop due to payments for General Fund land and/or greater site constraints and pressures;

-                  The amount of HRA subsidy for new homes should be minimised over the programme as a whole, with subsidy considerations and calculations taking into account the costs and projected income over the whole 60 year period;

-                  2.2 That the Housing & New Homes Committee approves a rent policy as set out below

3.28   Proposed rent policy

-                  Rents for proposed new schemes of new build council homes will be modelled as below, with the option of a mix of rents to achieve a spread of affordability on any one scheme to be available:

o    Affordable rents capped at LGA rates

o   37.5% Living Wage Rent

o   27.5% Living Wage Rent and

o   Target social rent levels

For each scheme officers will recommend one of these three four as appropriate for that scheme and based on the rent principles above, for housing and new homes committee to agree the rents when it approves the scheme.

2.3 That a task and finish working group be convened to explore how social rents and other more affordable rent levels (such as the 27.5% Living wage rent level) may be delivered to ensure genuine affordability for all the people of Brighton and Hove. The group shall comprise:

- Tenant representatives
          - Representation from the Housing Coalition,
          - Living Rent campaign representation
          - Councillors,

-Building costs specialists and

-Housing Specialists”

55.3   Councillor Gibson welcomed the production of a rent policy and the scheme modelling over a 60 year period when setting the subsidy. Some elements of the amendment were to make that more explicit. It was important that the council considered the option of something intermediate that was an affordable rent. The final clause of the amendment was a proposal to set up a Task and Finish Group.  Councillor Gibson confirmed that the first three bullet points related to paragraph 3.27. He further confirmed that it was his intention that the Housing & New Homes Committee would set up the Task & Finish Group.

55.4   Councillor Mears stated that she was happy to support the amendment up to, but not including 2.3.  She was concerned as to how the group would be appointed and how a consensus would be reached. She suggested voting on the amendment in separate parts.         

55.5   Councillor Moonan referred to 2.3 of the amendment. She considered that to work effectively, all stakeholders would need to be engaged. This could not be achieved in a small working group. However, there could be some sort of consultation process using the portal. She could not support 2.3.

55.6   Councillor Bell commented that a lot of work had gone into the rent policy but it was being looked at from the wrong angle. The reason why it took so long to pay money back was due to the design cost of new build homes. 

55.7   Councillor Hill referred to paragraph 7.2 with regard to financial viability modeling. This was over a 60 year period and had been changed following a review. She would welcome the input of people on the housing waiting list as they were the people most impacted by this issue. They should be asked if they wanted more homes at higher rents or fewer homes at lower rents.

55.8   Councillor Mears commented that if there were more realistic build costs, more homes could be built. 

55.9   In response to a question from Councillor Gibson regarding apparent discrepancies between the figures for living wage rents in this report and the following report it was explained that rents included in the rent policy report at paragraph 3.19 were calculated on the Living Wage in 2020. Rents in the Rotherfield Crescent report were assuming living wage rents in 2019 when the scheme was up and running.

55.10  Councillor Druitt welcomed the policy especially the inclusion of paragraph 3.8. It was clear that fuel and water efficient homes, could make a massive difference to residents’ bills. With regard to the comments about 2.3 of the amendment Councillor Druitt commented that the point of this part of the amendment was not to restrict other groups but to include as many relevant groups as possible.

55.11  The Committee voted on the Green amendment as follows. 2.1 and 2.2 were agreed unanimously. 2.3 was not agreed (two votes in favour and 7 against).

55.12  The Committee voted on the substantive recommendations and 2.1 and 2.2 as amended were unanimously agreed.

55.13  RESOLVED:-

(1)            That Housing and New Homes Committee agrees the proposed principles for a rent setting policy for new council homes as set out in paragraph 3.27 of this report, inclusive of amended bullet points 2, 4 & 5 as follows: 

·       Rents for new build council homes shouldbe set above Target Social Rents to reflect their take into consideration the high quality, amenities, standards and energy efficiency compared to older homes built in previous decades;

·       Rental income from new homes should support an ongoing development programme to continue to build much needed new council homes for rent on council owned land. Schemes with fewer site constraints and/or free HRA land will may cross subsidise others that prove more costly to develop due to payments for General Fund land and/or greater site constraints and pressures;

·       The amount of HRA subsidyfor new homes should be minimised over the programme as a whole, with subsidy considerations and calculations taking into account the costs and projected income over the whole 60 year period;

(2)            That Housing and New Homes Committee approves a rent policy for new build homes as set out in paragraph 3.28 of this report as amended below.

3.28 Proposed rent policy

Rents for proposed new schemes of new build council homes will be modelled as below, with the option of a mix of rents to achieve a spread of affordability on any one scheme to be available:

·        Affordable rents capped at LGA rates

·       37.5% Living Wage Rent

·       27.5% Living Wage Rent and

·       Target social rent levels

For each scheme officers will recommend one of these three four as appropriate for that scheme and based on the rent principles above, for housing and new homes committee to agree the rents when it approves the scheme.