Housing Revenue Account (HRA) Business Plan 2024-2054

2.1 The HRA operates within a political environment and therefore any changes in national housing policy can have a significant impact on the HRA Business Plan.

2.2 National Social Rent Policy

2.2.1 The Welfare Reform and Work Act 2016 included a statutory obligation for registered providers of social housing to reduce their rents by 1% per year, irrespective of inflation, from April 2016 to March 2020.

2.2.2 From April 2020, the Regulator of Social Housing's (RSH) Rent Standard made provision for a maximum annual increase in social housing rents of CPI plus 1% with effect from April 2020 for a period of five years.

2.2.3 In the Autumn Statement 2022 the then Chancellor announced a cap on rent increases of 7% for 2023/24. Whilst this applied to current tenancies it did not apply to the calculation of the maximum initial rent when properties are first let or subsequently re-let. In particular, the restriction does not apply to the calculation of formula rent that apply to social rent properties; these continue to increase by CPI plus an additional 1%.

2.2.4 In January 2024 the regulator confirmed the limit on annual rent increases for 2024/25 to be CPI plus an additional 1% and in April 2024 it was confirmed this formula will continue to apply to rent increases in 2025/26.

2.2.5 Any increase in rent will mean an impact on tenants' household budgets but the additional income is vital to maintain and improve the services we provide to tenants, invest in our existing housing stock in accordance with the stock condition surveys and develop new social housing to address the needs of local people.

2.2.6 Future rent increases will not mitigate against the reductions during 2016-2020 or the rent cap in 2023/24 and it means that rents are now set against a lower baseline than they would have been.

2.3 Welfare reform

2.3.1 The measures introduced in the Welfare Reform Act 2012 represented the biggest change to the benefits system in a generation. There have been repeated delays to the full implementation of the changes, particularly the rollout of Universal Credit to those already claiming legacy benefits. This had been extended until 2028/29, but in April 2024 the then Prime Minister announced that the migration of legacy claimants would be accelerated with the bulk to be completed in the year 2024/25 and all claimants by December 2025.

2.3.2 At the start of the current year (April 2024) 41% of council tenants were in receipt of Universal Credit, and 32% were still receiving Housing Benefit. Many of those on Housing Benefit will be required to reapply for Universal Credit in 2024/25.

2.3.3 Universal Credit is paid in arrears and in most cases directly to the recipients rather than to the landlords. Rent arrears of those tenants on Universal Credit have increased, especially in the early weeks of a claim. At the end of year 2023/24, the average rent arrears of tenants on Universal Credit were £589, more than eight times that of those still on Housing Benefit (£67).

2.3.4 This combined with the benefit cap and the under-occupancy charge continues to be a challenge and poses a risk to the level of potential rent arrears that may accrue. The risk is made even more acute in the context of cost-of-living increases for residents.

2.4 The Social Housing (Regulation) Act 2023

2.4.1 The previous government published the Social Housing Green Paper: A New Deal for Social Housing in 2018 and subsequently the Social Housing White Paper Tenants - The Charter for Social Housing Reform in 2020 with the aim of improving how social housing is regulated. It sets out fundamental reform to ensure social homes provide an essential, safe, well managed service for all those who need it, including an enhanced regulatory regime for local authorities. The paper set out seven principles which will underpin a new, fairer deal for social housing residents:

• to be safe in your home - to ensure every home is safe and secure
• to know how your landlord is performing - including on repairs, complaints and
• to have your complaints dealt with promptly and fairly - with access to a strong Ombudsman
• to be treated with respect - backed by a strong consumer regulator and improved customer standards
• to have your voice heard by your landlord - for example through regular meetings and scrutiny panels
• to have a good quality home and neighbourhood to live in - keeping homes in good repair
• to be supported to take your first step to home ownership - a ladder to other opportunities, should tenants circumstances allow

2.4.2 These papers laid the basis for the Social Housing (Regulation) Act 2023 (Act). The key changes brought in by the Act are:

• more proactive regulation with the power to impose unlimited fines for non-compliance
• new Consumer Standards
• new Decent Homes Standard
• new Tenant Satisfaction Measures
• new professional qualification requirements
• enhanced powers for the Housing Ombudsman

2.4.3 The Housing Ombudsman Service and the Regulator of Social Housing each have a role in dealing with social housing landlords. The organisations work closely together but have different roles. These roles are intended to be complementary, ensuring landlords meet expected levels of service delivery to tenants, and organisational levels respectively. The Act intends to strengthen the powers of the Housing Ombudsman (HO) and the Regulator of Social Housing.

2.4.4 The Act also provides for the RSH, HO and the Building Safety Executive to share information on failing landlords.

2.5 Housing growth

2.5.1 Addressing the housing shortage is a priority issue for the new government and one that carries clear expectations on how housing supply is increased to meet local housing needs. The government has committed to restoring mandatory housebuilding targets, building 1.5m homes by the end of this parliament, including affordable and council homes and prioritising brownfield and grey belt land for development to meet housing targets.

2.5.2 In July 2024 the government announced that it has started to review the increased Right to Buy discounts introduced in 2012 and will bring forward secondary legislation to implement changes in the autumn. There will also be a wider review of the Right to Buy, including looking at eligibility criteria and protections for new homes, on which the government will bring forward a consultation, also in the autumn.

2.5.3 At the same time the government set out immediate changes to increase the flexibilities on how councils can use their Right to Buy receipts.

• the maximum permitted contribution from Right to Buy (1-4-1) receipts to replacement affordable housing will increase from 50% to 100%
• RTB (1-4-1) Receipts will be permitted to be used with section 106 contributions
• the cap on the percentage of replacements delivered as acquisitions each year (currently 50%) will be lifted

2.5.4 The government confirmed their commitment to invest £450 million in councils across England under the third round of the Local Authority Housing Fund. This will create over 2,000 affordable homes for some of the most vulnerable families in society, including families currently living in cramped and unsuitable bed and breakfasts, and Afghan families fleeing war and persecution.

2.5.5 The government also recognises that councils and housing associations need support to build their capacity and make a greater contribution to affordable housing supply. It will set out plans at the next fiscal event to give councils and housing associations the rent stability they need to be able to borrow and invest in both new and existing homes, while also ensuring that there are appropriate protections for both existing and future social housing tenants.

2.6 Climate change and the low-carbon future

2.6.1 The previous government committed to tackling climate change and setting a target of reducing domestic emissions to zero. The current government has committed to reviewing the Decent Homes Standard, but it has not given any details about the timing or breadth of the reforms. The RSH therefore expects social landlords to be working to understand the potential costs of making carbon reduction improvements to our assets. The HRA stock currently has an average SAP rating of EPC C. An interim Net Carbon Zero Strategy is in place to supplement the HRA Asset Strategy. The strategy lays out the steps that will be needed to introduce a full Retro-fit Strategy in 2024, to support the prioritisation and delivery of Net Zero work packages.

2.7 Building Safety Act 2022

2.7.1 The Building Safety Act was passed in April 2022 and is in effect its response to the Grenfell Tower fire tragedy in 2017.

2.7.2 The Act requires the council to register its in-occupation, high-rise buildings with a newly established Building Safety Regulator (BSR). All buildings over 18m in height or with 7 or more storeys are captured in the scope of the Act. The council's Principal Accountable Person must register each high-rise building, provide each building's key information and a building safety case report The building safety case report will show how building risks are being proactively managed and residents kept safe. High rise buildings will be split into three tranches, with building safety cases for tranche one, buildings over 50m in height, required for March 2024. Gateshead has three tranche one properties with a fourth likely to be included.

2.8 Fire Safety Act 2021

2.8.1 The Act makes amendments to the Regulatory Reform (Fire Safety) Order 2005 ("the FSO") and extends the provisions of the FSO to the following parts of a multi-occupied residential buildings:

• the building's structure, external walls and any common parts. The external walls include doors or windows in those walls, and anything attached to the exterior of those walls, for example balconies and cladding
• all doors between the domestic premises and common parts

2.8.2 Under Article 3 of the FSO, the "responsible person" of a premise (either a building or any part of it) is the person who has control of the premises ("the Responsible Person"), which may include building owners, leaseholders or managers.

2.8.3 The council will take a pro-active approach to ensure compliance with the provisions. This has included a full and intrusive survey of the construction of the external wall system of each building, and an ongoing fire door inspection programme.