Agenda item

The Committee considered a report outlining the following 3 options for the implementation of a future Service Charge Policy for payments made by Contract Holders (tenants or leaseholders) for additional services provided by the Council for shared communal areas or facilities within council owned blocks of flats, sheltered schemes or supported housing projects that were over and above the general rent, as detailed within the report:

·       Option 1: Do Nothing - Keep the existing Service Charge Policy in place with a cap of any possible annual increase in its overall rental charge (including Service Charges) to a maximum rise of £3 per week.

·       Option 2: Gradual incremental removal of the Cap - Review and amend the existing policy with a view to introducing incremental increases over a 3-year period to bring all service charges in line with full cost recovery. The cap will only come into effect where charges exceed the agreed weekly cap.

·       Option 3: Remove the Cap -Remove the cap completely from the existing policy with contract holders meeting the full cost of usage from 2024/25.

The Committee noted that under the existing Service Charge Policy, the Council operated a ‘cap’ whereby any service charge increase was restricted to a maximum of £3 per week, with the cost increase per tenant varying depending on the type of accommodation and the level of service costs incurred. Any difference between the level of cost increase incurred by the Authority, and what contract holders paid as a result of the cap, was met from the Housing Revenue Account (HRA) and that based on 2021/22 actual expenditure of £903k set against £762k of recovered costs, the HRA met the £141k shortfall. However, following a significant increase in utility costs for 2022/23, future actual expenditure could be significantly higher, and should the existing cap be maintained the gap between costs incurred and recovered would increase, impacting further on the HRA Business Plan and its ability to invest in service provision.

The following questions/issues were raised on the report:-

·       It was noted that currently approximately 40% of tenants benefitting from the cap were at the maximum cap of £3pw. Previously, that had been 25%.

·       Concerns were expressed that removal of the cap could result in some tenants falling into arrears. The Head of Housing and Public Protection advised that in such circumstances the Council would work with the tenants to mitigate against that and to help prevent them going into arrears. Furthermore, Housing Benefit and Universal Credit payments could also cover part of any increase, and that part of officers’ roles was to ensure tenants were receiving the correct benefit payments.

·       Reference was made to Option 2 and the potential impact for tenants at the end of the 3year period when all service charges would be based in line with full cost recovery. It was suggested that, in view of the above concerns around the possibility of tenants falling into arrears following the removal of the cap, the position should be subject to regular review.

UNANIMOUSLY RESOLVED