Report to Cabinet
26 January 2016
Portfolio Holder Presenting: Deputy Leader and
Cabinet Member for Housing and Regeneration
Subject:
Review of the Private Sector Housing Renewal Policy
Status:
Open
Report ref:
Ward(s):
All
Key Decision:
Yes
Key Decision / Ref:
930/HR
Report of:
Deputy Leader and Cabinet Member for Housing and
Regeneration
Contact officer:
Tom Payne, Interim Head of Street Scene, Parks and
Regulatory Services. tom.payne@basingstoke.gov.uk
Appendices:
Appendix 1 – Private Sector Housing Renewal Policy
Appendix 2 – Policy Options regarding Discretionary
Financial Assistance

Papers relied on to
produce this report:



Report to Economic, Planning and Housing
Committee on 23rd July 2015 - Review of Private
Sector Housing Renewal Policy and Disabled
Facilities Grants funding
BDBC’s Private Sector Housing Renewal Policy
(dated 1 April 2006)
Cabinet Report 27 January 2015: Green Investment
Fund
Portfolio Holder Report 27 May 2015: Green
Investment Fund – Low Carbon Loans and Grants
Scheme
1
Executive Summary
1.1
This report recommends that Cabinet approve the revised Private Sector
Housing Renewal Policy which changes the council’s approach towards
providing discretionary financial assistance for a range of housing
adaptations, improvements and repairs.
1.2
If approved, implementation of the new Policy will take effect from 1 April 2016
(except for the Green Investment Fund - Low Carbon Loan and Grant Scheme
which will be implemented with immediate effect).
2
Recommendation
2.1
It is recommended that:
2.1.1
The Private Sector Housing Renewal Policy as set out in Appendix 1 of this
report is approved.
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2.1.2
The Borough Council works with Parity Trust to administer loans associated
with the Private Sector Housing Renewal Policy including entering into a legal
agreement between the Council and Parity Trust for this purpose.
2.2
Cabinet is requested to note that approval has already been given for
administration of the Green Investment Fund Low Carbon Loans and Grants
Scheme through the Parity Trust (Decision Notice 49/2015).
PRIORITIES, IMPACTS AND RISKS
Contribution to Council Priorities
This report accords with the council’s Budget and Policy Framework and directly
supports the Council Plan priorities of improving residents’ quality of life and
supporting vulnerable people.
GLOSSARY OF TERMS
Term
Definition
DFG
Disabled Facilities Grant
DCLG
Department of Communities and Local Government
BCF
Better Care Fund
GIF
Green Investment Fund
3
MAIN CONSIDERATIONS
3.1
Background
3.2
The Regulatory Reform (Housing Assistance) (England and Wales) Order
2002 provides local authorities with wide ranging powers to provide
assistance for the purpose of improving living conditions in their area. This
Order requires the Council to adopt a housing renewal policy setting out what
forms of discretionary financial assistance they will provide to address local
needs.
3.3
The Council’s current Private Sector Housing Renewal Policy was approved in
2006. This Policy provides for financial assistance to be offered in the form of
grants to assist with the cost of housing repairs, improvements and
adaptation. The following grants are available:

Mandatory Disabled Facilities Grants.

Discretionary Disabled Facilities Grants.

Discretionary Renovation Grants.

Discretionary Home Repairs Assistance Grants.

Discretionary Landlords Grants.
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3.4
A review of the council`s approach to Disabled Facilities Grant (DFG) funding
was prompted by an increasing DFG caseload resulting in increasing DFG
expenditure; the introduction of the Better Care Fund (BCF) which from April
2015 streams DFG funding through Hampshire County Council rather than
directly to the borough council from DCLG; and considerable uncertainty
about DFG funding from April 2016.
3.5
The budget in 2015/16 is under pressure: The overall budget for mandatory
and discretionary DFGs is £1,140,000. This is made up of the Government
grant of £566,000 (which is now paid to the borough council by Hampshire
County Council from the Better Care fund) and the rest is funded by the
council. The expenditure on DFGs for 2015/16 is forecast to reach
£1,442,000 - a potential budget pressure of approximately £302,000.
3.6
Recent growth in both demand and approvals for grant assistance has
resulted in significant overspends on the capital budget. The following table
illustrates the trend over the past three years showing the budget and actual
spend on all grants (DFGs, renovation and repair).
2013-14
Overall Housing Grants
budget and actual spend
2014-15
2015-16
Budget
Actuals
Budget
Actuals
Budget
Forecast
647,000
780,211
850,000
1,314,505
1,140,000
1,442,000
Mandatory DFGs
681,201
1,177,482
1,300,000
Discretionary DFGs
76,021
117,500
142,000
Housing repairs
11,495
19,523
0
3.7
The current policy requires updating to take into account current practice and
legislation; to reflect and respond to the increasing demands and pressures
on the sector and the service; to update the supporting data contained in the
policy to reflect the current demographic and housing context; and to set out
how the council and partners together can support the vulnerable people in
need of adaptations to their homes so they may live safely and independently.
3.8
In addition, in January 2015 the council agreed to utilise £900,000 from the
Green Investment Fund to establish a loan and grant scheme to assist
homeowners and community organisations to improve the energy efficiency of
their properties. This scheme also falls within the powers available to the
council under the Regulatory Reform (Housing Assistance) (England and
Wales) Order 2002, and therefore is included within the scope of the new
policy.
4
The Proposal regarding Discretionary Financial Assistance to home
owners
4.1
Historically, the Council has offered discretionary grants to improve private
sector housing. However demand for mandatory DFGs is placing significant
pressure on council resources. Expenditure has practically doubled over the
past three years alone and with the aging population this trend is likely to
continue.
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4.2
The Regulatory Reform (Housing Assistance) (England and Wales) Order
2002 changed the legislative framework which governed Local Authorities’
ability to provide financial assistance to home owners and allows for
authorities to offer loan funding. In view of this, it is proposed that the Council
introduces a loan scheme in place of discretionary grants. It is acknowledged
that lending money by providing repayable loans is a more economic use of
the Council’s limited resources. This scheme would be available for DFG top
ups (should the cost of an adaptation exceed the mandatory grant limit of
£30,000) and for essential housing repairs needed to protect the health and
wellbeing of the occupier.
4.3
Mandatory entitlement to Disabled Facilities Grants will not be affected and
these will remain available under the provisions of Housing Grants,
Construction and Regeneration Act 1996.
4.4
The Council would retain a small budget to provide Discretionary Home
Improvement Grants if applicants do not qualify for a loan and all other
alternative sources of funding have been exhausted.
4.5
Registered Social Landlords would be expected to “top-up” the Mandatory
Disabled Facilities Grants where the cost of the adaptation exceeds the
mandatory limit of £30,000. This reflects the practice throughout most of
Hampshire and the Isle of Wight. Discussions have been held with Sovereign
and Sentinel Housing Associations who are agreeable to this approach which
is consistent with the other local authorities they work with.
4.6
Most applicants who qualified for Discretionary Disabled Facilities Grants
since 2009 have been in receipt of a benefit which excused them from the
prescribed “means-test” applicable to the mandatory grant.
4.7
The Council will discontinue Discretionary Landlords Grants and Discretionary
Home Repair Assistance Grants. No Discretionary Landlords Grants have
been awarded since 2006 and so it is reasonable to formally remove this form
of assistance. The new Housing Improvements Loan or Grant schemes,
detailed below, will provide financial assistance for any repairs costing more
than £500 and will therefore replace the current Discretionary Home Repair
Assistance Grant.
4.8
Discretionary Home Improvement Loans/Grants will only be available to
owner-occupiers. This grant would be available to assist with the following
works:

DFG “top ups”

Removing or moderating a Category 1 hazard in a house.

Significant works of repair or improvements to a dwelling.
4.9
Discretionary grants would have conditions attached requiring repayment
when the property is sold or otherwise disposed of.
4.10
These new types of financial assistance, eligibility criteria and the terms and
conditions associated with them are presented in the revised Housing
Renewal Policy set out in Appendix 1.
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4.11
A loan scheme
4.12
Initial discussions have already taken place with Parity Trust about the
administration and operation of the loans for householders. Parity Trust is a
non-profit organisation, with charitable status and is an Industrial and
Provident Society. The council is currently working with Parity Trust who
administers the Low Carbon Loan scheme for energy efficiency measures.
They offer a variety of different types of secured loans to householders at a
fixed interest rate of 4.49% after a council funded subsidy of 3%. However,
further negotiations will take place with Parity with the objective of securing a
more favourable interest rate. There is an annual subscription fee (currently
£6,000) payable to Parity Trust for administering the loan scheme. This fee is
already being paid to administer the low carbon loan scheme so there would
be no additional charge for administering the Home Improvement Loans
proposed in the revised Housing Renewal Policy.
4.13
Loans are only available to households who are property owners and have
sufficient equity in their property to act as security. Depending on each
individual’s financial circumstances, loans may be offered with principal and
interest repayments, interest only repayments or no repayments until the
property is sold (interest roll up). The latter are typically for clients aged 60 or
over. Clients under 60 that cannot afford regular repayments have access to
a shared equity loan (with no repayment required) subject to meeting required
the criteria.
4.14
The loans would be tailored to suit the Borough Council’s individual
requirements and would operate through an agreement that results in the
Borough Council providing 80% of the loan, and Parity providing 20% of the
loan. This effectively increases the amount of funds that can be made
available. Parity are able to receive initial enquiries and guide applicants
through the process, taking an approach which ensures that loans are only
made available to households where this is suitable for their individual
requirements. Parity is accredited as an Industrial and Provident Society and
have highlighted that they have a zero default record on loans made.
4.15
Parity is also registered with the Financial Conduct Authority (FCA) which
enables the organisation to provide applicants with financial advice and carry
out financial assessments. Parity currently works in partnership with 14 other
councils and discussions have been held with the Council’s Procurement
Team to ensure that the arrangements are in line with the agreed
procurement and standard order regulations.
5
Options Analysis
5.1
The following options were considered as part of the report which went to the
Economic, Planning and Housing Committee on 23rd July 2015.
a)
Continue with the current policy, funding adaptations in full over £30,000.
b)
To stop all discretionary aid.
c)
To cap discretionary grants at a certain level
d)
To introduce a waiting list
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5.2
A comprehensive appraisal of benefits and risks of each of these options is
presented in Appendix 2. The majority of members supported the option to
offer loans whilst retaining discretionary grants if applicants were not eligible
for a loan.
6
The Proposal – Low Carbon Loans and Grants
6.1
The creation of the Low Carbon Loan and Grant scheme was approved by
Cabinet (January 2015) and the decision to enter into an agreement with the
Parity Trust for the administration of the scheme was made by the Portfolio
Holder for Regulatory Services and the Environment in May 2015.
6.2
Since May, the process for and promotion of the scheme has been developed
and four initial enquiries (3 loans and 1 grant) have been progressed in
accordance with the criteria for the scheme. However, in order for the scheme
to be properly implemented, the intention to provide financial assistance for
this purpose is to be included in the Private Sector Housing Renewal Policy.
6.3
None of the recipients of the first loans and grant have been either
advantaged or disadvantaged by the fact that the scheme has not yet been
included in the Private Sector Housing Renewal Policy. With the new policy
now imminent, further potential loan and grant recipients are being
encouraged to make an expression of interest. Completion of individual
agreements will take place once the new policy is adopted.
6.4
The criteria for the Low Carbon Loan and Grant scheme are presented in
Appendix 1.
7
Corporate Implications
7.1
Financial Implications
7.2
The proposed annual spend from the DFG budget 2016/17 to 2019/20 is:
Mandatory Disabled Facilities Grants
£1,350,000
Discretionary Housing Assistance Loan/Grant
£ 100,000
Total
£1,450,000
7.3
These costs can be met from within the proposed capital funding in the
Medium Term Financial Strategy.
7.4
The projected annual spend from the Green Investment Fund (Green
Initiatives Capital budget 2016/17 to 2019/20 is as yet unclear as there is no
track record of annual expenditure Additionally, as loans are repaid, sums flow
back to the council. In total a sum of £900,000 is set out in the Medium Term
Financial Strategy as follows:
Green Initiatives
Green Initiatives (Provisions)
15/16
£’000
50
0
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16/17
£’000
50
0
17/18
£’000
400
400
7.5
Risk Issues
7.6
The council would be required to provide loan funding to Parity Trust and this
would be held in a separate designated account. As Parity would be
authorised to make payments out of the account in line with loans agreed by
the council, there is a risk that the council could lose its capital if Parity Trust
were to go into administration. In order to minimise this risk, the council would
generally only transfer money across to Parity Trust as and when each loan is
approved to cover the Council’s contribution and interest rate subsidy. The
council has run a credit rating check on Parity Trust which shows that Parity
has a lower than average risk of failure. Furthermore Parity is well established
in this market with14 other local authorities as partners and those that have
been approached by the council have provided good references.
7.7
A further risk is of default on loans. This can be mitigated by careful vetting of
the potential recipients to understand their financial position and approach to
repayment. Parity has an excellent record of no defaults, write-offs,
repossessions or formal recovery proceedings on any loans made in
partnership with local authorities and arrears are minimal at less than 1% of
the amount advanced. If necessary, Parity has the ability to amend the
payment approach if this is causing difficulties for the recipient.
7.8
Other risks are associated with the demand for grant funding, which may
exceed the level of funding available. It will therefore be important to ensure
that the criteria upon which decisions are based ensures that those in most
need benefit from the funding.
7.9
In respect of the loans, there is some risk that the level of demand will be low.
However, this can be mitigated by ensuring the interest rate charged is low so
as to ensure residents are able to carry out any necessary adaptations or
other essential improvements to their property.
7.10
HR Issues
7.10.1 There are no significant HR impacts associated with this report.
7.11
Equalities
7.11.1 When considering the Public Sector Equality Duty (Equality Act 2010) and the
impact of the proposed amendments to the policy, no differential impacts have
been identified for any of the protected characteristics groups.
7.12
Legal Implications
7.12.1 The Regulatory Reform (Housing Assistance) (England and Wales) Order
2002 states that before the powers contained with it can be used to provide
grants and loans to private owners to repair, improve or adapt their property,
the Council must first adopt a Housing Renewal Policy for the provision of
such assistance. In addition the Council is required to give public notice of
adoption of the policy, have a full copy of the policy available for inspection,
free of charge and make arrangements that summary of the policy may be
obtained by post.
7.12.2 Where any significant changes are made to the published policy for housing
renewal these will have to be reported and adopted by the council. Such
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significant changes will include those to eligibility and scope as well as any
new forms of assistance which have been introduced
7.12.3 The power to provide assistance may be given by the council to persons
directly, or they may be provided assistance through a third party, such a
specialist financial intermediary,
7.12.4 Subject to the agreement of the Cabinet, a legal agreement will be signed
between the Borough Council and Parity Trust, which sets out the
responsibilities of both parties. This will be subject to the approval of the
Borough Council’s legal services team, with the involvement of the finance
team.
7.12.5 In addition to the above, the Order requires the council to ensure that
recipients have received appropriate advice or information on any obligations
arising from the assistance. This applies whether the local authority is
providing the assistance directly or through third parties
7.12.6 It will be necessary to ensure that applicants for financial assistance are
aware that responsibility for undertaking work funded by the Borough Council
rests with the applicants, and not the Borough Council.
8
Comment from Portfolio Holders
8.1
The Council is committed to supporting our most vulnerable residents and
improving housing standards to protect their health and wellbeing. These are
two key themes in the draft Council Plan 2016-2020.
8.2
Demand for disabled facilities grants has increased significantly over the past
three years and there is uncertainty around future funding from the Better
Care Fund. The revised policy responds to these challenges by ensuring that
we will continue to provide financial support to those in need of adaptations
and essential housing repairs.
8.3
Furthermore, the funds being made available to improve home insulation,
heating systems and energy efficiency will help to reduce carbon emissions
and assist homeowners to reduce energy bills, thereby reducing the risk of
fuel poverty.
9
Communication and Consultation
9.1
To assist with the preparation of the revised Private Sector Housing Renewal
Policy, the Portfolio Holder heard the views of Members at a workshop on
25th June 2015. Members were briefed regarding the challenges faced by the
service with regard to Disabled Facilities Grants and views were sought on
policy options. The comments from the workshop were circulated to all
members who were invited to comment on the options available to the council
in terms of discretionary financial assistance.
9.2
A report was then taken to the Economic, Planning and Housing Committee
on 23rd July 2015 which presented the four main options regarding
discretionary financial assistance. The majority of members supported the
provision of a loan scheme for discretionary DFGs, but to retain a small
discretionary grant budget where applicants are not eligible for a loan.
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9.3
The EPH Committee also resolved that the council should continue to work
with Sovereign and Sentinel Housing Associations to secure additional
funding for adaptations in HA properties.
9.4
Discussions have been held with Sovereign Kingfisher Housing Association
and Sentinel Housing Association regarding the approach to DFG schemes
which exceed the mandatory limit of £30,000. Both have established
protocols in place to review large schemes and would either provide the top
up funding themselves (where they deem the works to be necessary and
appropriate) or work with the tenant to find a property which is more suitable
for their needs and can provide a far speedier way of meeting that person’s
needs.
9.5
Sovereign and Sentinel have also both agreed for their own maintenance
contractors to carry out level access shower adaptations using the schedule of
rates they have agreed with them. This provides a considerable cost saving
compared with the average cost of such adaptations on the open market.
9.6
Lastly members resolved that the council should lobby the DCLG, the DoH,
the BCF and HCC representatives, pressing for a grant commitment to be
made urgently for 2016/17 and making the case for an increase in funding.
The government published the Spending Review on Wednesday 25
November 2015. This included a commitment of over £500 million by 2019-20
for the Disabled Facilities Grants through the Better Care Fund. Further
discussions will take place with colleagues at HCC to clarify how this money
will be apportioned between the 11 District Councils in Hampshire with the
aim of securing a fair settlement which reflects the high level of demand in
Basingstoke.
10
Conclusion
10.1
The revised Private Sector Housing Renewal Policy (set out in Appendix 1):
 Ensures all partner organisations are fully involved strategically, and, at the
highest level, work with the council jointly to respond to current and future
challenges facing the service;
 Ensures all partner organisations play a more significant and key role in
finding solutions to individual cases;
 Secures increased and sustained funding from housing associations for
adaptations in their properties;
 Makes the council`s own funding go further so that more applicants can be
supported;
 Taps into tried and tested tools and practices used by other councils;
 Puts financing the scheme on a more sustainable footing so that more DFG
applicants may benefit, without compromising quality, fairness or
responsiveness;
 Makes allowance for exceptional circumstances and can be tailored to the
needs of different people;
 Ensures that an applicant`s needs are met so that they can live
independently and safely;
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 Ensures that the right and suitable solution is found for each individual
applicant, and that this is also a sustainable solution for the applicant in the
medium to long term;
 To continue to provide a high level of service to all people who apply for
DFGs in Basingstoke and Deane;
 Enables homeowners and community groups to improve their homes to
reduce energy costs and reduce carbon emissions through greater energy
efficiency
 Enables landlords to make energy efficiency improvements to their
properties for the benefit of tenants
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