Wrexham Council look to use new lending rules to invest in housing stock after borrowing cap removed

Some of Wrexham Council’s rents are increasing by 2.4%, as they also look to borrow huge amounts to invest in the county boroughs housing stock, and even expand it by building and buying more property.

Wrexham Council acts as a social landlord with over 11,100 housing units, and has the first building programme in 30 years underway as part of a ‘Build and Buy Programme’ that aims to deliver an increase in affordable housing.

Next week the Council’s Executive Board will approve two reports, one the ‘business plan‘ and the other around rent setting in its ring-fenced Housing Revenue Account.

As of November 2018, the Council’s housing stock consisted of 11,137 homes including 6947 houses, 2448 flats and 1044 bungalows. As of December 2018 there were 1,886 applicants registered on the Council’s housing register.

Councillor D J Griffiths, the Lead Member for Housing, said: “The benefit we have have had in the UK government’s autumn budget is they said that the cap on borrowing is to be fully abolished, and abolished in Wales also. So if we can do that, then we can borrow more to invest. We don’t borrow just to borrow what we borrow to invest.

“What we do with it is to invest in our property. This year we are investing more in build and buy, the build ones are slow at the moment because we have to find the land.

“This year we have invested £53m in housing stock, it is a million pounds a week. Who else is investing a million a week? I don’t know if Barratt Homes are investing a million a week! We are doing that as the tenants really should have a home that they’re proud of you know, and if Mrs Jones down the road got a new front door why can’t I have?”

With the borrowing cap removed Wrexham Council say their borrowing will be £302 million in 2019/20 and will peak in 2023/24 to £361 million, noting: “Prudential borrowing requirements have been considered for this level of debt and it is considered to be prudent” with the business plan model in the report giving a 30 year view.

The model anticipates a total capital spend of £1,098 million (including inflation) over 30 years of which £77 million will be used to reach Welsh Housing Quality Standard by 2020, with it noted total revenue from ‘Rents and Other Charges’ is expected to be £2.2 billion over 30 years. The model includes planned expenditure of £22.3 million for the building, development and acquisition of new Council Housing and £12.2 million for sheltered accommodation review.

Since April 2018, Wrexham Council has completed the purchase of four former local authority properties which will be added to the Council’s housing stock. For the 2019/20 financial year, a budget of £3 million has been allocated to the buy back scheme, with it noted the average price paid per property so far is £144,000 – which includes the cash spent to bring them up to the required standards.

Cllr Griffiths said: “We are more open to buying property and it has to be in areas where there’s a big demand. Now we can give market values. We give market value exactly the same as what you would be doing if you had to buy them. If you went to buy it they said ‘It is X amount of money I’m not buying that’ so we step out of it. It is valued independently and they come back. So we’re not trying to get anything on the cheap. We’re not trying to be overpay for anything, we are paying the going rate”

“I have to say that Welsh government is very supportive. I don’t know what they do with others, but all I can say is they’ve been very supportive of us in Wrexham and they can see the good that we want to do, and then they can see the outcomes are good “.

The Council say they are limited to build new affordable homes in certain areas of the Borough since it does not own sufficient suitable land but says it is excited that for the first time in some 30 years it has now been able to commence a new build programme to deliver new Council-owned socially rented homes. Sites have been identified with an expected 28 units coming forward in the first phase of building. Work is due to start on site April 2019, with Plas Madoc which will be a development of 13 units and Nant Silyn which will be a development of 15 units of mixed property types.

A capital investment overview is also detailed in the report, copied in the below table:

Council Chief Executive Ian Bancroft added: “The quality of the work is about what’s right for those residents not just to comply with the (Welsh Housing Quality Standard) standard itself. It’s going beyond.

£1.7m has been allocated for the ongoing programme of adaptation work which benefits tenants who are in need of adaptations to their home to enable them to remain in their own home for as long as possible possible and promote independence

Mr Bancroft added: “What there is in this report is a significant investment for older people and we’re not clear where that investment is going geographically yet, but I think that’s really really important given the demand pressures we face with the increasing demography with the importance of older people needing to live longer independently or settling independently.

“If you think about that it is probably the biggest pressure we face in terms of demand on services is when older people lose their ability to live independently. So that becomes a real priority, in this business planning you’ll see that in terms of the investment figures.”

A common theme whenever we run stories on such housing revenue account (the ‘HRA’) investments is readers contrasting it to the council’s overall budget woes and cutbacks.

Mr Bancroft went on, “It is really easy to confuse HRA with our general revenue budget or our capital budget, it’s totally separate. There is no value in making savings or efficiencies in this budget, it needs to be spent and invested in a housing stock, it can’t help us out with our other budgetary pressures.”

This is also detailed in the overview budget table included in the report that shows the money in, and money out and in effect where the rents go:

The rent report also notes: “Rent will be increased for 2019/20 in accordance with Welsh Government (WG) guidelines of 2.4% plus a maximum of £2.00 per week (52 week basis) to bring rents up towards the Target Rent Level or a lower amount if this achieves the Target Rent in 2019/20. Properties where rents are above the target rent figure for 2019/20 will have no rent increase.”

There will also be a 2.4% increases for garage rents to £8.08 per week, garage plots (annual charge of £53.50), Warden charge to £3.38 per week, and a increase of 2.4% for charges for Travellers’ plots to £84.99 (and £100.56 per week for the larger plots).