Social Landlord Service: HRA Income Policy

Rent and services charges are formally agreed annually as part of the HRA Budget Report presented to members each February. The Council is required to provide four weeks' notice of the increase in charges.  There are two types of rents set at GYBC, Social Rents and Affordable Rents.

The rent we receive is used to pay the costs of managing, maintaining and improving the Council's homes.

7.1Social rents and affordable rents

Social rents make up most rents charged and are set in accordance with Housing Act 1985 and at a foundation principle is that rents are charged as a 'reasonable' rent, taking into account Government Guidance (GOV.UK: Guidance on rents for social housing) and the Regulator of Social Housing's rent standard (GOV.UK: Regulatory standards for landlords). Rents are calculated using a formula set by Government taking account of:

• the condition and location of a property
• local earnings
• number of bedrooms in a property

When a social rented property becomes empty it is re-let at the social/formula rent (exclusive of service charges), in accordance with the Rent Policy Statement national rent setting formula. There is flexibility in the policy to set rents at up to 5% above formula rent (10% for supported housing). This is reviewed annually and agreed as part of the HRA Budget Report.

Where a social rent property has been remodelled with a change in the property, i.e., increase/decrease in bedrooms, the Council will review the rent in line with the national rent setting formula.

Where the Council builds or acquires a new property, it will be let at an Affordable Rent. Affordable Rents are inclusive of service charges.  The Council sets Affordable Rents in accordance with the National Policy Statement on Rents for Social Housing. The rent is set at a maximum of 80% of the market rent (inclusive of service charges). Where the Affordable Rent property is re-let a new rental assessment is calculated in accordance with the Rent Policy Statement.

Where existing tenants are paying Affordable Rents, the Council will in accordance with the National Policy Statement apply an annual increase.

Rent levels are challengeable by judicial review although generally the courts are reluctant to interfere with local authority decisions.

7.2Tenant service charges

Tenants pay service charges on a property to cover the cost of providing communal services or shared services to a building and, if applicable the surrounding estate. Service charges are calculated to reflect the cost of the service being provided in accordance with the Policy statement on rents for social housing.  

Service charges form part of the tenancy agreement and may include caretaking, grounds maintenance, digital aerial, water, supported housing charges for tenants living in sheltered housing in accordance with the Landlord and Tenant Act 1985 (as amended). To be recoverable, the service charges must be reasonably incurred, and the services or works must be of a reasonable standard; reasonableness is a question of fact in each individual case. Challenge can be to the Housing Ombudsman.

The Council consulted tenants in September 2023 on introducing new service charges for services which are provided to some tenants but not all, for which there is not currently a service charge, this is called de-pooling.   The cost of these services was paid for by the HRA. The consultation showed that overall, there was support for de-pooling and the new service charges introduced from April 2024.  In addition, the Council consulted tenants on introducing differential charges to reflect different levels of service. 

In addition, tenants can elect to pay for additional services, such as home contents insurance and garden maintenance.  For collection purposes, these discretionary charges are treated as service charges and are added to the rent account and collected in the same way as other service charges.

These are also formally agreed as part of the HRA Budget Report annually except for the home contents insurance which is set by the insurer.

Should the Council propose to introduce any new service charges as a result of introducing a new service or enhancing any existing service, it will consult with tenants before making a final decision.

7.3Leaseholder charges

An annual service charge is levied on leaseholders to cover the proportion of costs for mandatory services provided to the block and communal areas in accordance with the Landlord and Tenant Act 1985 (as amended).  These services are set out in the lease agreement and include caretaking; digital aerial; communal lighting; day to day communal repairs; ground rent, buildings insurance, grounds maintenance and costs incurred for administration and management of the leasehold service. Leaseholders are billed annually in arrears in September.

The Council consulted leaseholders on introducing differential caretaking charges to reflect different levels of service in September 2023 and introduced from April 2024.

Leaseholders will also be liable for their proportion of the cost of any major works to the block. Leaseholders have the right to be consulted on any planned major works where their contribution will exceed £250.  The Council will recover the fair and proportionate amount of major works costs from leaseholders in accordance with the terms of leases, to ensure that tenants are not paying for the cost of improvements which benefit leaseholders.

Should the Council propose to introduce any new service charges as a result of introducing a new service or enhancing any existing service, it will consult with leaseholders before making a final decision.

7.4Freeholder service charges

Where a tenant purchases a freehold home through the Right to Buy process an annual service charge is levied on freeholders to cover the proportion of costs for mandatory services provided to the estates in accordance with the Landlord and Tenant Act 1985 (as amended).  These services are set out in the freeholder agreement and include ground rent, grounds maintenance and costs incurred for administration and management of the estate service. Freeholders are billed annually in arrears in September.

7.5Gypsy and traveller site

Residents on the site pay pitch rent and service charges in accordance with the Mobile Home (Pitch Fees) Act 2023, this legislation changed the inflationary index and now   requires that pitch rents shall increase or decrease by a percentage of no more than CPI at the latest index, and for the month which was 12 months before. The Council is required to provide four weeks' notice of the increase in charges.

7.6Other charges

There are other types of fees and charges the Council will incur because of taking legal action or undertaking repairs that the tenant is responsible for. The Council will recover the full costs that have been incurred where we can lawfully collect them, and these will be added to a separate account linked to the main rent account for payment.