HRABP - Draft 8 - Flipbook - Page 19
4 Financial Overview
1. Introduction
e.g. to facilitate new development, fund the
redevelopment of Retired Living housing,
address the uncertainties facing the
economy in the future that may impact on
the Business Plan because of the need to
take ‘impairment’ in value of the housing
stock into account, and the impact on the
potential to make a surplus on any market
housing developed by the HRA .
2. Self Financing Regime
The Self-Financing Regime gives the
Council greater certainty and control of its
resources enabling it to adopt a strategic,
long term approach to ensure that housing
needs are met, that the housing stock is
well maintained, and additional homes are
provided. This has enabled the introduction
of a Housing Development Programme
to enable the Housing Strategy priority of
providing additional affordable homes to
be achieved.
A 30 year financial business model is
used to support the delivery of the HRA
objectives and this business plan ensures
our targets and aspirations are achievable
and affordable. It uses assumptions about
the level of income available and the key
risks facing the housing service over the
next 30 years. The planned repayment
of current borrowing is scheduled into
the plan. A limit has been placed by the
Government on the Council’s total housing
debt at £87.26 million. The current debt
(at March 2018) is £76 million (£68 million
from the self-financing settlement and £8
million pre Self-financing), leaving a £11
million borrowing ‘headroom’ available to
the HRA at this time.
3. The HRA business plan – Base
financial position
The Council is required to account separately
for Local Authority housing provision via
the Housing Revenue Account (HRA). This
is a ring-fenced account covering the costs
arising from the provision and management
of the Council’s housing stock, offset by
tenant rents, service charges and other
income.
The Self-Financing regime was introduced
by Government in April 2012. The Council
is now able to control
the financial
sustainability of the HRA budget
by
ensuring that adequate funds are set aside
to repay debt and to cover any unforeseen
costs. The Council is able to plan longterm to meet its business objectives whilst
creating efficiencies and savings and giving
added value for money.
The HRA spending plans, including
our capital investment programme,
are currently fully funded from existing
resources. This means that we have no
current need to make use of this additional
borrowing, but future reviews of the
business plan may reconsider this position,
The Council’s housing stock is a valuable
asset of over 4,400 properties together
with other assets that bring an income of
£19m each year. Valuation of the stock is
required annually and in 2018 the market
valuation was £525.5m. An alternative
valuation is also required following a
Government formula which considers the
‘Existing Use – Social Housing’, taking
account of the fact that the stock
accommodates tenants on long term
tenancies. This valuation is £199.6m.
Following the acquisition of land and
property for future development over a
two-year period, we have invested £3
million in a 'land bank' that will provide us
with approximately 370 mixed tenure
housing units.
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