HRABP - Draft 8 - Flipbook - Page 21
Capital Programme - Total planned
capital investment in the HRA totals £368m
over 30 years. This includes major works on
existing stock of £83.8m, redevelopment
of £55.9m, and new developments of
£227.3m, and other capital works of £1m.
The new home programme will deliver 257
new affordable homes by 2022/23 and
an estimated additional 1500 homes by
2047/48. Funding for both the major works
on existing stock, and other capital works
will be through Direct Revenue Financing
(DRF). The new homes programme and
redevelopment works will be funded
mainly from our reserves and contributions
(average of 75%). The balance will be
funded
from
assumed
capital
receipts (£52.2m) and other assumed
income (RTB sales receipts, Homes
England funding, S106 funding) (£20.4m).
It can be seen that a cautious approach
has been adopted in the business plan to
ensure the financial viability of the HRA
and remain well within the Government’s
requirements. The plan is entirely
sustainable, paying off outstanding loans
by Year 26 to be totally debt free. Subject
to future trends remaining on track with
current assumptions this approach enables
the Council to reconsider and potentially
increase its future investment in new
housing in the area at a future review of
the business plan.
4. Assumptions
The HRA Business Plan has to be based
on a number of assumptions about the
future. We have been prudent in setting
these assumptions so that risk is minimised
(reviewed in Section 4 of the business plan).
The key assumptions we have made in the
plan are shown below.
Risk area
Assumption
Comment
Inflation
RPI at 2.5%
CPI at 2%
Year 1 – 4 of the business plan assumes current RPI and
CPI rates. Year 5 onwards a prudent approach of 3% CPI
has been applied to all expenditure items.
Rent policy
Yr 1-2 1% reduction
Yr 3–4 CPI +1% (3%)
Yr 5 + CPI only (2%)
A conservative approach to rent increases as local
authorities have flexibility under the self-financing
regime. The Year 3 onwards assumes a CPI average of
2%
Void rates
1.3%
Assumed long term void rate for planning. This is
reviewed annually.
Bad debt provision (BDP)
4.41%
A conservative approach to BDP has been taken, due
to the changes in the Welfare Reform, and in particular
Universal Credit. This is reviewed annually.
Interest on debt/balances
0.66% on balances;
4% on new and
rescheduled debt
Reflects current rates available and historic evidence.
This is reviewed annually.
RTB Receipts
30 sales per year.
Best estimate based on historical sales trends and
expressions of interest
Minimum cash balances
10% of total income
received within the
given financial year.
10% of total income received within the given financial
year is regarded as best practice.
High Value Voids (HVV) The HPA requires housing
authorities to sell interest
in any vacant higher value
HRA housing and pay the
levy to Government.
0 sales for Yr 1 – 30
Currently, though statute allows the HVV levy to be
applied it would appear that the Government has no
intention to apply it in the short term.
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