Agenda item

(Leader) To consider the attached report (C-004-2020-21).

(1)       The Cabinet noted the requirement to carry out a full review of service charges across the District;

(2)       The Cabinet agreed to receive a further paper in September to agree the proposals on introducing a fair and consistent approach to service charges for tenants living in blocks; and

(3)       The Cabinet approved the development of a new scheme ‘more than bricks and mortar’  ‘EFDC Creating great places where people want to live’.

The Housing and Community Services Portfolio Holder introduced the report on the review of service charges.

She noted that the Council charged for additional services to tenants living in blocks of flats based on a CPI yearly increase. An example of these services were the cleaning of blocks and communal utility costs such as electricity for lighting. 

This approach had become challenging for most organisations over the years as some costs had risen above the rate of CPI.  A recent analysis, by Housing Management of cost against income had ascertained that the under recovery of service charges stood at £1.3m for EFDC 2019/20. Most organisations have changed their approach and charge for the actual cost of services. 

Councils were now subject to rent regulations via the Regulator for Social Housing. The Regulations clearly state that social housing providers need to charge for services in a fair and consistent way which could be accounted for.  This translates to charging the actual cost for the services broken down to each individual property.  From a legal standpoint this protected the council from challenge regarding fair and accurate charging.

Any increase in service charge needed to be approached with care and compassion; as such a further paper would be presented to Cabinet in September setting out the options.

It was proposed that income raised (over and above current service charge income) in the first 4 years was ringfenced to pay for estate improvements under our proposed scheme ‘more than bricks and mortar’  our mission was: ‘EFDC creating great places where people want to live’.  Our estates would benefit from a cash injection, this strategically, would be a benefit to the whole district in terms of communities, place and customer satisfaction.

The Service Manager (Housing Management and Home Ownership), D Fenton, gave a presentation highlighting the benefits for communities.

Councillor S Kane said that he was very pleased to see this going ahead and was please at the prospect of resident participation, as this was important to instil some pride in the place.

Councillor J Philip commented that it would be good to scope out what the shortfalls were. The way it would self-fund itself was really good and it would allow us to target what was needed, where it was needed.

Councillor Murray asked if this would increase service charges. He was told that it would and that in the future they would further consult with the residents to see if they wanted to further increase the services that they were offered. The Council was regulated by the Social Housing regulations and so had to provide fair and accurate charges to services.

Councillor Murray commented that although this had been in the pipeline for some time this was not a good time to do this. D Fenton noted that this was subject to housing benefits and officers would be recommending ways that the charges could be applied, for example, going for a tiered     approach over four years. They fully recognised the potential strain that this had to put on people. Councillor H Whitbread added that this work had been started prior to Covid 19 and with a further report coming in September it gave officers a chance to review it and learn from the lockdown period.

Councillor Murray went on to ask what would happen if people wanted to pay less and have a reduction in services. How would we manage that? He was told by D Fenton that they would have to consult with all residents and all residents would have to agree to have a reduction in services. There was also provision in the tenancy agreement to charge the correct service charge.

Councillor Murray’s biggest concern was that a lot of houses on our estates had been sold to the tenants and they did not pay service charges, but they may benefit from communal improvements. D Fenton replied that lease holders did pay a service charge. As for owner occupiers on estates, that was a challenge as she could only charge for services that the council provided.

Councillor Neville emphasised Councillor Murray’s comments and noted that this needed to be looked at sympathetically especially where upgrades benefited everyone but only a few households were paying for it. He also asked that we use Tenants Groups for their input. D Fenton noted that they would be consulting widely as not all estates had tenant groups.

Councillor Chris Pond welcomed most of what had been said and commented that an upgrade was urgently needed for these areas, as the people who lived there needed a decent environment. Also, as the people who lived in these blocks were not well off and we needed to keep it affordable for them, especially at this time.

Councillor Heap welcomed the improvements to the properties. Councillor Wixley noted that the Debden Tenants Panel meetings had not taken place for some years, nor had other tenant body meetings. He asked if these bodies would be resurrected? And on service charges, he was concerned that there had been a shortfall, and would different blocks be charged at different rates. D Fenton noted that this exercise was about transparency and making sure that we were charging the actual costs for the services that we provided.  Our charges would be based on the size of the property. We were also working to reinvigorate the Tenant Panels, and some of them were still working really well.

Decision:

(1)       Cabinet noted the requirement to carry out a full review of service charges across the District;

(2)       The Cabinet agreed to receive a further paper in September to agree the proposals on introducing a fair and consistent approach to service charges for tenants living in blocks; and

(3)       The Cabinet approved the development of a new scheme ‘more than bricks and mortar’  ‘EFDC Creating great places where people want to live’.

Reasons for Proposed Decision:

The development of an accurate and fair charging regime for service charges supports the overall aspirations of the Councils Corporate Plan – Stronger Communities, Stronger Council 

Other Options for Action:

Not to develop a fair and accurate charging regime. This would leave us potentially in breach of the newly published Rent Regulations and at risk of legal challenge around fair charging.