SHOULD COUNCIL RETAIN HOUSING STOCK?

Members of The Highland Council�s Housing and Social Work Committee will be asked next week to retain management and ownership of their 17,000 Council houses, rather than transfer the stock to an external housing agency.

The report from the Director of Housing, Gordon Fisher, follows extensive research carried out by consultants DTZ Pieda updating their previous study. The new research indicates that the Council can keep its housing stock and still afford to carry out the maintenance and improvements required.  However, rents may have to rise by one per cent over inflation every year for the next 30 years and further savings would have to be identified.

The report concludes that  �there does not appear to be an overwhelming case for such a significant change as stock transfer at this time�. However, it stresses that if Councillors decide to retain the housing stock further work would be required to examine service, rent and investment levels as part of a �Retention Strategy�. The report states that such a retention strategy would  be developed in consultation with tenants and other stakeholders.

The Highland Council Housing and Social Work Committee will be considering the report at a special meeting on Wednesday 3 October.

However, the Council consulted tenants last year on their views of the Housing Service and their long term preferences. At that time there was little obvious enthusiasm for transfer as such. This was one of the factors, which led the Council to re-examine the figures.

In the revised study more detailed work has been carried out calculating the costs of home improvements and energy efficiency needs. The consultant�s updated report indicates that stock retention is now a more realistic option for the future.

One of the benefits of transfer is that the non-profit making landlords, such as housing associations, who take over Council housing, do not face the same restrictions on borrowing that the Council does. They could then pay for large-scale improvements which the Council could not afford to do so quickly. 

At present the Scottish Executive are promising to write off or service any outstanding housing debt that the Council has if stock is transferred.

However, as the consultant�s report confirms, such large-scale change may not be necessary.

Mr Fisher, Director of Housing, states: �It would appear that the Council can now afford to pay for repairs and maintenance and make improvements without having to resort to transfer. Providing things are properly managed, the Council will still be able to carry out a major programme of improvements to people�s homes including central heating and double glazing throughout the next thirty years � and keep rents at an affordable level.�

However, the Director�s report also recommends that stock transfer should not be ruled out forever. Equally, it points out that small-scale transfers may be appropriate in some areas.

The Council is inviting tenants, staff and other interested parties to discuss the Housing Stock Options on its on-line discussion forum, which can be accessed via the Council�s web site www.highland.gov.uk.  Go to the front page and click into the forums and look for housing to leave your views

In their initial report, the consultants identified a projected need to spend �1,106 million on housing over 30 years and that the council had �745 million at its disposal � a gap of �361 million.

As a result of new research commissioned, the consultants identified a projected need to spend �719 million over 30 years and that the council had �769 million at its disposal � a projected surplus of �50 million.  However, this is based on one of a number of scenarios.

Sensitivities have been run on different assumptions.  The effect of these is to suggest a �worst case� scenario of a funding gap of �82.11m and a �best case� of �61.51m surplus over 30 years.

The most significant positive factors were:

�   When taking into account the reduction in the number of houses due to Right to Buy, �387 million less is required for maintenance and improvement than previously forecast.

�    A reduction of �90 million of investment needed by adopting a more realistic standard

�    A reduction of �80 million on servicing the council�s debt. 

The council has the highest level of housing debt per house in mainland Scotland at �198 million or �11,500 per house.   Rents are the fifth highest in Scotland.

The council also has �19 million of balances, which will be needed if the retention strategy is to be implemented.