A brighter future for council housing? Jon Mallen-Beadle Acting Chief Executive The Gateshead Housing Company

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1 A brighter future for council housing? Jon Mallen-Beadle Acting Chief Executive The Gateshead Housing Company

2 Gateshead Gateshead is largest Tyne & Wear Borough Population of,000 0% of properties are Council owned Council setup the ALMO in 00 to manage their,000 properties Achieved two star rating to unlock Decent Homes funding in 00 Since achieved three star rating in 00 plus a number of other accreditations (IIP gold, CSE, ISO00) Decent Homes completed in Dec 0 Setup charitable subsidy, Keelman Homes Delivered over 00 new build homes over past years

3 The Gateshead self financing deal Headline debt settlement is m Under self financing HRA debt will be reduced by.m Debt Cap is m Difference due to prudential borrowing In / the Council paid subsidy of.m

4 The Gateshead self financing deal More certainty over income enabling development of 0 year business plan Introduction of a debt cap Set at m for Gateshead Due to previous prudential borrowing we will be at our debt cap No capacity to borrow going forward But the Council will be able to spend what it collects

5 0 year plan assumptions Rent convergence by 0/ Management & Repairs fees rebased Properties numbers based on actual stock, known demolitions included Assumes 0 Right to buys per annum Void rates Yr Yr Yr Yr Yr +.0%.0%.%.%.0%

6 0 year plan assumptions Bad debt provision Yr Yr Yr Yr Yr + 0.%.00%.0%.0%.0% General inflation set at.% Adaptations budgeted at.m per annum increasing by inflation HRA reserve balance of million

7 0 year plan summary 0,000 00,000 0,000 00,000 0,000 00,000 0,000 00, HRA CFR Debt Cap 0,000 0,000 0,000 0,000 0,000 0,000 0, Capital Expenditure Need Capital Finance Available -,000 -,000-0,000 -,000 -,000 -,000 -,000,000, In-Year Cashflow HRA Balance

8 The Challenges ahead Impact of welfare reform Impact on rent increases due to rent convergence Right to buy sales No spare capacity for further prudential borrowing or new build

9 0 year plan impact of changes to assumptions Areas whereby a change in assumptions are the most likely to impact on the model are as follows: Lower than guideline increase in rents Increase in bad debts Increase in voids Increase in right to buys

10 Impact of reduced rent increase 0,000 00,000 0,000 00,000 0,000 00,000 0,000 00, HRA CFR Debt Cap 0,000 0,000 0,000 0,000 0,000 0,000 0, Capital Expenditure Need Capital Finance Available -,000 -,000-0,000 -,000 -,000 -,000 -,000,000, In-Year Cashflow HRA Balance

11 Impact of increase in bad debts 00,000 0,000 00,000 0,000 00,000 0,000 00,000 0,000 HRA CFR Debt Cap 0 0 0,000,000 -,000 -,000 -,000 -,000-0,000 -,000 -, In-Year Cashflow HRA Balance 0,000 0,000 0,000 Capital Expenditure Need Capital Finance Available 0,000 0,000 0,000 0,

12 Impact of increase in voids -,000 -,000-0,000 -,000 -,000 -,000 -,000,000, In-Year Cashflow HRA Balance 0,000 00,000 0,000 00,000 0,000 00,000 0,000 00, HRA CFR Debt Cap 0,000 0,000 0,000 0,000 0,000 0,000 0, Capital Expenditure Need Capital Finance Available

13 Impact of increase in right to buys 0,000,000,000,000,000 0,000,000,000,000,000 0,000 HRA CFR Debt Cap 0 0 0,000,000 -,000 -,000 -,000 -,000-0,000 -,000 -, In-Year Cashflow 0,000 0,000 0,000 Capital Expenditure Need Capital Finance Available 0,000 0,000 0,000 0, HRA Balance

14 Governance Joint project with the Council Benefits of challenge from our Board Sharing best practice ALMO s & retained stock authorities

15 New Build New challenge how do you build new homes when.. We will be at our debt cap (potentially) for next 0 years No new build factored into self financing plan

16 A new strategy for Keelman Homes to support the Council s new build aspirations Direct New Build Purchase of section 0 affordable homes Purchase and refurbishment of existing homes Funded by Council prudential borrowing Business case repays the loan over 0 years

17 Overall Conclusions Overall settlement is tight no spare capacity in the first 0- years as we are at our debt cap Struggle to invest capital other than legal requirements (ie: decent homes, DDA, fire safety works) Need to look at options to attract alternative funding But remember significantly better than the old system which would not have been viable within three years time

18 Questions