DELEGATED POWERS REPORT NO. All reports 1. Governance Service receive draft report Name of GSO Paul Frost. Date 13/09/12

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1 DELEGATED POWERS REPORT NO SUBJECT: Increase in the Council Mortgage Interest Rate Control sheet All of the following actions MUST be completed at each stage of the process and the signed and dated report MUST be passed to the Governance Service for publishing All reports 1. Governance Service receive draft report Name of GSO Paul Frost 13/09/12 2. Governance Service cleared draft report as being constitutionally appropriate 3. Finance clearance obtained (report author to complete) Name of GSO Paul Frost 23/09/12 Name of Fin. officer John Hooton 21/09/ Staff and other resources issues clearance obtained 5. Strategic Procurement clearance obtained Name of Res. officer Name of SPO 6. Legal clearance obtained from (report author to complete) 7. Policy & Partnerships clearance obtained 8. Equalities & Diversity clearance obtained 9. The above process has been checked and verified by Director, Head of Service or Deputy 10. Signed & dated report, scanned or hard copy received by Governance Service for publishing 11. Report published by Governance Service to website Name of Legal officer Steven Strange 19/09/2012 Name of P&P officer Andrew Nathan 13/09/2012 Name of officer Andrew Nathan 13/09/2012 Name Dave Rowe Name of GSO Paul Frost Name of GSO Paul Frost 12. Head of Service informed report is published Name of GSO Paul Frost Key decisions only: 13. Expiry of call-in period 14. Report circulated for call-in purposes to Business Management OSC members & copied to Cabinet Members & Head of Service Name of GSO

2 ACTION TAKEN UNDER DELEGATED POWERS BY OFFICER IN CONSULTATION WITH CABINET MEMBER(S) (EXECUTIVE FUNCTION) Subject Officer taking decision Increase in the Council Mortgage Interest Rate. Deputy Chief Executive & Chief Finance Officer of decision 24 th September 2012 decision comes into effect Summary Officer Contributors 1 st November 2012 To increase the interest rate on Council mortgages and Right to a Loan advances from 1 st November Gary Hussein - Interim Finance Manager EPR Dave Rowe - Head of Exchequer Iain Millar Head of Treasury Status (public or exempt) Wards affected Enclosures Reason for exemption from callin (if appropriate) Key decision Public None Not applicable No Contact for further information: Gary Hussein, Interim Finance Manager EPR Tel No: Serial No. 1815

3 1. RELEVANT PREVIOUS DECISIONS 1.1 None 2. CORPORATE PRIORITIES AND POLICY CONSIDERATIONS 2.1 This report meets the statutory requirements of the Housing Act 1985 (as amended). The proposal also supports the corporate priority A Successful London Suburb in the Corporate Plan RISK MANAGEMENT ISSUES 3.1 I do not consider the issues involved are likely to raise significant levels of public concern or give rise to policy considerations. 3.2 Failure to vary the interest rate is a breach of statutory requirements and could lead to a direction of compliance from the Secretary of State. 4. EQUALITIES AND DIVERSITY ISSUES 4.1 This report is aligned with the Council s Equalities Policy. There is no change to policy as the interest rate is governed by legalisation and the increase does not compromise the Council s compliance. 5. USE OF RESOURCES IMPLICATIONS (Finance, Procurement, Performance & Value for money, Staffing, IT, Property, Sustainability) 5.1 An interest rate of 3.13% is currently being charged to Mortgagors, whilst an interest rate of 4.09% is being charged on Right to a Loan advances. The review of a change in rate has arisen as a result of the Secretary of State Settlement payments determination in relation to HRA Self-financing. The Council borrowed an additional m on the 28 th March The revised interest rate of 4.22% will lead to an increase in interest income to the Housing Revenue Account of approximately 4, in a full year. 5.3 The Council currently has 51 mortgages and 9 Service charge loans. 5.4 The revised interest rate of 4.22% will commence on 1 November LEGAL ISSUES 6.1 Paragraph 1 of Schedule 16 to the Housing Act 1985 specifies how local authorities must set their interest rate on mortgages arranged since 3 October The legislation requires authorities to charge their borrowers the higher of two interest rates: the Standard National Rate, which is set by the Secretary of State, or the applicable local average rate, based on the authority's own borrowing costs, plus one quarter percent has to be added above the amount the authority has to pay (3.97%+0.25%)

4 The Standard National Rate of interest was last revised on 1 April 2009 and is currently: 3.13% 6.2 Under paragraph 5(2) of Schedule 16 to the 1985 Act the local authority is required to serve notice of the variation, in writing, on the person liable to pay the interest not later than two months after the change. 7. CONSTITUTIONAL POWERS 7.1 Council s Constitution, Part 3, Responsibility for Functions - Section 6, Powers Delegated to Officers, provides that Chief Officers (ie the Chief Executive, Directors and Heads of Service as listed in Article 12) can take decisions, in consultation with the Cabinet Member concerned in all matters where they have managerial or professional authority. 8. BACKGROUND INFORMATION 8.1 Local authorities have discretionary powers to offer mortgages. Most current Council mortgage holders are people who took advantage of their Right to Buy and could not get a mortgage on the open market. Local authorities were required to offer this service until 1993 but this is no longer necessary as mortgages are available for Right to Buy purchasers from a range of mortgage lenders. 8.2 Local authorities also have the power to grant loans in respect of service charges. The legislation provides two service charge loans schemes: a mandatory code (The Right to a Loan) where the local authority must, upon request, grant a loan to cover the costs of large service charges in respect of repairs or improvements which are payable in the first 10 years of the lease, and a discretionary loan code which gives local authorities the power to grant loans either to help leaseholders who do not comply with the mandatory rules or to top up mandatory loans which do not cover the whole amount of the service charge being demanded. 8.3 As legislation requires the Council to charge its borrowers the higher of the Standard National Rate or the applicable local average rate based on the Council s own borrowing costs, it is necessary to increase the interest rate on Council mortgage advances to 4.22% from 1 st November LIST OF BACKGROUND PAPERS 9.1 None 10. CONSULTATION WITH CABINET MEMBER(S) 10.1 The Cabinet Member for Resources and Performance has been consulted and supports the decision set out below. 11. OFFICER DECISION I authorise the following action

5 11.1 An increase in the interest rate charged on Council mortgages from 3.13% to 4.22% from 1 November An increase in the interest rate charged on Right to a Loan advances from 4.09% to 4.22% from 1 November Signed Andrew Travers Deputy Chief Executive and Chief Finance Officer