HS 003 HAVEBURY HOUSING PARTNERSHIP POLICY RENT SETTING & SERVICE CHARGES Controlling Authority Director of Resources Policy Number HS 003 Issue No. 5Status Final Date November 2013 Review Date November 2016 Equality & Diversity Impact Assessment carried out December 2009 Impact - Low Page 1 of 6
RENT SETTING & SERVICE CHARGES 1. PURPOSE 1.1 To explain the way in which rent and service charges are set for each Havebury Housing Partnership tenant and homeowner. 1.2 To ensure that Havebury will comply with statutory requirements, regulations and guidance issued by Government departments including the HCA. 1.3 To ensure Havebury complies with the rent setting formula as provided by the Government. 1.4 To ensure that rent for shared ownership tenants reflects the HCA (former Housing Corporation) funding guide as relevant at the time when that shared ownership property was built. 1.5 To ensure that Havebury will accurately calculate the new charges and apply them in a timely fashion for all tenancy and rent types including service charges and that accurate performance and monitoring tools are applied to measure the collection of the rents set. Monitoring will be provided for the HCA, Board of Directors, Performance and Scrutiny Panel, Tenants Forum and employees delivering the service. 1.6 Service Charges (including leasehold service charges) will be set which are sufficient to cover the cost of providing services. 1.7 A robust service charge system will be put in place to ensure accurate charges are applied to tenancies and leaseholder properties as required by the Landlord & Tenant Act 1985 and amendments. 2. SCOPE 2.1 This policy extends to the following tenancies: Assured, Assured shorthold, Assured with preserved rights, Fixed Term tenancies, Licences, demoted tenancies, Shared Ownership leases, intermediate rents, and garages as well as leaseholders. 2.2 The Policy applies to any new or acquired properties, the rents and service charges for which will be determined in accordance with the HCA guidance. Page 2 of 6
3. RESPONSIBILITIES 3.1 The Board, having formally adopted the Rent Setting & Service Charges Policy for Havebury, accepts responsibility for its implementation and for monitoring its effectiveness. 3.2 Day to day responsibility lies with the Chief Executive and the Management Team. The Resources Director will be the nominated Controlling Authority. 3.3 Issue control: the management of duly authorised policies and procedures or amendments will be the responsibility of the Resources Director who will ensure they are circulated to appropriate individuals and they are kept updated with the current versions. 3.4 There will be a shared role in ensuring timely setting of rents and charges and the notification of same to tenants and leaseholders between the Head of Finance and the Income Manager. 4. METHOD 4.1 Havebury will comply with the following relevant legislation: 1988 Housing Act (amended by 1996 Housing Act); Landlord & Tenant Act 1985 and amendments. Havebury will also ensure that it meets the requirements as laid down by the HCA with regard to the rent convergence model. It should be noted that the rent convergence model ends in March 2015. 4.2 Havebury shall set rents with a view to achieving the following as far as possible: 4.2.1 Rents conform with the pattern produced by the rent formula set out in the Rent Influencing Regime Guidance with a five per cent tolerance in individual rents (ten per cent for supported and sheltered housing) but subject to the maximum rent levels specified in that guidance (rent caps). 4.2.2 Weekly rent for accommodation changes each year by an amount which is no more than RPI + 0.5% +/- 2 until it reaches the upper limit of the rent flexibility level or the rent cap, whichever is lower. From March 2015 this will change to CPI plus 1% and convergence factors will be removed. 4.2.3 Weekly rent for accommodation that has reached or is above the upper limit of the rent flexibility increases each year by an amount that is no more than the increase to the target rents. 4.3 For shared ownership properties, the rent will be calculated according to the Housing Corporation s Capital Funding Guide in force Page 3 of 6
at the time the shared ownership property was built. For intermediate rented properties, the rent will be set so as to be midway between an affordable rent and a market rent for the area the property resides. For garages, rent levels will be set in accordance with local supply and demand for garages taking into account market rents for garages in the locality. 4.4 Service charges will be applied where necessary to leasehold; shared ownership; sheltered and general needs properties. It should be noted that new general needs tenancies will attract a service charge but that this will only apply to flats and these will be applied when an existing tenancy ends. Some new developments with separate management charges will require collection of service charges from house tenancies also. 4.5 Ground rent will be collected from leaseholders in line with the lease. 4.6 Service charges will be apportioned between households deemed to be receiving them. This will be notified to tenants and leaseholders at the commencement of their agreement. 4.7 The actual costs will be outlined in an annual statement provided after the end of each financial year (no later than the end of September). 4.8 Estimates for each new financial year based on previous years expenditure will be provided giving 28 days notice before the commencement of each financial year in April. 4.9 Monthly monitoring will take place to ensure that budgets and expenditure are correct and up to date which will lead to statements that are timely and accurate. 4.10 Annual statements will be made available to sheltered scheme tenants regarding the service charges they pay. 4.11 Statements regarding service charges for all variable service charge payers will be issued on an annual basis. 4.12 In the case of the modernisation of any property where the tenant has moved out temporarily, there will be no increase in the rent charged when the tenant returns to the property. Where such works has resulted in additional space, the rent will be adjusted accordingly. 4.13 Where Aids and Adaptations work has been undertaken, there will be no change in the rent charged to the existing tenant. However, the rent will be reviewed on any subsequent re letting. Page 4 of 6
4.14 Any properties that are not convergent in terms of their target rent up to April 2015, will be re let at their target rent. 4.15 For tenants who have been paying a service charge prior to 2013/14 generally sheltered schemes, a service charge has not been accompanied with a management fee and this will be continued for existing tenants. However new tenancies starting in existing properties with a service charge will be charged a management fee of 15% applied to all costs excluding personal utilities on top of this service charge. This should be highlighted in their tenancy agreement. Havebury s Board of Directors agreed in November 2013 to a cap on the management fee at 100 per annum. In addition, it was agreed that where a management company exists (e.g. on new developments) and a management fee is charged by them, then Havebury will only charge an additional 5% management fee for the work covered by the management company. Monitoring and Tenant Involvement 4.16 It is important to ensure that residents are given the opportunity to consider the annual rent setting process through the consultation with the Tenants Forum and tenant Board Members involvement in that process. 4.17 All tenants will have the following information made available to them: i. The breakdown of rent and service charges. ii. iii. iv. Details of any charges ineligible for benefit. The services and standards provided. The way in which charges are set. v. The full range of payment methods. vi. vii. viii. How to interpret rent statements. The details of the notice period required to terminate the tenancy. Procedures for Appeal through the Rent Assessment Panel. 4.18 Havebury will ensure that notice of increase complies with legislation and all rents increases will be sent giving 28 days clear notice to tenants and leaseholders of rent and service charge increases. 4.19 The letter will comply with legal requirements including the 1988 Housing Act Section 13 and the Landlord and Tenant Act 1987. Page 5 of 6
4.20 The rent and service charge increase notices will be sent where relevant in the same envelope. 4.21 Rights of appeal will be clearly notified either via the first tier tribunal for service charges or the rent assessment panel for rents. 4.22 Information will be provided to outline how ground rents and service charges have been set including a full breakdown of scheme costs for service charges including personal services and personal apportionment of communal provisions such as heating. 4.23 Havebury will convey the importance of offering good quality services which are valued by tenants but at the same time ensuring that the rental income remains at a level which guarantees Havebury s future financial stability in the long term. It will ensure it meets its loan covenants and that the rent collected is such that the promises made in the Business Plan can be fulfilled. 4.24 Welfare Reform Act 2012 requires local housing benefit authorities to deduct the rent from those under occupying their properties. As a result many tenants have appealed on the basis that their bedroom number is incorrect due to poor record keeping or deficiencies in size or nature of bedrooms. Havebury will ensure that an appeals process is adhered to, see HS 039 Bedroom Size policy and the process is in place to enact this policy. 4.25 For those who have suffered financially as a result of any inaccuracy or decision making change with regard to bedrooms, Havebury has also introduced a Hardship Policy. Page 6 of 6