Strategic Housing Fund Annual Report 2022-23
Argyll and Bute Council · 29 June 2023
Back to Argyll and Bute Council — 29 June 2023 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
Page 1
ARGYLL AND BUTE COUNCIL COUNCIL DEVELOPMENT AND ECONOMIC GROWTH 29 JUNE 2023 STRATEGIC HOUSING FUND ANNUAL REPORT 2022 - 23 1.0 EXECUTIVE SUMMARY 1.1 In December 2004, Council decided to exercise its discretion to reduce the discount for council tax for second and long term empty homes across the whole council area from 50% to 10%. Subsequently, on 18 May 2006, the Strategic Policy Committee agreed that this revenue should be used flexibly, depending on local circumstances, for the establishment of: • A Landbanking fund; • An Empty Homes Strategy, and • To promote additional investment in infrastructure capacity, where further development of affordable housing is otherwise constrained. In line with Scottish Government guidance, which states that additional income arising from the reduced discount of council tax on second and holiday homes be retained locally by the local authority and used specifically for activity relating to the provision of affordable social housing or for activity in relation to bringing empty homes back into use, the Strategic Housing Fund (SHF) was created to allow for allocations in support of priority projects emerging from the Local Housing Strategy (LHS). 1.2 This report provides an annual update on the SHF income and expenditure position for 2022-23, the current balance on the SHF as at 31 March 2023 and all future commitments against this balance. 1.3 The closing balance as at 31 March 2023 on the SHF is outlined in the table below: Opening Balance at 1 April 2022 £m Income 2022-23 £m Expenditure 2022-23 £m Closing Balance at 31 March 2023 £m Earmarked Balance in General Fund 6.592 2.231 1.574 7.248 Useable Capital Receipts Reserve 2.878 0.057 0.000 2.935 TOTAL 9.470 2.288 1.574 10.183 1.4 The Strategic Housing Improvement Plan (SHIP) report that was approved by Council in September 2022 details plans for the delivery of 956 affordable
Page 2
houses which will require a commitment of £11.472m from the SHF. The table below outlines the estimated income and expenditure profile of the earmarked balance within the General Fund over the next five years. It can be seen from the table below that there is an estimated surplus in the SHF over the next five years and Council could give consideration as to how this could be used to support the housing emergency that has been declared. 2023-24 £m 2024-25 £m 2025-26 £m 2026-27 £m 2027-28 £m Opening Balance 7.248 5.840 4.670 3.968 3.252 Estimated Income - Second Homes 2.230 2.230 2.230 2.230 2.230 Expenditure SHIP Profile (2.136) (2.964) (2.484) (2.484) (1.404) Outstanding Commitments (1.079) 0.000 0.000 0.000 0.000 Staffing Contribution (0.423) (0.435) (0.448) (0.462) (0.476) Estimated Closing Balance 5.840 4.670 3.968 3.252 3.603
Page 3
ARGYLL AND BUTE COUNCIL COUNCIL DEVELOPMENT AND ECONOMIC GROWTH 29 JUNE 2023 STRATEGIC HOUSING FUND ANNUAL REPORT 2022-23 2.0 INTRODUCTION 2.1 This report provides an annual update on the SHF income and expenditure position for 2022-23, the current balance on the SHF as at 31 March 2023 and all future commitments against this balance. 3.0 RECOMMENDATIONS 3.1 It is recommended that the Council: (a) Note the report on income and expenditure for 2022-23 and the balance on the SHF as at 31 March 2023. (b) Note the estimated future income for SHF for 2022-23. 4.0 DETAIL 4.1 In December 2004, Council decided to exercise its discretion to reduce the discount for council tax for second and holiday homes across the whole council area from 50% to 10%. Subsequently, on 18 May 2006, the Strategic Policy Committee agreed that this revenue should be used flexibly, depending on local circumstances, for the establishment of: • A Landbanking fund; • An Empty Homes Strategy, and • To promote additional investment in infrastructure capacity, where further development of affordable housing is otherwise constrained. In line with Scottish Government guidance, which states that additional income arising from the reduced discount of council tax on second and holiday homes be retained locally by the local authority and used specifically for activity relating to the provision of affordable social housing or for activity in relation to bringing empty homes back into use, the Strategic Housing Fund (SHF) was created to allow for allocations in support of priority projects emerging from the Local Housing Strategy (LHS). 4.2 In September 2007, a further report went to Council to formally agree the arrangements for the operation of the SHF. The following items of expenditure were deemed appropriate and agreed: • Expenditure incurred in relation to assets formally held on the Housing Revenue Account;
Page 4
• Expenditure relating to the acquisition of land for the landbank; • Expenditure related to the purchase of homes under the empty homes initiative; • Payments to enhance infrastructure where this is restricting the development of affordable housing, and • Payments to registered social landlords (RSLs) to partially fund proposed projects to deliver houses in accordance with the local housing strategy. 4.3 The introduction of the Local Government Finance (Unoccupied Properties etc.) (Scotland) Act 2012 provided enabling powers for further regulations to modify council tax discounts. The new legislation defined new categories of unoccupied properties which differed from the previous categories, and provided new discretions for charging council tax on these new categories. The new regulations allowed the council to determine that, instead of a reduced discount of a minimum of 10%, no discount, or an increase in council tax of up to 100% may apply. 4.4 In 2016 The Scottish Government announced its intention to introduce legislation to allow councils to end the Council Tax discount for second homes from April 2017 in “A Plan for Scotland: The Government’s Programme for Scotland 2016-17”. Legislation brought this into effect from 1 April 2017 and the Policy & Resources Committee at its meeting on 27 October 2016 agreed that the Council should exercise its discretion under regulation 4 The Council Tax (Variation for Unoccupied Dwellings) (Scotland) Regulations 2013 to vary the council tax charge on second homes such that no discount applies across the whole of the council area with effect from 1 April 2017. 4.5 The Council also exercised their discretion to increase the council tax charge on empty properties, where the dwelling has been unoccupied for over 12 months, by 100% across the whole council area with effect 1 April 2014 however this additional income is not ring-fenced to the SHF. 4.6 There are currently two elements to the SHF balance: Earmarked Balance in General Fund Reserve Income collected from council tax on second homes which can only be used for investment in affordable, sufficient and suitable housing. The current balance in this reserve represents income from council tax collections from previous financial years. Each year the actual income collected is transferred into this earmarked balance and is, on average, circa £2.2m. Useable Capital Receipts Reserve This relates to the accumulated unspent capital receipts from the sale of council houses prior to the transfer of the housing stock. Any sale of residual HRA property or land is transferred to this reserve when the capital receipts are received.
Page 5
4.7 The closing balance as at 31 March 2023 on the SHF is outlined in the table below: Opening Balance at 1 April 2022 £m Income 2022-23 £m Expenditure 2022-23 £m Closing Balance at 31 March 2023 £m Earmarked Balance in General Fund 6.592 2.231 1.574 7.248 Useable Capital Receipts Reserve 2.878 0.057 0.000 2.935 TOTAL 9.470 2.288 1.574 10.183 4.8 Further detail of the income and expenditure for 2022-23 is included as Appendix 1. 4.9 There are a number of outstanding commitments against the SHF. There is usually a delay between grants being approved and the monies being released. Included as Appendix 3 is a list of these outstanding commitments, these funds were not released prior to 31 March 2023. In addition to the grant commitments, there is an ongoing annual staff cost charged to the SHF, the value for 2023-24 is £422,500 and this will rise in line with salary increases each year. 4.10 The Strategic Housing Improvement Plan (SHIP) report that was approved by Council in September 2022 details plans for the delivery of 956 affordable houses which will require a commitment of £11.472m from the SHF. The table below outlines the estimated income and expenditure profile of the earmarked balance within the General Fund over the next five years. It can be seen from the table below that there is an estimated surplus in the SHF over the next five years and Council could give consideration as to how this could be used to support the housing emergency that has been declared. 2023-24 £m 2024-25 £m 2025-26 £m 2026-27 £m 2027-28 £m Opening Balance 7.248 5.840 4.670 3.968 3.252 Estimated Income - Second Homes 2.230 2.230 2.230 2.230 2.230 Expenditure SHIP Profile (2.136) (2.964) (2.484) (2.484) (1.404) Outstanding Commitments (1.079) 0.000 0.000 0.000 0.000 Staffing Contribution (0.423) (0.435) (0.448) (0.462) (0.476) Estimated Closing Balance 5.840 4.670 3.968 3.252 3.603 4.11 In addition to the above, the council has used reserves to advance loans to RSL’s in line with the approach agreed in August 2013. Details of the loans advanced and balances outstanding at 31 March 2023 are set out below:
Page 6
RSL Scheme Name Amount Committed £m Amount Advances £m Rate of Interest % Repayment Period (Years) Amount o/s 31/20/20 £m FYNE 6000 - Rothesay Court House 1.900 1.900 1.93 9 0.000 ACHA 6005 -Glenshellach 2.305 2.305 4.45 25 1.748 ACHA 6010 - Bonawe 0.123 0.123 4.43 25 0.095 ACHA 6015 - Hood Court 0.603 0.603 4.43 25 0.471 FYNE 6020 - St Cuthberts 0.201 0.201 3.14 25 0.000 WHHA 6025 - Imeraval 0.955 0.955 2.85 25 0.807 The Port Ellen Station 6030- Port Ellen Police Station 0.080 0.080 2.12 10 0.042 Total 6.168 6.168 0.000 0.000 3.163 5.0 CONCLUSION 5.1 The SHF makes a significant contribution to the new affordable housing development programme in Argyll and Bute. The fund will be used to support the affordable housing development programme as set out in the Strategic Housing Improvement Plan (SHIP) report September 2022. 6.0 IMPLICATIONS 6.1 Policy: None 6.2 Financial: None, SHF will continue to be administered in line with approved policy. 6.3 Legal: None 6.4 HR: None 6.5. Fairer Scotland Duty: None 6.5.1 Equalities: None 6.5.2 Socio-Economic Duty: None 6.5.3 Islands Duty: None 6.6 Climate Change: None 6.7 Risk: None 6.8 Customer Service: None Kirsty Flanagan Executive Director / Section 95 Officer 21 June 2023 Councillor Gary Mulvaney – Policy Lead for Finance and Commercial Services Councillor Robin Currie – Policy Lead for Economy and Rural Growth APPENDICES Appendix 1: SHF Income and Expenditure 2022/23 Appendix 2: Usable Capital Receipts Appendix 3: Outstanding SHF Commitments For further information contact Anne Blue, Head of Financial Services anne.blue@argyll-bute.gov.uk
Page 7
APPENDIX 1 SHF Opening Balance 2022-23 6,591,173.00 2022-23 INCOME Income from Council Tax on Second Homes 2,230,584.21 2022-23 EXPENDITURE RSL Scheme £ £ ACHA Travelling Persons Site 35,881.00 ACHA Barn Park, Inveraray, Phase 2 120,000.00 ACHA Oakhill, Tarbert, Phase 2 78,492.00 ACHA 99 Millknowe 12,000.00 Total ACHA 246,373.00 Colonsay Community Development Company Scalasaig 108,000.00 Total Colonsay Community Development Company 108,000.00 Glengorm Farming Partnership Glengorm 60,000.00 Total Glengorm Farming Partnership 60,000.00 Isle of Gigha Housing Trust Ardminish Housing Development 60,675.60 Total Isle of Gigha Housing Trust 60,675.60 Loretto Sawmill Field, Helensburgh 432,000.00 Total Loretto 432,000.00 North West Mull Community Woodland Company Ulva 90,663.00 Total North West Mull Community Woodland Company 90,663.00 West Highland Housing Association Imeraval Phase 3 96,000.00 West Highland Housing Association 96,000.00 Total RSL Spend 1,093,711.60 Other Spend Empty Homes Grants 8,589.32 Housing OT Post 67,331.34 ABC Strategic Housing Staff 404,628.74 Total Expenditure 1,574,261.00 SHF Closing Balance 2022-23 7,247,496.21
Page 8
APPENDIX 2 Strategic Housing Fund (SHF) 2022-23 Usable Capital Receipts (UCR) £ £ UCR Opening Balance 2022-23 2,877,853 2022-23 INCOME HRA Revenue Interest on UCR Reserve 0 56,993 Disposal Receipts former HRA Property 0 0 56,993 UCR Closing Balance 2022-23 2,934,846
Page 9
APPENDIX 3 Outstanding Strategic Housing Fund Commitments RSL Scheme Grant Approved Total Drawn Down as at 31/03/23 Commitment Remaining £ £ £ ABC Council Serviced Tenancies (SHQS) 572,000 57,623 514,377 ABC Furnace Coastal Protection 69,000 57,784 11,216 ACHA Off the Shelf - St Oran's Place, Connel & Heatherbank, Cairnbann 60,000 40,000 12,000 ACHA Eton Avenue, Dunoon 48,000 48,000 ACHA Travelling Persons Site 35,881 35,881 35,881 Isle of Gigha Housing Trust Ardminish Housing Development 159,724 60,676 99,048 WHHA Imeraval, Islay, Phase 4 240,000 240,000 WHHA Port Mor 25,000 25,000 WHHA Port Appin 72,000 72,000 ABC Empty Homes 62,420 40,476 21,944 TOTAL 1,344,025 292,440 1,079,466 As well as the above commitments, there is an ongoing annual staff commitment of £422,500 for 2023-24 which will rise in line with salary increases for year-on-year.