11th August 2015

HONITON: Housing cuts to wreck budget

by Jack Dixon

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GOVERNMENT plans to cut council house rents in East Devon will create a £7 million black hole in the district’s housing budget, council bosses have warned.

Hundreds of council tenants in Honiton may see their bills reduced – but standards of maintenance could also slip over the next four years.

The proposed one per cent rent reduction is meant to help reduce tenants’ monthly bills, but district housing chiefs fear the scheme will also scupper plans to manage their current stock while preventing them from building more affordable homes in East Devon.

Councillors are seeking to meet urgently with local MPs Neil Parish and Hugo Swire to discuss the proposals, which were outlined in the Budget in June.

They claim the government is seeking to “move the goalposts” in a way that would disrupt a 30-year housing plan for East Devon.

Councillor Jill Elson, EDDC’s portfolio holder for sustainable homes and communities, said maintenance of the council’s 4,245 properties may have to be scaled back if the government goes ahead with the plans.

“While a one per cent reduction may seem good news for existing tenants, we may not be able to carry out the kind of maintenance on properties as we do now,” she said.

“We have invested £9 million each year on the repair and improvement of tenants’ homes over the last three years.

“It would also affect our future tenants too, as the £7 million rent income we are at risk of losing equates to being able to provide 66 new affordable homes, assuming [a cost of] £120,000 per home.”

In June, the Chancellor unveiled plans for a one per cent reduction in council house rents each year for the next four years.

There are currently 510 council-owned houses in Honiton – not including the surrounding villages – rented by tenants who would be affected by the changes.

The proposals should help tenants save on their monthly bills – but EDDC says the long-term impact could be more damaging.

A 30-year business plan to maintain its housing stock would be rendered “unviable” as a result of massive reductions to its ring-fenced housing revenue account, the council argues.

It estimates that a total of £77.2 million would be sucked from the account over the next three decades.

Cllr Elson added: “This policy is very short-sighted and has tough consequences on us as a council, and on tenants too.

“We need to secure a more effective balance between the needs of present and future tenants in the longer term.”

Toby Lloyd, a policy analyst at the Shelter housing charity, said: “On the positive side, the announced reduction in social rents by one per cent a year for the next four years will be good news for tenants and will help to limit the rising housing benefit bill.

“What this will mean for social landlords’ financing plans, and hence their future pipeline of development, is less positive.”

HONITON: Housing cuts to wreck budget

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