Edinburgh sets out £2.5bn housing-investment plans
0Proposals to invest almost £2bn in delivering new council homes and close on £500m to upgrade existing social-housing and tenant services over the next decade are set to be agreed by City of Edinburgh Council.
The moves would see the delivery of around 10,000 new homes over the period and commitments to spend in the region of £20,000 per existing property on estate modernisation and energy-efficiency improvements.
A report to Edinburgh’s finance and resources committee this week sets out the strategy – which continues a decade-long programme to deliver 20,000 new homes between 2018 and 2018, adding a further 2,000 homes over the 2030 plan period.
The 2020/21 spending commitments in the plan will be included in the council’s annual budget put before elected members on 20 February.
Report author Paul Lawrence, Edinburgh’s executive director of place, said the city’s investment in its housing stock had more than doubled over the past five years and was expected to “more than quadruple” over the next five.
Figures in the report to the finance committee indicated investment of £35.89m in new homes development in 2020/21, rising to £183.69 in 2024/25.
Over the whole 10-year period, Edinburgh said £1.85bn was earmarked for developing new homes, with an extra £132.92m for land costs.
The plan sets out £126.87m in spending on tenants’ homes and services over the period and £350.92m on external fabric and estates.
A breakdown of funding sources indicated prudential borrowing was the biggest single contributor to the programme, with £1.21bn over the decade.
Receipts from the council’s new Edinburgh Living limited liability partnerships, set up in 2018 to deliver mid-market and market-rent homes, were expected to add £897.55m and Scottish government funding a further £264.13m.
Capital receipts and contributions accounted for £49.15m of the 10-year total with capital contributed from revenue projected to be £32.58m.
According to the finance and resources committee report, the HRA’s debt level was projected to be £416m as of next month, up from £377m at 31 March 2019 “due to an increased borrowing requirement to support the capital investment programme in 2019/20”.
It noted that net debt levels had risen by £48m over the past five years, at the same time as delivering close on £335m of investment over the period, while officers had been able to reduce the HRA’s debt-servicing charges by 5.56% as part of a wider debt-portfolio review.
Place director Paul Lawrence said the council’s rent-collection performance had “improved significantly” over the past financial year, with a 7% reduction in current arrears compared with 2017/18 that equated to around £450,000.
“This is even more positive when compared to the national picture, where the overall trend was for landlords to be reporting an increase in arrears,” he said.
However, Lawrence noted that tenants were expected to face rising challenges to their finances through the rollout of Universal Credit and the “impact of low income and zero-hours contracts”, which meant arrears were expected to increase. He said the authority was projecting an anticipated loss of £9m over five years following the full introduction of Universal Credit.
He said a contingency fund had been created to mitigate the impact of reduced income – or increased unplanned spending – on the 10-year HRA programme and that the fund was expected to have reached £4.5m by the start of the next financial year, growing to £15m by 2027.
Last year, the London Borough of Haringey set out a £1bn five-year programme of capital funding for council housing, following the lifting of the HRA borrowing cap for councils in England.
A report by Haringey director of finance John Warlow this week said the authority’s ambitions to deliver around 250 new council homes for rent every year over the medium term would require cross-subsidy from the development of private homes for market sale.
“In the current funding environment it will only be possible to deliver new homes for council rent by generating significant additional cross-subsidy,” the report said.
“As such, over the coming years the council will need to commit capital spending to build homes for market sale.
“Whilst the number of private homes required will need to be kept under review as external factors such as Public Works Loan Board rates change, it is currently estimated that around 40% of the homes built will need to be sold in order to cross-subsidise our programme of homes for social rent.”
Warlow also cautioned that market-sale cross subsidy had “a degree of uncertainty in the current housing market” that would require strategies and plans to manage.
Haringey is currently working to deliver a 2018 pledge to provide 1,000 new council homes at council rents by 2022.
