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  1. ‘Rents and Risks’ ARCH Presentation 23 September 2013 Slide 1 Councillor Ian Wingfield – Deputy Leader and Cabinet Member for Housing Management www.southwark.gov.uk

  2. ‘Rent and Risks’ • The impact of welfare reform • Lessons from the Direct Payment pilot • Proposed changes to rent convergence • Southwark Housing Commission • New-build – 10,000 new homes Councillor Ian Wingfield – Deputy Leader and Cabinet Member for Housing Management Slide 2 www.southwark.gov.uk

  3. Welfare Reform • The council needs to deliver a balanced budget • Without a reliable income stream service delivery may be jeopardised, loan commitments or planned projects won’t be met, borrowing becomes more difficult – reputational damage • Will rent take priority or will the temptation to spend the UC direct cash payments be too much? • UC is paid monthly but most of our tenants pay weekly • If UC process fails, evictions will increase, council is last resort and carries the financial risk • Increased void periods results in reduced rent collection • Reductions in advice agency funding will affect landlords providing housing-related services - a key tool in preventing rent arrears Councillor Ian Wingfield – Deputy Leader and Cabinet Member for Housing Management Slide 3 www.southwark.gov.uk

  4. Lessons from the Direct Payment pilot • Costs are up, rent collection is down - additional service delivery resources needed and reduced patch sizes • UC process and data sharing remain undecided - needs to be automatic and automated otherwise UC will make process unworkable and open to fraud • Effective delivery of support, with an outcome that reduces arrears - huge majority of tenants decline support even when in arrears, we have little evidence of support interventions that work and UC claimant commitment should include paying rent • Switchbacks are increasing as tenants fall further into debt • Southwark arrears on project are currently 11% • Key part of effective income management – educating tenant as to exactly how much they pay, when and how at an initial stage Councillor Ian Wingfield – Deputy Leader and Cabinet Member for Housing Management Slide 4 www.southwark.gov.uk

  5. The end of Rent Convergence? • We optimised resources available via subsidy system by implementing rent restructuring • Have always mitigated annual rent increases for tenants by applying affordability limits (RPI + ½ + £2) • Under self-financing rents form over 70% of all HRA income, so any proposed change can be far-reaching • The promised CLG consultation is welcome, but must address timing & scope – we need clarity • Are the changes so profound that we need to lobby for reopening the Settlement? Slide 8 Slide 5 Finance and Resources –Housing Finance Councillor Ian Wingfield – Deputy Leader and Cabinet Member for Housing Management www.southwark.gov.uk

  6. Southwark Housing Commission • Independently run and chaired • Wide-ranging brief • Evidence-gathering methodology • Report to Cabinet • Broad options set out – what type of provider in future? • Community Conversation Councillor Ian Wingfield – Deputy Leader and Cabinet Member for Housing Management Slide 6 www.southwark.gov.uk

  7. New-Build Proposals • Some key questions we ask ourselves: • What is the Council’s overall objective as a social landlord? • How do we set our own direction? • How is that direction affected by outside forces? • 10,000 home proposal expands on earlier commitment regarding new-build • Rent changes won’t derail it but they will impact on other aspects of where we want to be • We want to take local decisions and be held to account locally for them Councillor Ian Wingfield – Deputy Leader and Cabinet Member for Housing Management Slide 7 www.southwark.gov.uk