Review of residential rent and service charge

Report: 6
Date: 17 February 2011
By: Director of Resources on behalf of the Commissioner

Summary

This report requests the Metropolitan Police Authority’s (MPA) approval to increase the rental charges levied to tenants.

With Members endorsement residential rents are linked with the level of rent charged by Registered Social Landlords.

Rents are reviewed in April year by reference to social housing rent data published by Dataspring Research Centre.

As Dataspring reports that rents have increased by an average of 6.05%, this level of increase should be applied to the MPA residential estate.

Previously the annual rent review was reported in an Estates update paper taken in February each year. As the cycle of the Estates Update papers has moved in relation to the Dataspring publication. Members are asked to consider if future decisions in regard to the level of rent can be delegated to the Metropolitan Police Service and reported retrospectively to the MPA, if the link with social housing rents is maintained.

A. Recommendations

That members

1. Approve an average increase of 6.05% in the level of rent to be charged in 2011/12 in respect rents that are paid by police officers when occupying houses or flats and rooms in section houses within the MPA estate.
2. Support a proposal that with effect from 2012/13, future annual changes in the level of rent charged to the MPA’s tenants can be reported retrospectively to the MPA, if the basis for such change continues to be linked with the level of social housing rent levied to tenants of the London boroughs.

B. Supporting information

Introduction

1. The annual review of rents that the MPA charges in regard to the letting of residential accommodation to Police officers in occupation of the MPA’s residential properties, is undertaken and implemented in April each year. Previously, MPA Members have resolved that rents should be reviewed to reflect changes made to rents charged by those Registered Social Landlords (e.g. housing associations) which have tenanted properties in the London boroughs.

2. The MPA’s standard assured shorthold tenancy and its standard room licence make provision for rent to be paid by those officers who joined after September 1994 when parts of the Sheehy Report were implemented. The changes in the Sheehy Report were implemented through Police Regulations which included the withdrawal of rent free residential accommodation for newly appointed officers. Where the MPA provides residential accommodation to eligible post-Sheehy officers the associated assured shorthold tenancy or room licence is subject to the payment of a rent. Those officers who were appointed prior to the implementation of the Sheehy Report do not pay a rent but continue to be eligible for either a Housing Allowance or rent-free accommodation.

These officers give up their Housing Allowance when living in MPA residential accommodation.

Rent review April 2011

3. A review of the MPA’s residential rents (including service charges) has been undertaken in conjunction with an analysis of rental data published by Dataspring Research Centre, whose data has always been used to inform the level of rent for the MPA residential estate. The data draws upon all rents charged by providers of social housing within the London boroughs.

4. The Dataspring Research Centre data reports that social housing rents have increased within the range 5.79% to 6.38%, depending upon the size of individual units over the past 12 months. The average increase based on this data is 6.05%.

5. DoR-Property Services recommend that the rental levels charged by the MPA are increased by an average of 6.05% in April 2011, reflecting the social housing rents. Should the MPA support this recommendation then the practical effect of the increases is that the rent for a 3 bedroom unit, which comprises 70% of the total estate, will rise from £499.50 to £528.50 per month. The section house service charge (rent) will rise by 6.05% or £29.50 to £477.50 per month. This increase is in line with the rents charged by Registered Social Landlords for similar properties.

6. Two appendices are attached that show the existing charges levied by the MPA at April 2010 (Appendix 1) and the proposed charges that would be effective from April 2011 (Appendix 2).

Reporting future reviews of residential rent (including service charges)

7. MPA members resolved in 2006 to link the MPA’s standard residential rents with the level of social housing rent that is paid by tenants in the London Boroughs.

8. The level of rent is reviewed each year by reference to published data on social housing rents. The data analysis is reported to Members with a recommendation to change the MPA’s standard rents in line with any changes in social housing rental levels. The associated report has previously been made to Members during January or February each year which enables tenants to be given a minimum of one month’s notice before implementing any change.

9. Since 2006 the recommendation has been incorporated into an Estates Update Report that was traditionally taken by Members sufficiently early in the year to enable the correct notice to be given to tenants before new rents were put in place on 1 April. The cycle for the Estates Update Reports has changed and it has not been possible to include the residential review in this way, as the publication of the rental data that is used for comparison purposes is published too late to enable a report to be written and circulated for consultation before going to Committee in December. To do so in the following March would delay the opportunity to implement any rent changes until the following May.

10. As the level of rent that is reviewed is based on published data from the Dataspring Research Centre, MPA Members are asked to consider whether decisions in regard to future changes in the level of residential rent that would be implemented in April 2012 onwards can be delegated to the MPS, and reported retrospectively to the MPA if the change continues to be in accordance with the average level of social housing rents in the London Boroughs.

11. This would enable changes to be implemented the following 1 April after giving notice to MPA tenants no later than 1 March. The implementation of the review would be reported to Members through a subsequent Estates Update Report.

C. Other organisational and community implications

Equality and Diversity Impact

1. An Equality Assessment has been carried out. There are no new issues that arise from this review of the residential rent.

2. The MPS policies on equal opportunities and diversity apply to the content of the review and the management of the residential estate. The level of rent is related solely to each property’s value not to the occupying tenant.

Consideration of MET Forward

3. In accordance with Met Forward and specifically the need to demonstrate better value for money as part of Met Support, the residential rent review will lessen the financial impact to the MPA in maintaining those elements of the residential estate with tenanted occupiers.

Financial Implications

4. The Residential Estate Strategy is set at the provision of a maximum core holding of 200 quarters and nil section house rooms.

5. Based on the current trend in occupation levels, (there has been a decline in demand throughout 2010 which is projected to bottom out during 2011). Assuming the rent review is introduced, the reviewed residential rents are expected to produce a budget income totalling £946,000 in 2011/12. This is approximately £23,000 less than the year-end forecast for 2010/11 and reflects the impact of implementing the residential estate strategy’s programme of disposals and closures.

6. If the rental review is not implemented, residential income will reduce in 2011/12 by a further £54,000, compared to the current year end forecast.

7. All costs relating to the above activities are covered by existing MPS budgets as approved in the current version of the MPS Medium Term Finance Plan.

Legal Implications

8. Officers living in MPA houses or flats and section house rooms occupy under either an assured shorthold tenancy or a room licence, respectively.

9. Assured Shorthold Tenancies have a statutory basis that originates from the Housing Act 1988 (as amended). Rent under the standard Assured Shorthold Tenancy and the standard licence for a section house room may be reviewed in accordance with the rent review clause(s) incorporated within the tenancy/licence document, provided adequate notice is given of the increase and the rent increase is line with the market rate (and is not excessive).

Environmental Implications

10. There are no specific environmental implications as a result of this review of residential rent and service charge.

Risk Implications

11. Unless residential rents are reviewed there will be an ongoing deterioration in rental income and disconnect with corporate budgets.

D. Background papers

• “Guide to local rents 2010, Part 3 - Social Landlord Rents”; published by Dataspring at the Cambridge Centre for Housing and Planning Research, University of Cambridge, Department of Land Economy
• MPA Finance Committee Report - Review of Residential Rent and Service Charge 16 February 2006
•  MPA F & R Committee Report - Estates update paper (Residential Rent Review, paragraphs 18-21) 11 February 2010

E. Contact details

Report authors: Jane Bond, Director of Property Services and David Willis, Divisional Director Estate Management, MPS

For more information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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