« Previous | Contents | Next »
Listen
Introduction
Average rents across Scotland are projected to increase in 2007-08 by 4.5%, to £48.19 per week, while average expenditure on managing and maintaining local authority dwelling stock is expected to increase by 3.4%. The main points regarding projected changes for 2007-08 are summarised below:
- The number of local authority housing properties continues to reduce; the rate of 5.3% between September 2006 and 2007 being consistent with previous years taking account of housing stock transfers to registered social landlords;
- There is a range of £20.04 per week between the highest and the lowest rents; City of Edinburgh Council is expected to have the highest rent in Scotland (£58.11) and Moray Council remains the lowest (£38.07);
- Average management and maintenance expenditure is expected to increase by 3.4% to £1,656 per unit;
- Supervision and management costs (part of management and maintenance) are expected to increase by 4.0% to an average of £630 per unit for the year;
- Repairs and maintenance is expected to be an average of £1,026 per unit, an increase of 3.1% on 2006-07, with Renfrewshire reporting the highest projected level of expenditure per unit (£1,397) and Angus the lowest (£568 per unit);
- Housing debt in Scotland is expected to increase and there is still a wide variation across local authorities in their levels of debt; Orkney Islands is expected to remain debt free, whereas Shetland and City of Edinburgh are expected to have the highest outstanding housing debt of £28,121 and £12,475 per unit respectively;
- Total capital expenditure in 2007-08 is projected to be £501 million, an increase of £39 million (8.4%) on 2006-07, with Midlothian, Angus and Perth and Kinross projecting the highest increases.
1. This report provides information on local authority housing income and expenditure. The principal sources for the data are the annual local authorities' Housing Revenue Account ( HRA) returns submitted to the Scottish Executive (tables 1-13). Information provided by other sources is recorded in the footnotes. Collection of the HRA data takes place under the Housing (Scotland) Act 1987. At present five local authorities have transferred their housing stock to registered social landlords. These are Argyll & Bute, Comhairle nan Eilean Siar, Dumfries & Galloway, Glasgow City and Scottish Borders councils and data from these local authorities is no longer included within the analysis. The figures provided by Inverclyde Council for planned income and expenditure in 2007-08 only relate to 6 months of the year as the council expects to transfer its housing stock during October 2007. For consistency income and expenditure for Inverclyde has been excluded from analyses for 2007-08. In this publication, the 2006-07 data are based on actual outturn figures provided by local authorities and the 2007-08 data are local authorities' budget estimates. The estimates should be regarded with caution since they are usually different to the final outturn figures reported by local authorities in the following year.
Consolidated Income and Expenditure ( tables 1 and 2)
2. Total income from local authority rents is projected to be £828.8m in 2007-08. On a like for like comparison - excluding Inverclyde - this is an increase of £14.3m (1.8%) over 2006-07. Once cash brought forward is excluded, rents account for 91% of total HRA income in 2006-07 and 2007-08. Taking key expenditure in 2007-08 as a proportion of rental income, repairs and maintenance continues to be the largest item (41%). Supervision and management are the next major cost (25%) closely followed by costs of loan charges (24%). The proportions of income and expenditure continue to be consistent with previous years.
Stock levels ( table 3)
3. Between September 2006 and September 2007 the number of local authority dwellings fell by 10,034 (excluding Inverclyde due to scheduled stock transfer). This represents a reduction of 2.9%, which is broadly the same rate as in recent years taking account of transferred stock. Around four fifths of the decrease is due to right to buy sales to tenants with the remainder accounted for by demolitions.
Rents ( tables 4 and 5)
4. The average local authority rent in Scotland is estimated to be £48.19 per week in 2007-08, an increase of 4.5% on 2006-07 (table 4), with increases ranging from 2.0% in Shetland to 8.5% in Midlothian. In 2007-08, there is a range of £20.04 between the highest and the lowest average weekly rent in Scotland. City of Edinburgh has the highest rent at £58.11 per week, over £4 per week more than the next local authority, Renfrewshire, which has an average weekly rent of £54.06. For the third year in a row, Moray has the lowest rent in Scotland at £38.07 per week. While the majority of actual 2006-07 rents closely confirm the estimates published in the previous bulletin, in two cases (the City of Edinburgh and Inverclyde), rents were significantly greater than had been estimated.
5. In 2007-08 local authorities estimate that the rent rebate subsidy, which measures housing benefit receipts, will total around £515 million, or 62% of total rental income (table 5).
Management and maintenance ( MM) expenditure ( tables 6, 7 and 8)
6. MM expenditure comprises of expenditure on supervision and management (mainly staffing costs) and the repair and maintenance of the housing stock (table 6). The average annual MM expenditure of Scottish local authorities in 2007-08 is estimated to be £1,656 per unit. This is an increase of £55 per unit or 3.4% on average MM expenditure in 2006-07. There is a range of £639 per unit between the highest and the lowest projected MM cost in 2007-08 which is a slight narrowing on the 2006-07 range of £680. Falkirk is the council with the highest estimated average expenditure at £1,980 per unit in 2007-08 replacing Dundee. Midlothian reported the lowest at £1,341. Differing accounting practices amongst local authorities, and higher actual costs than original estimates mean that the figures for individual authorities may not always be directly comparable and the estimates for MM expenditure should be regarded with caution.
7. Within overall MM expenditure, average annual supervision and management ( SM) costs in 2007-08 (table 7) are estimated to be £630 per unit. This is an increase of £24 (4.0%) on average actual SM costs in 2006-07. There is a range of £803 for full year SM costs for 2007-08, and Perth & Kinross has the highest at £1,014 per unit and the lowest once again is £211 for the Shetland Islands. As local authorities differ in the extent to which central administration and related service costs are included in SM expenditure, individual figures may not always be directly comparable.
8. Average annual expenditure on repairs and maintenance ( RM) (table 8) is estimated to be £1,026 per house in 2007-08. This is an increase of £31 or 3.1% on the actual cost for 2006/07. The range for full year RM costs is £847 and the highest projected RM expenditure in 2007-08 is in Renfrewshire at £1,397 per house. The lowest full year cost was recorded by Angus, at £568 per unit.
Rents lost because of voids ( table 9)
9. Total rents lost due to voids in 2007-08 are projected to be around £21.2 million, or 2.6% of total rental income. This is similar to the results for 2006-07. Levels of rent loss may be significantly influenced by a number of factors such as: different levels of demand for properties; different management practices and targets; decanting for improvement and investment programmes; or the inclusion of properties lying empty and awaiting demolition. But there are some noteworthy patterns in the reported figures. Inverclyde and West Dunbartonshire consistently report rents lost in excess of 5% of rental income.
Rent arrears and rent arrears written off ( tables 10 and 11)
10. These tables have been significantly revised compared to the equivalent tables in previous bulletins. In previous years a number of local authorities provided information on the amount of rent arrears for current tenants only, rather than for current and former tenants. In table 10 actual or estimated amounts of rent arrears at 31 December 2005 and 31 March 2007 include total arrears for current and former tenants combined. Total rent arrears at 31 March 2007 were £41.1m, representing 4.9% of standard rental income. This is in keeping with the previous year. The number of current tenants reportedly in arrears has decreased by 5,195 (or 5.6%). Direct comparison between local authorities may not always be meaningful due to differences in how they define arrears and rent write-off, but again there are some findings worth highlighting. Total rent arrears for Aberdeenshire, Falkirk and West Dunbartonshire increased by 50% or more between December 2005 and March 2007 while rent arrears in Dundee, Moray, Orkney and Stirling decreased by 25% or more in the same period.
Housing Revenue Account surpluses ( tables 12 and 13)
11. Housing Revenue Account surpluses rose each year between 2003-04 and 2005-06 when the total was £200.3 million. Since then, the total surplus has decreased partly due to further councils transferring their housing stock. Some local authorities continue to use surplus revenue income to boost their capital expenditure. Capital funded from current revenue ( CFCR) is estimated to increase by 14% and reach £91.3 million in 2007-08. This increase is mainly attributable to Aberdeenshire Fife, North Lanarkshire and South Lanarkshire. Revenue balances of £81.8 million are projected to be carried forward into 2008-09. The remaining £14.3m will be transferred into the General Funds, a reduction of a third compared with transfers in 2006/07.
Capital debt ( table 14)
12. The total reported HRA debt at 1 April 2007 was £2,212 million, an increase since 1 April 2006 of £204 million. The average debt per unit is now £5,710. There continues to be a wide disparity between local authorities in the level of debt they carry and estimated movements in debt within the year. Shetland continues to have the highest amount of debt of £28,121 per unit followed by City of Edinburgh at £12,475 per unit. Orkney estimates it will continue to be debt free at 1 April 2008.
Capital expenditure ( table 15)
13. Local authorities' total housing capital expenditure financed from all sources (including new borrowing, usable receipts and CFCR) is projected to total £501 million in 2007-08, an increase of £39 million or 8% on 2006-07 figures. This level of increase is consistent with the 8% increase reported in the previous year. Some local authorities have projected major increases during 2007-08 in gross capital expenditure, above the Scottish average. These include Midlothian (218%), Angus (112%) and Perth and Kinross (102%).
Capital Receipts ( table 16)
14. At March 2007, in budgeting for 2007-08, local authorities estimated that they would obtain £240.1 million in capital receipts in 2007-08. These receipts, which mainly come from the sale of council houses to sitting tenants, can also come from sales of housing land following demolition or improvement or sales, or transfer of groups of properties to housing associations. Estimated receipts in 2007-08 represent a reduction of £17 million (7%) on the total receipts received in 2006-07. While most councils have estimated 2007-08 receipts in line with the levels of receipts in the previous three years a few local authorities have estimated significant reductions in capital receipts - Aberdeenshire (27%), Renfrewshire (64%); Shetland (32%) and West Dunbartonshire (66).
15. Overall, the capital receipts which local authorities receive tend to be higher than the amounts estimated when budgets are being set, possibly reflecting a generally prudent approach to budget setting. For example, when setting 2006-07 budgets councils estimated that they would raise £231 million in receipts and actually raised £257 million - £26 million (11%) more than originally estimated.
« Previous | Contents | Next »