IMPORTANT
FACTS THAT YOU, THE HEREFORDSHIRE COUNCIL TENANTS SHOULD
KNOW
Q
What happens if the Company goes bust?
A
It is extremely unlikely that Herefordshire Housing will
get into irretrievable financial difficulties. The Housing
Corporation monitors the performance of registered social
landlords regularly and if Herefordshire Housing had financial
difficulties, then they would step in and take action. It
could, for example:
• Impose new members onto the Board of Herefordshire
Housing who have the right sort of skills to help the Company
revise its business plan and financial policies;
•
Enable the company to sell empty properties;
•
As an absolute last resort, suggest that rents could increase
slightly to deal with the problems.
If
it really wasn't possible to resolve the financial difficulties
of the Company, the Corporation might oversee the transfer
of the homes to another registered social landlord that
was financially secure. This has happened, but extremely
rarely
Q
Why is the Council doing this?
A
The Council believes it is in the best interest of its tenants
for the transfer to take place. Councils are severely restricted
by Central Government on how much they can borrow and how
much of the income from selling Council houses they can
spend on housing. Additionally, the Government has required
that more and more of tenants housing benefit is funded
by rent which means that a large proportion of tenants rents
goes to meet housing benefit payments. These actions have
made it more difficult for the Council to carry out repairs
and improvement programmes or build new homes. Herefordshire
Housing will pay a price for its homes that takes their
condition into account and will borrow money not just to
fund the purchase but also to do all the catch up repairs
and improvements within five years. Tenants of Herefordshire
Housing will have all of their housing benefit paid by Central
Government and not by other tenants.
Q
Just what is a registered social landlord?
A
Registered social landlords are not-for-profit organisations
and all of their income is spent on the provision of the
housing service or on building new homes, they are run voluntary,
unpaid boards of management.
Q
What would happen to services for the elderly?
A
The sheltered schemes would all transfer to Herefordshire
Housing. The Company would aim to deliver high quality services
to older people and recognise the important contribution
that older people make in changing policies and services
for the future. It is intended that the same staff will
provide this service if the transfer goes ahead so that
the elderly tenants do not have to get used to somebody
new. Wardens provide security to elderly tenants and Herefordshire
Housing recognises the importance of their role.
Q
How are Board members appointed? How long do they serve?
A
There are fifteen members on the board of Management of
Herefordshire Housing, five Council representatives, who
are chosen by the Council, five independent people, not
connected with the Council and chosen for their expertise
in a range of areas (such as housing and finance) and five
Tenants. The five tenant Shadow Board Members were selected
by the Tenants' Federation. An umbrella organisation of
elected Tenants Representatives. If transfer goes ahead
then the Council has the power to appoint and remove their
five Board Members at its own discretion.
An election of tenants to select their Tenant Board Members
will take place. The Tenants' Federation will run the election
for future Board Members on behalf of the Company. All tenants
would have the opportunity to vote for these Board Members
however.
The election of the five independent Board Members is the
responsibility of the Members of the Company (these would
be "the shareholders" if the Company was a public
limited company) at general meetings.
Tenants and Independent Board Members retire on a three
yearly cycle, apart from five Board Members who have to
retire after the first two years of the Company, to make
sure that the Board does not have ten new, inexperienced
Board Members in only the third year of its life.
Q
Who is in charge of the Company?
A
The Board of Management of Herefordshire Housing is responsible
for deciding the overall "direction" of the Company
and its policies. The day to day management of the Company
will be the responsibility of a Chief Executive and supporting
Directors and Managers. The Chief Executive and his/her
staff will be responsible to the Board.
Q
Are all Board Members equal?
A
Yes. Each Member has an equal say in the running of
the Company and has an equal vote at Board Meetings.
Q
Where did the Independent Shadow Board come from?
A
The Independent Board Members were recruited following local
advertising and although not elected to the Board, were
interviewed to ensure their suitability and commitment to
social housing.
PAST
/ FUTURE REPAIRS AND IMPROVEMENTS
Q
Grass cutting - who will cut the grass outside my house?
A
If it gets cut now by the Council, it will continue to be
cut either by the Council or Herefordshire Housing.
Q
If the Council can't afford to do all the repairs and improvements,
how come some brand new Company with no track record can?
Where will they get the money from and how will they be
able to pay it back with interest if all they are getting
is our rents?
A
The Council has to finance all the repairs and improvements
and contribute to housing benefit payments from its housing
revenue account. The major part of income to that account
is rent. The way in which the Housing Revenue Account operates
is closely controlled by Central Government within a system
that is designed to increase rent to take them up to market
levels. The Council has very limited opportunities to borrow
money to finance repairs and improvements, and as a result
these programmes are mainly paid for out of increased rents
on a year by year basis. That is why the Council is finding
it difficult to maintain the same standard of service without
increasing rents.
Registered Social Landlords, on the other hand, have much
greater freedom to operate. They will buy the housing stock
at a price that takes into account the amount of repairs
that need to be done and will borrow enough money to buy
the houses and carry out the repairs. The money will be
repaid, from rent, over a long period, up to 30 years, and
on favourable terms.
Q
Why can't funding be given to the Council to undertake improvements?
A
Basically, financial limits imposed on the Council mean
that it cannot borrow the money necessary to carry out the
repairs and day to day maintenance needed to its properties.
The Council could consider raising its rents to obtain this
money but because the level of improvements needed is so
great, rents would be unaffordable to the people in Herefordshire
and the Council would certainly not wish to raise rents
to these limits. A further constraint on the Council's spending
is that at present a large proportion of all weekly rent,
whether they are on benefit or not, goes to meet the Council's
housing benefit bill and this is therefore money that the
Council cannot use for the housing services.
This constraint and the Council's limits on borrowing do
not apply to Herefordshire Housing which will be able to
borrow monies from Banks and Building Societies to fund
repairs and improvements programme, repaying these loans
over up to 30 years from the rent Herefordshire Housing
receives.
Herefordshire Housing will, of course be expected to keep
rents affordable - the Housing Corporation will make sure
of that.
Q
You are conning us if you say that major repairs would be
brought forward.
A
There has been a sample survey of all the Council's stock.
From that, Herefordshire Housing and its Consultants have
worked out very carefully its repair programmes and what
are called "catch-up" repairs including a substantial
number of major repairs, will be completed within five years
of transfer. This will not only be built into Herefordshire
Housing's business plans and financial projections but also
reflected in the price that the company will pay to the
Council for the houses. The Council, the Housing Corporation,
the Funders the Tenants Federation and you will be monitoring
progress very carefully.
Q
What is to stop Herefordshire Housing jacking up everyone's
rent to pay the full cost of improvement's as soon as the
transfer takes place?
A
The detailed long term business plans of Herefordshire Housing
make an assumption that there will be no need for future
rent increases beyond their rent setting policies. In common
with the Council, Herefordshire Housing cannot give absolute
guarantees on this matter because it will be subject to
external influences.
The Government has also set out its policy for the next
ten years which both Herefordshire Housing and the Council
will need to follow.
Q
Which homes/areas will receive modernisations first?
A
If tenants decide that the Council should go ahead with
the transfer, Herefordshire Housing and its consultants
will prepare a detailed plan of the works programme to be
carried out in the first five years after transfer. This
plan will be prepared in close co-operation and consultation
with tenants and the Board of Herefordshire Housing.
VALUATION
ISSUES
Q
I understand that Herefordshire Housing are going to buy
the homes for a lot less than I would have to pay under
the Right to Buy, why is this?
A
The method of valuation in voluntary stock transfer
is now well tried and tested and approved by the Government,
but is a different valuation from that under the Right to
Buy. Basically, when tenants exercise their Right to Buy,
they are buying it with vacant possession and, apart from
repayment of discount within the first three years, the
new owner can do with the property whatever they wish. If
they sell it, they keep the profit.
On the other hand, the Company is buying the properties
with the promise to retain them for renting at affordable
levels (subject to Right to Buy provisions for transferring
tenants) and also promising to bring them up to, and maintain
them at, a high standard of repair. It will not be allowed
to sell any of the properties, except Rights to Buy, without
the approval of the Secretary of State which is unlikely
to be given.
Also, the higher the valuation, the higher the rents will
be to pay back the loans raised. The Council and Herefordshire
Housing are keen to keep rents at affordable levels.
Q
What is the business plan and can it be altered?
A
It is all the financial assumptions needed to run the business
of Herefordshire Housing including:
• expenditure on mortgage repayments, running costs
of staff, offices, repairs and maintenance and income from
rents;
•
service charges
•
some Right to Buy sales.
It
can be altered to reflect changes in circumstances.
The
business plan is carefully prepared and vetted very closely
by Housing Corporation and the Banks and Building Societies
providing the loans. These organisations will not release
any money to buy the properties until they are satisfied
that the business plan shows that Herefordshire Housing
is viable and has high standards.
Q
Who is in charge of the Company?
A
The Board of Management of Herefordshire Housing is
responsible for deciding the overall "direction"
of the Company and its policies. The day to day management
of the Company will be the responsibility of a Chief Executive
and supporting Directors and Managers. The Chief Executive
and his/her staff will be responsible to the Board.
Q
Where is Herefordshire Housing getting its money from?
A
Herefordshire Housing will be able to borrow the money needed
to buy, repair, maintain and improve the homes from private
finance organisations such as Banks and Building Societies.
The repayment of these loans will be covered by the rents
Herefordshire Housing receives.
Q
What has the Council done with our rent money?
A
The Council has used the money received in rents in its
housing service. Because the Council has kept rents affordable,
a backlog of repairs and improvements have built up and
the Council cannot raise the money needed to carry out these
repairs and improvements, due to financial limits imposed
upon it. In addition, a large proportion of the rents the
Council receives goes to meet housing benefit payments which
is money that the Council cannot use for the housing service.
The Council has done its best within, unfortunately, strict
financial limit
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