Wokingham Borough Council’s housing budget for 2012/13 is being set up to invest almost £5million in the future of its homes, despite servicing a £95.4million debt that will be taken on to buy the houses from central government. 

Historically, the council has had to pay some 44 per cent of its tenants’ rents to central government in the housing subsidy system, a total of £5.7million in 2011/12. The reform of the council housing finance system, under The Localism Act 2011, removes this subsidy system, which was used to pay for housing improvements nationally, and instead allocates debt to individual councils based on the value of their housing stock. The new system is known as 'self financing'. 

Wokingham Borough Council’s housing stock has been valued at £102million and the council is required to take on an additional debt of £95.4million to buy itself out of the subsidy system. 

As part of self-financing, a 30 year business plan for the Housing Revenue Account (HRA) has been prepared, setting out how the council will use rental income to invest in its housing and repay the debt and associated interest. The interest payment for 2012/13 is estimated at £3.4million. 

The budget for 2012/13 also allows £5million for major repairs, a significant increase on the £2million available in 2011/12. 

Rents will increase in line with government formula from April 2, setting the average rent increase in the Wokingham Borough at 7.56%, meaning an additional charge of approx £6.77 per week for the average tenant, making the weekly average rent approximately £97.38.Service charges for tenants from April 2012 will decrease and garage rents will remain the same for 2012/13. 

Cllr Julian McGhee Sumner, executive member for health and well being, said: "While an initial debt of £95.4million is a scary mantle to take on, the review of the housing subsidy system allows us the flexibility and freedom to do more for our tenants. I’m delighted that we are able to propose investment in our homes that more than doubles that available in the last financial year. It will allow us to move towards decent homes standard across the board, something that was unimaginable under the previous system." 

The proposed HRA will be considered by members of the council’s executive and council at their meetings on Thursday February 23, 2012.