17 SEPTEMBER 2015 NOT EXEMPT FACTORING CHARGES ON ACQUISITIONS

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1 STIRLING COUNCIL THIS REPORT RELATES TO ITEM 11 ON THE AGENDA ENVIRONMENT & HOUSING COMMITTEE HOUSING & ENVIRONMENT 17 SEPTEMBER 2015 NOT EXEMPT FACTORING CHARGES ON ACQUISITIONS 1 SUMMARY 1.1 This paper addresses the issue of charges relating to garages and factoring fees that are/or maybe applicable in terms of acquisitions made under the 2 nd Home Acquisition Policy, new build acquisition programme and also those purchases made under Mortgage to Rent Scheme. 1.2 At the time of writing, there are a total of 14 units where a factoring fee is incurred. The factoring fee is approximately 300 per unit. This represents an approximate annual cost to Housing and Environment Services of There are a variety of factoring agents. 1.3 It is proposed that when a factoring fee is present as a consequence of purchasing a property as part of the 2 nd Home Acquisition Policy, new build acquisition programme or a property purchased under Mortgage to Rent Scheme, that a weekly service charge is applied to the incoming tenant in order to recover the factoring fee cost. This service charge would be in the region of 6/ 7 per week based on a 48 week rent year. 1.4 The service charge would rise annually in line with any increase in fees applied by the factoring agent. 1.5 It is proposed that the incoming tenant will be advised at the time of tenancy sign up of the service charge and this will be applied to the tenants rent account. The charge will appear as a Service Charge in the tenant s tenancy agreement. 1.6 In addition to factoring fees, some of the properties purchased under the 2 nd Homes Acquisition Policy, new build acquisition programme and the Mortgage to Rent Scheme have either free standing garages or integrated garages. 1.7 Mortgage to Rent properties which contain a garage are charged a garage fee similar to that charged to Council tenants. It is proposed that where there is a garage as part of the purchase of a property under the 2 nd Homes Acquisition Policy, new build acquisition programme, that the incoming tenant will be charged a garage rent fee as is currently charged in Mortgage to Rent purchases. This fee is currently 6.85 per week for Council tenants.

2 2 OFFICER RECOMMENDATION(S) The Housing and Environment Committee is asked to agree to the following recommendations: 2.1 to continue with the practice of charging either a factoring fee if present and/or garage fee as appropriate to those properties purchased under the Mortgage to Rent Scheme; 2.2 that incoming tenants of properties purchased under the 2 nd Homes Acquisition Policy or new build acquisition programme are charged a service charge where a factoring fee is incurred by Housing and Environment. This will be actioned for any new purchases and for the existing properties when they next become vacant and a new tenant signs up. This is in order for the Council to recover these fees and ensure a consistent approach to those properties purchased under the Mortgage to Rent Scheme. The service charge will increase in line with any increase imposed by the factoring agents; and 2.3 that incoming tenants of properties purchased under the 2 nd Homes Acquisition Policy or new build acquisition programme are charged a garage rent where there is a garage that is either free standing or integrated. The charge will be equivalent to the rent charged for lock ups for those who are Council tenants. This amount will rise in line with the annual garage rent increase. 3 CONSIDERATIONS 3.1 The Mortgage to Rent Scheme was introduced by the Scottish Government in Stirling Council agreed to be a party in the scheme at the time that it was implemented by the Scottish Government. The Scottish Government have allocated ten million pounds to the scheme for this years, 2015/16 budget. The budget for the Mortgage to Rent scheme for Stirling Council 2015/16 is 400, Under the scheme applicants who have major difficulties and who qualify for the scheme can have their property purchased by a social landlord. The Scottish Government provide a subsidy to the social landlord, representing approximately 65-70% of the market value of the property. The social landlord must them make up the rest of the market value in order to purchase the property. The average cost to Stirling Council to purchase properties under the scheme is per property, however on occasion the cost for purchasing a property under the scheme may be significantly higher. This is due to the fact that there were a number of Mortgage to Rent qualifying applicants who live in large properties located within private developments. 3.3 It is due to the recent influx of Mortgage to Rent applications from owners in large properties in private developments, that has highlighted the issue of both factoring fees and the issue of the existence of either integrated garages or free standing garages linked to these properties. 3.4 Under Mortgage to Rent successful applicants are entitled to be given a Scottish Secure Tenancy at the time of transfer of ownership. This is also a Scottish Government grant condition.

3 3.5 Since the commencement of the Mortgage to Rent Scheme in 2008, 55 properties have been purchased. The properties are varied and include previously owned Council stock bought under Right to Buy, as well as properties located in private development schemes. At the time of writing 4 properties have been purchased under Mortgage to Rent Scheme where either integrated garages and/or factoring fees are in existence. 3.6 Under the new build acquisition programme a further 10 properties were purchased where a factoring fee was present. 4 POLICY/RESOURCE IMPLICATIONS AND CONSULTATIONS Policy Implications Equality Impact Assessment Strategic Environmental Assessment Serving Stirling Single Outcome Agreement Diversity (age, disability, gender, race, religion, sexual orientation) Sustainability (community, economic, environmental) Effect on Council s green house gas emissions Strategic/Service Plan Existing Policy or Strategy Risk Resource Implications Financial People Land and Property or IT Systems Consultations Internal or External Consultations Effect Yes Yes Yes Yes Equality Impact Assessment 4.1 The contents of this report were assessed using the EqIA Relevance Assessment Form. It was determined that an Equality Impact Assessment was not required as the introduction of charges will not have an impact on communities, household groups or individuals with a higher risk of experiencing poverty or individuals with protected characteristics. Strategic Environmental Assessment 4.2 This report does not relate to a Plan, Policy, Programme or Strategy therefore Strategic Environmental Assessment does not apply Serving Stirling 4.3 The proposals set out in this report are consistent with the following key priority:- R - Our financial strategy will reflect the current economic challenges by saving 24M whilst ensuring the delivery of quality services

4 Single Outcome Agreement 4.4 The proposals set out in this report support the following outcome in the Single Outcome Agreement: Improved supply of social and affordable housing Other Policy Implications 4.5 ne Resource Implications 4.6 ne Consultations 4.7 ne The appropriate Convener, Vice Convener, Portfolio Holder and Depute Portfolio Holder have been consulted on this report The Chief Executive or Director has been consulted on this report as appropriate Tick ( ) to confirm and add relevant initials DG NB VW ME RS 5 BACKGROUND PAPERS 5.1 HAG paper : Factoring Charges on Acquisitions 6 APPENDICES 6.1 Appendix 1 EqIA Relevance Assessment Form Author(s) Name Designation Telephone Number/ Carol Hamilton Housing Management Manager Ext hamiltonc@stirling.gov.uk Approved by Name Designation Signature Robert Steenson Director of Housing & Environment Date 8 September 2015 Service Reference

5 Appendix 1 Stirling Council: EqIA Relevance Check (June 2014) Completing this form will help you determine whether or not an equality impact assessment is required and provide a record of your decision. This is a screening process to help you decide if the proposal under consideration requires an EqIA - it is not an EqIA and the impact of the proposal will be determined by the EqIA itself. The Guidance: Equality Impact Assessment Toolkit June 2014 may help when completing this form this can be accessed via the following link - The term proposal used below is intended to include policy, strategy, service, function, procedure or project. When is an EqIA required? While each proposal must be considered individually, it is anticipated that an EqIA will always be required when: introducing a new policy/strategy/service/function reviewing a current policy/strategy/service/function reducing / discontinuing an existing service considering budget proposals resulting in any of the above Reports on technical or procedural matters or which confirm progress on previously considered proposals, may be less likely to require an EqIA but this can only be determined by using this form. SUMMARY DETAILS 1. Title of Proposal: Service PBB Ref (if applicable) Factoring charges on acquisitions Housing & Environment 2. Service, and Lead Officer (Head of Service/ Service Manager) undertaking assessment Service Housing & Environment Lead Officer Carol Hamilton 3. What is the nature of the proposal? (Tick/complete all that apply) Review of an existing policy/strategy Review of an existing service/function x Reduction in an existing service / function Removal of an existing service Introduction of a new policy/ strategy x Introduction of new service/function Other e.g. technical, progress, procedural report PBB category e.g. transformational change

6 4. For proposals with implications for budgets complete the following: Current expenditure on activity Total anticipated savings or proposed increased spend Delivery Timescale and Phasing In Council area as a whole In/for specific community/ies In/for Council area as a whole 5 In/ for specific community/ies Start date for savings/increased spend End Date for savings/increased spend Savings/increased spend Year 1 Savings/increased spend Year 2 Savings/increased spend Year 3 Savings/increased spend Year 4 Savings/increased spend Year 5 ( 000s) AIMS & OBJECTIVES Answering questions 5-7 will help you decide whether or not your proposal needs to be accompanied by an EqIA. 5. What longer term outcomes is the proposal expected to achieve? Increased income streams for the Council 6. What are the main aims of this proposal? If this proposal revises an existing policy have its aims changed? To charge for services where a duty exists 7. Who is most likely to be affected by this proposal? Consider current and potential future service users including people with particular needs, specific geographical communities and current and prospective employees. Future Mortgage to rent applicants and all council tenants.

7 POTENTIAL IMPACT Answering Questions 8-12 will help you consider the potential impact of the proposal. 8. What potential impact will this proposal have on people in terms of the needs of the public sector equality duty and the Council s responsibilities to:- eliminate discrimination, harassment and victimisation advance equality of opportunity foster good relations - including the need to tackle prejudice and promote understanding See guidance for additional information. n/a 9. Will this proposal have a potential impact on people with protected characteristics *? Please consider all protected groups listed below. A detailed explanation of these is provided in the guidance. Group Impact Group Impact Group Impact Age Disability Gender Reassignment Marriage and Civil Partnership Pregnancy and Maternity Race Religion and Belief Sex Sexual Orientation 10. Will this proposal have an impact on communities, household groups or individuals with a higher risk of experiencing poverty? Please answer Yes//Unclear. Information on communities, households and individuals with a higher risk of experiencing poverty is provided in the guidance. 11. Do you already have any evidence that has influenced or shaped this proposal in relation to people in protected characteristic groups or communities, groups or individuals vulnerable to poverty? If so please summarise what this evidence includes.

8 DECISION 12. Based on your responses and any evidence you already have, is an EqIA required for this proposal? In making your decision please note: if answering Yes to any part of either questions 9 or 10 an EqIA is required if answering Unclear to any part of questions 9 or 10 you are strongly advised to do an EqIA to allow you to comprehensively assess the impact of the proposal if answering to any part of questions 9 or 10 please justify your response and why you consider an EqIA is not required for this proposal in the box below 13. Who was involved in making this decision? Housing Management Manager Authorisation by Lead Officer (Head of Service / Service Manager) This decision has been approved by (Director/Head of Service/ Senior Manager delete as appropriate) Name Title Date