HMO Fee Setting 2015-2016 PDF 290 KB

ABERDEEN CITY COUNCIL
COMMITTEE
Community, Housing and Infrastructure
DATE
18th March 2015
DIRECTOR
Pete Leonard
TITLE OF REPORT
HMO Fee Setting 2015 - 2016
REPORT NUMBER
CHI/15/116
CHECKLIST COMPLETED
1.
Yes
PURPOSE OF REPORT
The purpose of this report is to seek Committee’s approval to set
revised HMO Licensing fees from 1st April 2015.
2.
RECOMMENDATION(S)
It is recommended that committee agree to: 1. Implement the new HMO Licence fee structure for 2015/16 as set
out in the following table as from 1st April 2015.
RENEWALS
No. of
Tenants
3–5
6 – 10
11 – 20
21 – 50
51 – 100
101- 200
201 +
3.
Fee
£
400
500
900
1,500
2,400
3,700
4,000
Part 1
£
300
400
800
1,400
2,300
3,600
3,900
NEW APPLICATIONS
Part 2
£
100
100
100
100
100
100
100
Fee
£
495
720
1,350
2,520
4,230
6,840
7,380
Part 1
£
370
600
1,225
2,355
3,900
6,340
6,715
Part 2
£
125
120
125
165
330
500
665
FINANCIAL IMPLICATIONS
The HMO Licence fee is raised for the purposes of processing HMO
applications as per Part 5 of the Housing (Scotland) Act 2006 and the
Provision of Services Regulations 2009, and is ringfenced solely for the
purposes of HMO Licensing activities.
4.
OTHER IMPLICATIONS
There are no other issues that have not already been addressed within
this report.
5.
BACKGROUND/MAIN ISSUES
5.1
The current fee structure was set having taken into consideration
representation by Landlords at the Housing and Environment
Committee in March 2013 and subsequent annual outturns.
5.2
HMO Licensing is a statutory function imposed on local authorities
under the Housing (Scotland) Act 2006, Part 5, s124. The setting of
fees is covered under s161. The Scottish Ministers also issue statutory
guidance for the operation of HMO Licensing duties and the setting of
fees. The authority must also take cognisance of the Provision of
Services Regulations 2009.
5.3
The HMO Licensing duties for Aberdeen City Council are performed by
the Private Sector Housing Unit. There are currently 6.8fte staff
working on HMO duties, these staff comprise;
HMO inspecting Officers; who are responsible for on-site HMO
Licence applications and enforcement duties, unit manager and
administration staff.
5.4
The 2014/15 cost of administering the service is forecast to be circa
£277,026 against a projected income of £140,000, thus leaving a
negative balance of £137,026 to be offset against the carry forward of
£221,551.46 from previous years. The above figures take account of
all corporate costs and make an allowance for Legal fees incurred in
operating the service. It is anticipated that this will mean that a carry
forward of £84,525.46 will be taken into the 2015/16 budget, (see
appendix 1). This carry forward is a historical surplus from previous
years that the Council is now endeavouring to reduce to balance over a
3 year period.
5.5
It will be noted that the fee income forecast in March 2014 for the 201415 budget was estimated at £185,785, whereas the actual income will
be circa £140,000. This has therefore impacted significantly on the
potential carry forward into the 2015-16 budgets and has therefore
required a larger increase to the Renewal fee than had initially been
anticipated.
5.6
The fee increase has only been applied to the Renewal fee in order to
reflect the minimal difference in work required between New application
2
and a Renewal. This represents a 60% increase on the 3 to 5 tenants’
occupancy level, (see table below).
RENEWALS
No.
Tenants
3-5
6 - 10
11 - 20
21 - 50
51 - 100
101 - 200
201 +
Fee
£
250
360
675
1,260
2,115
3,420
3,690
Part 1
£
125
235
550
1,090
1,785
2,920
3,025
NEW APPLICATIONS
Part 2
£
125
125
125
170
330
500
665
Fee £
495
720
1,350
2,520
4,230
6,840
7,380
Part 1
£
370
600
1,225
2,355
3,900
6,340
6,715
Part 2
£
125
120
125
165
330
500
665
2014 -15 HMO Licence fees
5.7
In calculating the fees, for 2015 - 16, officers have taken into
consideration the running costs of the unit, including corporate and
legal costs, along with the number of new applications we could
reasonably expect to receive plus renewals from current licenses that
are due to expire. An attempt has been made to factor potential
additional new cases found through continued enforcement activities.
2015 - 2016 Projections
156 New applications
=
336 Renewal applications =
Total estimated income
5.8
£ 87,255
£158,000
£245,255
Based on the projected income and expenditure for 2015/16, it is
estimated that there will a negative balance of circa £45,000. This will
reduce the HMO fee surplus to circa £35,000 which represents 12% of
the annual operating costs of the HMO service. Ideally the Council
would look to operate with a surplus of 25% to 30% when
endeavouring to balance the costs over a 3 year period. This is to
provide a cushion that prevents the HMO service requiring a subsidy
from the General budget yet prevents overcharging the landlords for
the service thus complying fully with the legislation. However, due to
the 60% increase proposed for 2015-16, it is accepted that a smaller
surplus than would be ideal for one year.
In conclusion; officers have endeavoured to set a HMO Licence fee
for 2015-16 that reflects the anticipated workload of the unit based on
predicted income and current year’s balance, against known
expenditure while endeavouring to comply with the requirements of the
Housing (Scotland) Act 2006 and the Services Directive 2009. While
there are some unknowns the fact that the Council has to balance its
3
HMO budget over a rolling 3 year period allows us scope to make
adjustments on an annual basis to truly reflect the service needs.
6.
IMPACT
This report will be of interest to all private sector landlords in the city
who either operate or intend to operate an HMO property as the fee
relates directly to their operating costs.
7.
MANAGEMENT OF RISK
It is impractical to accurately identify the number of applications that will
be received for an HMO Licence. Assumptions have been made that
80% of all current Licences due to expire in 2014/15 will be renewed
and the number of new applications reflects that lodged during
2014/15. There is a slight risk to the budget in that the number of
actual applications may fall short of the predicted numbers, thus
requiring the Council to adjust the Licence fee upwards for the following
year, while an increase will result in the Council having to make
reductions to the fee in following years. The budget should ideally
balance over a three year period.
8.
BACKGROUND PAPERS
None applicable
Licensing Committee, June 2010 HMO Licence fees
9.
REPORT AUTHOR DETAILS
Name:
Job Title:
Email Address:
Phone Number:
Andy Pitblado
Private Sector Housing Strategy Officer
apitblado@aberdeencity.gov.uk
(52)2339
4
Appendix 1
Houses in Multiple Occupation
Outturn
Forecast
2014/15
Budget
2015/6
£s
£s
199,343
199,343
201,500
201,500
10,000
290
1,300
55,000
66,590
10,000
300
2,000
5,000
55,550
72,850
5,300
3,540
8,840
7,000
3,750
10,750
Expense Total
Income
Fees-Hous'G Multi Occup
1,511
742
2,253
277,026
1,550
750
2,300
287,400
-140,000
-245,255
Income Total
-140,000
-245,255
137,026
42,145
£221,551.46
£84,525.46
£84,525.46
£42,380.46
Financial Years
Staff Costs
Salaries (including on costs)
Administration Costs
Legal Expenses
Mobile Phones
Courses
Advertising
Charges - Central Support
Transport Costs
Travelling Expenses - Aptc & Co
Car Parking
Supplies & Services
Software Purchases/Licenses
Other Expenditure
Net Expenditure/(Income)
Previous Year(Income)/expenditure b/f
Net Balance for year
Projected Carry Forward
5
Appendix 2
Projected income in 2015 – 16 based on new licence fee and assumed
applications received.
Assumptions made: New applications are similar to previous year, and
80% of all licenses due to expire in 2015 – 16 are renewed, (this
reflects previous year’s experience).
No. of Tenants
New
Applicant
3–5
6 – 10
11 – 20
21 – 50
51 – 100
101- 200
201 +
143
10
2
1
-
Sub total
TOTAL
Budget 2015 - 2016
Forecast – Carry forward
from 31st March 2015
156
Minimum Income
requirement for
2015 – 16
FEE
£
495
720
1,350
2,520
4,230
6,840
7,380
Possible
Renewals
300
22
1
3
9
-
Renewal
FEE £
INCOME
£
400
500
900
1,500
2,400
3,700
4,000
190,785
18,200
900
9,540
25,830
-
335
245,255
287,400
84,525
202,875 Estimated Carry Forward
into 2016-2017
6
-
42,380