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Self-financing comes to Wales Matthew Warburton - 28/08/2014

WalesFlag300Legislation extending HRA self-financing to the 11 stock-retaining councils in Wales is likely to receive Royal Assent on 17 September, it was reported this week. 

The Housing (Wales) Bill was agreed by the Welsh Assembly on 8 July and subsequently survived the four week period of "intimation" during which the Solicitor General has to decide whether a Bill's provisions are within the powers of the Assembly.  It now joins the queue of items awaiting Her Majesty's approval. 

Part 5 of the Bill abolishes the housing subsidy system for councils in Wales and gives Welsh Ministers the power to make a financial settlement transferring debt to or from councils to implement the new self-financing system under which rent income will be retained locally in full.  This part of the Act would come into effect two months after Royal Assent. 

Self-financing is expected to be introduced from April 2015.  As in England, each council will be set a borrowing limit based on historic debt.  Interestingly, the power to set these debt caps for councils in Wales remains with the Treasury in London.

The Bill also gives the Welsh Government powers to set standards for local authority rents and service charges.  Currently, government influence over council rents is exercised through the subsidy and rent rebate systems - there are strong financial incentives to comply with rent guidelines but councils remain free to set rents differently if they choose. 

Anticipating abolition of the subsidy system, the Bill allows Ministers to set a target rent band within which local authorities will be legally required to set their average rents.  There is also scope for consideration of a higher rent regime similar to the "affordable" rents charged on some dwellings in England.

Councils will be expected to make achievement of the Welsh Housing Quality Standard - similar to the Decent Homes Standard which applies in England - the first priority for new investment made possible by self-financing.  There will be a legal requirement to achieve the standard throughout the housing stock by 2020 and maintain it thereafter.

ARCH representatives will be meeting officers from the 11 councils affected in Wales on 12 September to share learning from the experience of implementing self-financing in England and discuss how ARCH can help support its implementation in Wales.

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