SECTION 6: HRA ASSETS PROVIDING BENEFITS TO COUNCIL TENANTS EITHER DIRECTLY OR AS AN INVESTMENT PROPERTY PROVIDING A FINANCIAL RETURN
Key principle 2
HRA assets must benefit HRA tenants either in direct usage or as investment properties providing a financial return. If neither of these situations applies, then the assets are not benefiting the HRA and removal from the HRA should be considered
57. Councils must regularly review the role of HRA assets to determine whether those assets continue to provide tenants with exclusive and/or substantial benefits either directly through usage or through a positive financial return as investment assets. If an HRA asset no longer provides such benefits to council tenants, the council, as landlord, must consider the options for that asset. These include a change of use but remaining on the HRA; disposal to a third party; or transfer to the General Fund if a more valuable or relevant use can be found and any other options the local authority wishes to consider. There must be a financial adjustment in favour of the HRA to reflect the transfer of value if the market value of the asset is positive. Whilst the local authority is required to regularly review HRA assets there is no requirement to dispose immediately if it is determined the asset is surplus to requirements. As with any asset, the local authority should determine the appropriate time for disposal taking into consideration the current economic climate.
Good asset management
58. The council must demonstrate good stewardship of all of its assets including all of its housing stock. This must begin with keeping an HRA asset register. Statistical returns to Scottish Government (March 2014 estimates) published in Local Authority Housing in Scotland Income and Expenditure 1997-8 to 2013-14 suggest that there are approximately 363,323 properties on the 26 housing revenue accounts in Scotland as shown in Table 3:
|Type of property||Estimate (March 2014)|
|Number of lettable dwellings||314,914|
|Number of other properties held on HRA of which are:||48,409|
|- Unlettable dwellings||1,292|
|- Garages and lock-ups||43,850|
|Total properties on the HRA||363,323|
59. Assets placed on an HRA asset register should provide details of the buildings and land which is owned (or leased) by the HRA. These assets should be actively managed and periodically reviewed to ensure they continue to provide a positive benefit to the HRA. General guidance on asset management in local government can be found from Scottish Government in this 2005 advisory guidance note and later in 2009 from Audit Scotland. Thirdly, separate recommended practice from the Scottish Housing Regulator ( SHR) from 2012 specifically covers the management of social housing assets.
60. Dwellings should be managed and deliver outcomes as set out in the Scottish Social Housing Charter i.e. outcomes 13, 14 and 15 as outlined in Section 4 above.
61. Councils should ensure that any land it holds continues to be held for a specific HRA purpose. Should the land no longer be held for a specific HRA purpose the council should consider all the available options for it as well as the economic climate for disposing of such assets. If the asset is of a significant scale, then the Council should consult with tenants accordingly as laid out in Section 8.
62. Land held and/or maintained by the HRA which is available and accessible to other residents of the area ( e.g. recreational areas), is by definition not held for the exclusive use of tenants. In such circumstances it is reasonable for tenants to expect a financial contribution from elsewhere reflecting the wider us of that land beyond council tenants. This may be happening already but in some cases may not especially if the costs of administering the process exceeds the benefits that can be derived. The level of materiality should feature in discussions between councils and RTOs. If charging is too complex a process in comparison to the financial benefit from the charges , the Council may wish to go further and transfer the land out of the HRA in line with the principles outlined in guidance on the disposal and transfer of assets referred to in paragraphs 42- 48.
63. An investment property (land or building) held by the HRA also requires active asset and risk management. Councils should regularly review investment property to ensure that holding investment properties provides a positive financial benefit to the HRA. The holding of investment property in the HRA must also be in accordance with legislation. Local authorities may invest money with the consent of Scottish Ministers. The conditions attaching to Scottish Ministers consent are set out in Finance Circular 5/2010. The conditions include the requirement for an annual Investment Strategy and an annual Investment Report. The annual Strategy is required to set out procedures for reviewing the holding of longer term investments, particularly those held in properties or shareholdings in companies or joint ventures. There is no statutory requirement to have a separate HRA annual strategy or annual report but HRA investment properties must be covered in both documents.
Council tenants' and other residents' involvement to decisions on HRA assets
64. It is clear that tenants (or other residents) might wish to be involved in any consideration of the future of particular HRA assets whether they are being sold to a third party or if they are being transferred to or from the General Fund. Further details of this in relation to the Charter can be found in section 8.
Email: HRA Guidance