Wandsworth Council's £663m Housing Plan: Borrowing Rises Amidst Rent Policy Shift and Stock Condition Concerns
Wandsworth Council's Housing Revenue Account (HRA) business plan outlines a revised capital programme totalling £662.980 million over four years. This significant investment is primarily funded through borrowing, which is projected to reach £848 million over the next 10 years, with an assumed average interest rate of 4.5%. The council's housing stock is aging and has increasing requirements
which are becoming more expensive in future
. This, coupled with serious failings in the way that we were managing our stock
as highlighted by a C3 grading by the Regulator of Social Housing
, necessitates a substantial investment in maintenance and improvements.
The need for increased borrowing is driven by significant pressures including building safety regulations, damp and mould obligations, inflation, and repairs costs.
The report also notes that accelerated stock condition surveys identifying further remedial works
are contributing to increased capital investment requirements. Specifically, new fire and building safety requirements, damp and mould obligations, inflation, higher interest rates and the financial implications of the Council's C3 grading from the Regulator of Social Housing
are cited as pressures on the HRA. The accelerated stock condition survey programme is identifying additional remedial works, increasing both revenue repairs costs and future capital investment requirements.
The revised capital programme allocates £662.980 million over the four-year framework period from 2026/27 to 2029/30. Of this, £254,205,000 is designated for TOTAL EXISTING STOCK REPAIRS & IMPROVEMENTS
and £403,239,000 for TOTAL NEW STOCK INVESTMENT
across the four years.
The council is proposing to revise its rent policy to allow for rent convergence from April 2027. This national policy aims to harmonise rents for similar properties and could generate an additional £37 million by 2036/37. The additional income is intended to support increased investment in existing housing stock and reduce the council's reliance on borrowing. Rent convergence could affect up to 9,900 Wandsworth tenants (c.60% of all tenanted properties)
, with affected tenancies skewed towards those in smaller properties with lower rents. Tenants whose current rent levels are below the Formula Rent level will receive an additional increase, capped at a maximum of £1 per week in April 2027 and £2 per week in subsequent years, until the Formula Rent level is reached. Older tenants are disproportionately represented among affected tenancies, comprising 60.9% of them. For tenants not in receipt of benefits, this additional rent increase could have a financial impact.
However, concerns have been raised about the projected increase in borrowing costs, which are forecast to rise from £17 million in 2026/27 to £55 million by 2035/36, representing 26% of rental income. Councillor Dilley questioned when borrowing levels would be considered unsustainable, while Councillor Dickerdem highlighted that the proposed borrowing for maintenance and capital costs, which do not directly generate rent, is a departure from borrowing for assets that do. The meeting information suggests that while borrowing on the HRA is often a good thing
and getting this right is vitally important
, the rising debt costs mean less and less money over time to actually invest in the homes that people live in.
Councillor Conner, Cabinet Member for Housing, defended the borrowing, stating that it is necessary to address significant pressures on the HRA. He also emphasised the administration's commitment to building homes for Wandsworth's residents and improving the quality of existing stock, citing the council's C3 rating from the Regulator of Social Housing as a key driver for increased investment in maintenance. The Council aims to get a C1 rating, the highest rating possible
as soon as possible
and is in regular communication with the regulator to understand the timeline for re-inspection and grade improvement.
Further details on the HRA business plan can be found in the Public reports pack for the Housing Overview and Scrutiny Committee.