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Executive (I)
Tuesday, 21st January, 2014

REPORT TO:10
DECISION NUMBER:PH/4/2014
EARLIEST DATE FOR DECISION:21st January 2014

LOCAL AUTHORITY MORTGAGE INTEREST RATE
Matter for Consideration:
To review and declare the Council’s mortgage interest rate with effect from 1st February 2014.
Information:
As a consequence of the provisions in Section 438 of the Housing Act 1985, that details the basis on which Local Authorities shall charge interest on mortgage loans, local authorities are required to charge a rate of interest on such loans at the higher rate of:

(1) the standard national rate (as declared by the Secretary of State by reference to interest rates charged by Building Societies); or

(2) the local average rate (in the Council’s case this is the estimated average annual rate of interest at which the authority is able to borrow), plus 0.25%.


Local Authorities are required to review their local average rate at six-monthly intervals, in the Council’s case the reviews fall within the months of January and July.

At the present time the above rates of interest are respectively:

(1) 3.13% (with effect from 1st April 2009)
(2) 5.24%


The rate of interest currently charged on the Council’s mortgage loans is 5.24%.

The local average rate has been calculated using the Council’s average rate of long term borrowing as at December 2013 of 4.99% plus 0.25%. This total rate of 5.24% is higher than the current standard national rate of 3.13%.

Does the information submitted include any exempt information?NO
Legal Considerations:
The Council is required to set its mortgage interest rate by the Housing Act 1985.
Personnel Considerations:
None
Financial Considerations:
The total value of the mortgages outstanding as at 31st December 2013 was £18,100 (Housing Revenue Account £18,100 / General Fund £0). The number of mortgages outstanding is 4. If there is any increase or decrease in the interest rate, no matter how immaterial, there is a statutory requirement to make the change.
Performance Management Considerations:
None
Risk Management Considerations:
None
Relevant Officer:
Steve Thompson, Assistant Chief Executive- Treasurer Services
Relevant Cabinet Member:
Councillor S. Blackburn
Consultation Undertaken:
None
Background Papers:
None
Is this a key decision?NO
Is the decision required in less than 5 days?NO
Recommendations:
To declare that the local average rate under Section 438 of the Housing Act 1985 remains as 5.24% and that there is no requirement for either an increase or decrease in the mortgage interest rate with effect from 1st February 2014.
Reasons for Recommendations:
The Council is obliged to declare the mortgage rate at six monthly intervals, using the calculation parameters outlined in the information section.
Is the recommendation contrary to a plan or strategy adopted or approved by the Council?NO
Is the recommendation in accordance with the Council’s approved Budget?YES
Other alternative options to be considered:
None, the setting of the mortgage rate is a statutory requirement.
Policy, Overview, and Scrutiny Committee Chairman (where appropriate)
Date Informed: N/A
Date Approved: N/A
DECLARATION(S) OF INTEREST (if applicable)
None
Decision:
The Leader of the Council agreed the recommendation as outlined above namely: To declare that the local average rate under Section 438 of the Housing Act 1985 remains as 5.24% and that there is no requirement for either an increase or decrease in the mortgage interest rate with effect from 1st February 2014.
Date:21st January 2014
Reason for Decision:
The Council is obliged to declare the mortgage rate at six monthly intervals, using the calculation parameters outlined in the information section.

Date of Publication:		21st January 2014


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