Thursday, 24 February 2011

Calling all Sheffield allotment holders ..

Please see the attached received today from the Allotment Federation ... if you have comments that you would like to submit for consideration, please contact: heeleyallotments@yahoo.co.uk and I will forward to Pat (secretary of the Sheffield Allotment Federation).

At the Allotment Advisory meeting on Tuesday, 1st March, Allotment Rents and other Changes are on the Agenda. We have only just received details of proposed plans and I am forwarding the file. Would appreciate feedback from members, if possible before Sunday evening, so that your representatives can formulate a response that reflects your views.

SHEFFIELD CITY COUNCIL
ALLOTMENT ADVISORY GROUP
1 MARCH 2011

A REPORT ON RENTS – TIMESCALES/INCREASED RENTS

Summary
This report introduces a change in the process for the collection of allotment rent and other charges. There is also a proposal for increases to allotment rents and other charges from 1 April 2012 to 31 March 2016.

Allotment provision is a statutory duty of local authorities and guided by numerous pieces of legislation. Within the legislation is a requirement to offer 12 months’ prior notice of changes to the allotment tenancy agreement. The amount of rent and date of payment are required by law to be detailed in the tenancy agreement. The proposed changes must therefore be agreed and subsequently communicated to all current allotment tenants by 31 March 2011 in order for them to take effect, as anticipated, from 1 April 2012.

Recommendation
It is recommended that the following changes to the process for collecting allotment rent and other charges, and an increase in such charges from 1 April 2012, be approved by the Allotment Advisory Group for a formal decision to be taken by the Portfolio Holder for Communities:

Change to a process of payment in advance for all allotment-related charges;
  • Increases to allotment rents and other charges as highlighted below:
  • A 7.5% increase to allotment rent and other charges for the year 1 April 2012 to 31 March 2013
  • Further increases for following three years, as detailed within the report, to meet income targets by 2015/16.
THE COLLECTION OF ALLOTMENT RENT AND OTHER CHARGES
In accordance with the Allotment Act 1950, allotment rent and other charges (water, sheds, pigeon coops, etc.) are currently invoiced 9 months in arrears and 3 months in advance. Invoices are posted to tenants in December and the payment due date is 15 January of any year. There is an approximate collection rate of 85% of the total amount invoiced. Some, but not all, of this can be attributed to unknown concessions claimed after invoices are issued. Lost income due to non-payment is impossible to recover and impacts negatively on the allotment budget through the write-off of bad debt.

Issues with the current process
There is currently less incentive to pay the invoice as the tenant has already received use of the plot for the preceding growing season. Should a tenant choose not to pay, the amounts owed are so small that the Council does not seek to recover them. The only recourse is termination of tenancy but there is no financial penalty and the rental income is thus lost. In the current financial climate this situation cannot remain and it is imperative that the Allotment Office maximises potential income through improved collection rates for allotment rent.

As invoices are only raised once each financial year, a tenancy established any time after the invoice data is sent for processing (usually early December) is a charge-free period until the beginning of the next financial year. In an extreme situation, a tenancy could be established in early December one year and no rent received for this plot for at least two years:
  • Tenancy established 2 December 2009: charge free period until 31 March 2010.
  • Invoice raised in December 2010 for period 1 April 2010 to 31 March 2011.
  • Invoice falls due 15 January 2011.
  • Rent payment not received – reminder sent.
  • Rent not received by 24 Feb 2011/ after 40 days of due date
  • 28 day notice to quit issued – ends 24 March 2011.
  • 25 March 2011 - tenancy quit and plot reoffered.
In the example above, no income will be received for the period 2 December 2009 until a new invoice is raised for the new tenant in January 2012. The cycle of non-payment could continue if the second tenant chooses not to pay...

Other issues to consider include the fact that many tenants, particularly those new to allotments in Sheffield, simply do not understand the process of payment in arrears. Anecdotally, the office also understands that payment in arrears can be viewed as a disincentive to cultivate a plot and that advance payment would make some tenants more likely to maintain their allotments to the standards expected.

Changing the process

In keeping with the practice of the overwhelming majority of other local authorities, the Allotment Office is seeking to change the rent collection process to one of payment in advance. From 1 April 2012 allotment rent and other charges will be invoiced in advance and will cover the cost of allotment use for the in-year period. For example, the invoice due date of 1 April 2012 will cover the period 1 April 2012 to 31 March 2013 inclusive.

In order for this change to take place on 1 April 2012, agreement must be reached in advance so that the changes can be communicated to allotment tenants with 12 months’ notice, in accordance with allotment law. It will also be necessary to amend the tenancy agreement accordingly with a similar notice period. The Allotment Office will consult on these proposals with the Allotment Advisory Group on 1 March 2011, before seeking formal approval from the Portfolio Holder for Communities later that month. Information will then be communicated to all allotment tenants before end March 2011.

Allotment Act 1950
It must be noted that the change in policy currently conflicts with Section 10(2) of the Allotment Act 1950. Payment in advance is, however, common practice amongst nearly all other allotment authorities. Those that do not yet have payment in advance in place are proposing to do so – Nottingham City Council is an example. Advice has been sought from the Council’s solicitor as to whether we can make this change. Guidance received indicates that this is the case1.

The Allotment Office has also sought guidance from the Legal Advisor at the National Society for Allotments and Leisure Gardens2. They agree that the law still stands but that payment in advance is common and accepted practice. To date it has not been challenged legally but they suggest that the law is long out of date and should be reviewed. Guidance3 produced and published by the Allotment Regeneration Initiative, on behalf of central Government, also states that ‘allotment rent is usually paid in advance’. A precedent has been set by the vast majority of allotment authorities and adherence to allotment legislation in this situation appears to be the exception rather than the rule.

Reasons for Change/ Anticipated Benefits
It is anticipated that payment in advance will be an incentive to tenants to make full use of their plots. It will also be beneficial from a debt-management perspective and enable the Allotment Office to address the issue of non-payment of rent resulting from the current system. Payment in advance will enable us to terminate tenancies promptly for non-payment, create a new tenancy and still receive some income for the use of that plot in the same year.

In the current economic climate the Council is looking at ways in which revenue can be maximised, to include lost income through non-payment. If the process remains unchanged and the service continues to lose significant potential income each year through non-payment, the only way to mitigate this will be to raise rents by more than the figures proposed later within this report. The new system would also be easier to understand for tenants, causing less confusion and thus generating fewer invoice-related queries for the Allotment Office.

PROPOSED RENT INCREASES FROM 1ST APRIL 2012
The provision of allotments is a statutory duty as defined by allotment law. There are approximately 3115 individual allotment plots in Sheffield with more than 2300 people on the waiting list. Demand for allotments is high across the city with a wait of up to 10 years expected for some sites.

Historically, allotment rent and other charges have been set at low levels to enable all to participate and to avoid any discrimination on the grounds of ability to pay. A full size plot, including unlimited water provision, currently costs less than £1 a week (£45.90). Allotment legislation does not determine the levels at which rents should be set but does state that rents should be ‘at a level that a tenant should be reasonably expected to pay’.

Total income from rents and other charges in 2010/11 will be in the region of £75,000. Income will only increase by a nominal amount in 2011/12 as rent increases in line with inflation have previously been communicated to allotment tenants. For example, the cost of a full size plot with water will rise from £45.90 to £48.90. This cannot be changed as 12 months’ prior notice is required by law.

Current and next year’s allotment charges are set out below

1 April 2010 – 31 March 2011
.............Plot Size (A)....Rent (B) Water.....(A+B) Total
Up to 200m²....£11.80 ..........£10.20........... £22.00
201-300m² .....£16.60...........£16.50 ...........£33.10
>301m²...........£21.50...........£24.40............£45.90

1 April 2011 – 31 March 2012
.............Plot Size (A)....Rent (B) Water.....(A+B) Total
Up to 200m²....£12.10...........£11.50...........£23.60
201-300m² .....£17.00...........£18.20 ...........£35.30
>301m²...........£22.00 ...........£26.90...........£48.90

Against this backdrop Sheffield City Council must address a shortfall of £80 million in funding and most services will be subject to budget cuts and/ or under pressure to increase income. Parks and Countryside is proposing section-wide funding reductions of 15% in year 2011/12 and 7.5% in each of years 2012/13 and 2013/14 to meet the Council-wide objective of a 30% reduction in spending for non-ring fenced services within 3 years.

Proposed Increase
To maintain the current levels of staffing and service provision, the Allotment Office is seeking to increase significantly the income generated from rents and other charges. This compliments the process of changing to collection of rent and other charges in advance, without which the proposed increase would be greater than highlighted below. The allotment function is one of the services to generate income for the Parks and Countryside section and increasing rents would be a way to mitigate the impact of Council-wide reductions in funding. This would enable the Allotment Office to at least maintain current levels of service at a time when funding for many other services will be reduced or withdrawn.

Proposed Increases for period 1 April 2012 – 31 March 2013

The Council’s Cabinet has agreed that increases to fees and charges for services in Parks and Countryside from 1 April 2012 should be increased by 7.5%. All fees and charges within the Parks and Countryside section are thus increasing by this amount. As a result of this 7.5% increase, the allotment rent and other charges will be as follows:

1 April 2012 to 31 March 2013
............Plot Size (A).. Rent (B) Water....(A+B) Total
Up to 200m² ..£13.00........£12.40 ............£25.40
201-300m² ....£18.30........£19.60.............£37.90
>301m²..........£23.70........£28.90.............£52.60

The Allotment Office has been set a target of doubling current (2010/11) total income, including allowances for inflation, by the year 2014/15 and to increase the total income by an additional £25,000 for the year 2015/16.

Targets for total income generated will be £150,000 by 2014/15 and £175,000 by 2015/16. If these figures are not achieved there will be an adverse impact on the authority’s ability to maintain provision at current levels. It is proposed that these increases are communicated to tenants at the same time as those for 2012/13 to give as much advance notice as possible.

Proposed rental and other charges to deliver the income targets above for the period 1 April 2013 to 31 March 2016 are as follows:

1 April 2013 to 31 March 2014
..............Plot Size (A)...Rent (B) Water...(A+B) Total
Up to 200m²...£23.00..........£17.50..........£40.50
201-300m².....£30.00..........£23.50..........£54.50
>301m²..........£38.00..........£30.50..........£68.50
Assuming all variables remain constant, these rent charges would be predicted to bring in an additional £35.5k (accounting for inflation)

1 April 2014 to 31 March 2015
.............Plot Size (A) Rent..(B) Water (A+B).....Total
Up to 200m².....£38.75............£18.50.............£57.25
201-300m².......£49.00............£24.50.............£73.50
>301m²..........£57.50............£31.50.............£89.00
Assuming all variables remain constant, these rent charges would be predicted to bring in a further additional £41k (accounting for inflation)

1 April 2015 to 31 March 2016
..............Plot Size (A) Rent...(B) Water......(A+B) Total
Up to 200m².....£47.50.............£19.50..........£67.00
201-300m².......£61.50.............£26.00..........£87.50
>301m².............£72.00.............£33.50..........£105.50
Assuming all variables remain constant, these rent charges would be predicted to bring in a further additional £25k (accounting for inflation)

The increase for the smallest size plot is proportionally greater in 2013/14 than for larger plots as they require the same levels of officer time and administrative support. Charges have been adjusted to reflect this. Following this readjustment of charges in 2013/14, the percentage increases for all plot sizes are the same in subsequent years. The total amount invoiced will include plot rental, water charges and any other services provided.

Water Charges

Most, but not all, allotment sites receive a mains water supply. In 2009/10 the Allotment Office spent just over £24,000 on water bills with Yorkshire Water with an income from the water charge element of invoices of £36,000. A further £9,000 of charges was incurred through water repairs on allotments. Providing water on allotments also involves additional officer and ranger time to assess repairs and turn the supply on and off each year.

Current water charges, with an annual uplift, appear to cover the combined cost of supply and infrastructure repairs and thus have received only a modest increase to achieve the income targets set. It is imperative that the authority recoups such costs but is not seen to generate profit from water provision on allotment sites. A substantial proportion of the proposed new income targets therefore consists of significant increases to rental element of allotment charges.

Increases in context and additional support

Although significant in terms of total cost, the proposed increases in allotment charges still mean that a large sized plot, including water, will cost only £1.50 a week in 2013/14 and will rise to just above £2 a week by 2015/16. Smaller plots cost significantly less. In an article ‘Allotment Gardens: Food and Health’ by the National Society for Allotments and Leisure Gardens, the estimated minimum value of produce from a well cultivated full-size plot was £1564! The cost of receiving the many benefits of having an allotment, including the produce generated, would still offer good value to tenants.

To mitigate to impact of rent increases on people of low income, a 50% total discount (rent + water + other charges) will still be offered to allotment tenants of pensionable age, or in receipt of other benefits4. Currently such benefits are only available for one plot. From 1 April 2012 this will change to be available for every plot rented – some allotment tenants rent up to four plots. The Allotment Office is also investigating ways in which payment may be spread over instalments or by direct debit to help tenants manage the increase in charges.

Managing change
One of the biggest issues to overcome will be the crossover period of two rent collection processes. This may confuse tenants and also place them under an additional financial burden in early 2012. Staggering the changes so that the major increases in rents do not take place until a year after payment in advance is introduced seeks to minimise this. It is hoped that the long notice period for increased charges, and the introduction of concessions for all plots for the most vulnerable tenants, will further address the potential issues.

Timescales
By end March 2011 we must communicate the above changes to allotment tenants.

In December 2011 tenants will receive their usual bill: nine months in arrears and three months in advance for the period 1 April 2011 – 31 March 2012, due on 15 January 2012, the increases for which have already been agreed and communicated.

In March 2012 we will then issue a second bill for advance payment covering the period 1 April 2012 – 31 March 2013, due on 1 April. This invoice will include the increases of 7.5% detailed above and as agreed by Cabinet.

Invoices from 1 April 2013 will be for a considerably higher amount but advance notice of these increased charges will have been given and the change from payment in arrears to advance will have been undertaken in the preceding year. Careful management of processes and clear communication with all allotment tenants will minimise any confusion.

Appendix 1

Copy of correspondence with Julian Ward, Principal Solicitor, Sheffield City Council, January 2011.

Just to confirm our discussion, I think it is a perfectly tenable view that the reference to rent in advance in the subsection is a reference to rent being asked for in advance of the rental period commencing, rather than a reference to the rental period itself; thus if the rental period commences on 1 April, a demand for rent for the period commencing 1 April, even if made on 1 April, is not a demand in advance whereas a demand on 31 March is a demand in advance.
Copy of communication from Liz Bunting, Legal Advisor to National Society for Allotments and Leisure Gardeners, January 2011.
Further to our telephone conversation yesterday, as explained it is customary now for the provision to be made in the agreement for rent to be paid in advance, to help with the collection problems that we have discussed. Many Associations and Councils appear to be by passing Section 10(2) of the 1950 Allotments Act which states ‘If the yearly rent exceeds £1:25, it is not permissible to provide for more than one quarter’s rent to be payable in advance. This is really long out of date and really should be reviewed.
As you have already stated, you are correct in giving 12 months notice and another point to consider may be a phased introduction, so half in advance and the half after 6 months in the first year, then full amount in advance the following year.
Just to confirm the details given the book I recommended is The Law of Allotments by Paul Clayden, publishers Shaw & Sons.
Kind Regards

Liz Bunting
Legal Advisor

[1] See appendix 1 for copy of correspondence.
[2] See appendix 1 for copy of correspondence.
[3] ‘Allotments – a plotholder’s guide’, Section 4 page 9, ARI for DCLG, 2007.
[4] 50% discount for: age 60+, unemployment, disability living allowance, family credit, incapacity benefit, industrial injury disablement, housing or council tax benefit, student.