Accounting For Leaseholder Contributions


I know of a LA that is considering bringing the contributions from leaseholders into the HRA I&E, which seems odd as the payments are contributions towards major capital works. The argument is that just like Depreciation, which funds major works, the leaseholder contributions also needs to be in revenue. However, this doesn't look correct as the payments are for capital purposes. 

Can anyone confirm what the arrangement they have and how they are accounted within the HRA?

Many thanks

  • Hi,

    I’d like to introduce myself as the editor of TISonline Local Authority Housing board. I have asked the board members for views on your question and a board member has responded as follows: 

    "In my last authority lessees contributions to major (capital) works were treated as capital receipts and I believe this is general practice. I have seen these contributions treated as negative capital expenditure, which is not quite correct but gives much the same result. The comparison with depreciation is ingenious but I think there is a specific statutory requirement to include a debit for depreciation which is certainly not the case for a credit for major works charges (for more info see the Housing Revenue Account chapter of the Local Authority Housing stream). It is worth asking what is the objective of the proposal - if you just post lessees charges as income and increase RCCOs then there is no net effect on the HRA so why bother risking an argument with the auditor?"

    I hope the above is helpful and I expect that our members would be willing to respond to any follow up questions you may have.