Agenda item
TA Joint Venture
Verbal update.
Minutes:
The Panel received a presentation on the establishment of two new housing companies being set up to provide housing stock for Temporary Accommodation. The presentation was given by Alan Benson, Head of Housing Strategy and Commissioning.
The following points were noted in response to the discussion of the presentation:
a. The Panel sought clarification on what the incentives were for the joint venture partner. In response, officers outlined that the Council would provide a void guarantee and in doing so would provide tenants for each property. This would provide the partner with a guaranteed source of rent and also allow them to borrow money at very low rates. In addition, the joint venture partner would receive the maintenance contract for the properties as well as refurbishment fees for each of the 400-800 properties. It was hoped that the wining consortia would include a housing association to provide expertise in both acquisitions and property management.
b. The Panel queried the need to enter into an agreement with a partner organisation and questioned why the Council couldn’t borrow the money, build and manage the units on its own. In response, officers outlined that there would be two companies, one of which would be entirely owned by the Council and would be funded through capital investment and a second joint venture which was entirely revenue funded. The advantages of the joint venture was that the Council could acquire stock without undertaking any borrowing itself.
c. In response to questions about where the properties would be located, officers advised that as many properties as possible would be in Haringey, however it was also in the Council’s interest to purchase them as quickly as possible. Officers advised that all properties should be in north London and hopefully contiguous to Haringey. Furthermore, each purchase would be signed off by Cabinet. Officers stated that it may be a good time to buy property due to pending changes to the rules around Buy-to-Let mortgages and wider volatility in the housing market.
d. In response to a question about the success of similar schemes, officers stated that Bromley had progressed quite far with a similar scheme and were in the process of selling stock to sure up other services.
e. In response to a question, officers clarified that Right-to-Buy receipts could not be used to purchase properties in a wholly-owned Council vehicle. Out of the two companies, RTB receipts would go the capital-funded CBS vehicle.
f. In response to concerns about the rationale for a joint venture, the Panel were advised that as well as not being able to invest Right-to-Buy receipts, there were questions about the levels of rent that could be charged through a wholly owned vehicle. Officers emphasised that the purpose of these properties was not to build homes at social rent levels but to acquire properties for temporary accommodation only.
g. In response to a question around who would hold the tenancy, officers advised that the landlord would be a registered provider, such as a housing association, that would form part of the winning consortium. Officers elaborated that the tenancy would in effect be an Assured Shorthold Tenancy.
h. In response to a request for clarification on the level of savings expected, the Panel was advised that it was anticipated that savings of £3.5 million-£4million would be made over 4 years.
i. In response to a question on the governance arrangements, officers advised that Councillors would likely make up two of the five board members of the joint company.
j. Officers advised that the refurbishment and maintenance contract for the CBS vehicle could conceivably be carried out by HfH. Officers anticipated that if this did happen then there could be opportunities to provide apprenticeships in the HfH repairs service.
k. The Panel sought clarification on what the main risks to the proposals were, in response officers suggested that the biggest risk was around uncertainty in the housing market and the potential for the council to lose money in the eventuality of a downturn in property values. As part of the mitigation of this risk, officers advised that purchasing would be undertaken sequentially. Officers also suggested that strong governance arrangements were necessary to ensure that the arm’s length company continued to work in the Council’s interests.
l. In general, the Committee acknowledged the need to reduce the costs of Temporary Accommodation provision and welcomed the proposed approach.