Agenda item

[Report of the Director for  Housing  and Growth. To be introduced by the Cabinet Member for Housing and  Estate Renewal.]

Report on  joining  a pan-London scheme to procure temporary accommodation.

The Cabinet Member for Housing and Estate Renewal introduced this report which set out a proposal to join the pan-London ‘Capital Letters’ scheme which will collaboratively procure new properties to rent on behalf of London boroughs, supported by the Ministry of Housing, Communities & Local Government (MHCLG).

The Cabinet Member reiterated that there was a desperate shortage for housing in Haringey. With limited supply and properties often required at short notice, this also incurred significant costs to the Council.

Capital Letters was a pan-London scheme, which sought to increase the supply of temporary accommodation, reduce the cost of this accommodation, and reduce the need for households to be accommodated out of the borough. This scheme would also combat the competition between boroughs to secure emergency and temporary accommodation, which was also driving up the costs. The pan-London approach would impact on this high cost and would enable boroughs to work together on common housing issues.

It was therefore proposed to enter into partnership with other boroughs to enable a significant impact on reducing those costs.

In response to questions from Cllr Cawley- Harrison, the following information was noted:

• It was considered unlikely that MHCLG would not be funding the scheme beyond the first year. This funding could not yet be confirmed until the spending review was announced.

• If the scheme were not funded in second year, it would not mean that the scheme collapsed. It would only mean that additional funding was not available to acquire additional properties in future years. However, the funding from the first year would have been utilised to secure properties that could be used over a longer period. In the event that the scheme collapsed, this would not lead to a financial risk for the Council as set out at paragraph 6.27. Also any Assured Short Hold Tenancies would have been acquired in the first year, which would have already been paid for.

• It was clarified that the 50% of Council-secured property lets proposed to be added to the capital letters scheme part of our proposed commitment to the scheme. There was an expectation that the capital letters scheme would acquire 4500 homes in addition to what the boroughs acquired independently. It was the ultimate intention for all Council property lets to be put into the capital letters scheme but the Council would firstly consider how this arrangement works in the next three years before such a commitment was considered and any staff transferred to the scheme.

RESOLVED

1. To note the £39 million over three years potentially being made available by MHCLG for pan-London collaboration on the procurement of accommodation for homeless households.

2. To note the draft Articles of Association at Appendix A

3. To note the draft Members Agreement at Appendix B

4. To approve, in principle, for the Council to join Capital Letters London Ltd, a Company Limited by Guarantee that will be established by the London boroughs, as an ‘A member’.

5. To delegate to the Director of Housing, Regeneration and Planning, after consultation with the Cabinet Member for Housing and Estate Renewal and the Statutory Legal and Finance Officers, the following:

a)    Finalising and agreement of the Articles of Association

b)    Payment of up to £100,000 from Flexible Homelessness Support Grant funding in lieu of seconding staff as set out in 6.11

6. To note that under the constitution part 3 Section D – local Choice Functions / function 16 - the appointment of officer(s) to the Capital Letters Board falls to the Chief Executive. Nominated officer(s) will represent the Council at Company meetings, and will vote and exercise all rights of Membership on behalf of the Council.

Reasons for decision

The decisions recommended are required to join the Company and participate in the collaborative procurement approach and to access the MHCLG funding.

The estimated aggregate financial benefit of the proposals to London Boroughs are up to £116m over the first three years, plus potential savings on changing how placements are made and reduced repeat homelessness through tenancy sustainment. Joining the scheme early will maximise Haringey’s share of these savings.

Currently other London boroughs have temporary accommodation in Haringey meaning Haringey must place many households outside of the borough. Capital Letters will help rationalise temporary accommodation in London with properties obtained in Haringey being prioritised for households from Haringey.

Benefits to Haringey borough of being in the first phase:

It is proposed that Capital Letters membership will grow in a number of phases with some boroughs joining the first phase and others joining in later phases. There are a number of reasons why it would be advantageous for Haringey to be part of the first wave of boroughs, which are anticipated to start operations in April 2019.

1. The MHCLG subsidy per borough will be greater in the first year. This is important in terms of the proportion of centrally funded staff compared to borough-funded staff, which should provide a greater uplift to procurement numbers for the boroughs in the first wave.

2. The boroughs involved in the set-up of the company will have much more control over the way it is set up and it is Articles of Association than boroughs who join after the company has been established. This may also include the terms and conditions of future boroughs joining the scheme.

3. Boroughs who do not join Capital Letters will still have properties procured by Capital Letters in their area. Although Capital Letters will abide by the agreed Inter- Borough Accommodation Agreement rates, there is nevertheless a significant risk that property owners and agents will prefer to work with Capital Letters than within individual boroughs. This is because of the profile it will have when launched, and because of the more streamlined ability to let properties across London with one organisation than with a number of different boroughs, all with slightly different terms and conditions and different personnel.

4. If Capital Letters is successful then it will be possible for Haringey to secure more private rented and leased properties in London within or close to Haringey, reducing the need to place families in nightly paid accommodation in neighbouring boroughs or elsewhere in London. It would be better to secure these benefits sooner rather than later.

Alternative options considered

To not join the scheme and instead rely on the existing team in Homes for Haringey, which procures Assured Shorthold Tenancies and nightly rate bookings, and on new Haringey-only schemes such as the Community Benefit Society and Purchase, Repair and Management Company.

This was rejected, as existing resources are unlikely to be able to achieve the level of uplift that Capital Letters can with the additional funding. The two new schemes focus on purchasing properties when property owners wish to sell, whereas Capital Letters will focus on renting and leasing properties, which landlords wish to retain. Not joining the scheme will also, lead to any properties Capital Letters obtains in Haringey being allocated to households from other boroughs who are members of the scheme.

To not to join the company in the first phase, but rather wait and assess the scheme’s progress.

This option was rejected, as it would result in a lost opportunity to access MHCLG grant funding for the first year, and delay the benefits of reduced costs and more local placements. There would also be less influence on the scheme’s design by joining once the scheme has been established.

To join the company as a ‘B member’.

Although this option would still enable the Council to receive services from Capital Letters, joining as a ‘B member’ would mean that the Council has less influence over the strategic direction of the company and the specific Articles of Association relating to ‘B members’. Joining as a ‘B member’ also means that they would not have access to MHCLG subsidy for newly procured properties. The distinction between ‘A’ and ‘B’ membership is noted in the 21.2.3 of the draft Articles of Association at Appendix A.

There is an option to reduce funding for ‘A membership’ by seconding up to two staff to Capital Letters.

While there is no intention to make any compulsory secondments at this stage, this option may be taken up if individual members of staff request to take up this opportunity on a voluntary basis.