Agenda item

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

Amendments to the Community Benefit Society's governance and it's funding and lease arrangements with the Council.

The Cabinet Member for Housing and Estate Renewal introduced this report which provided an update on progress on the Community Benefit Society (CBS) and noted the amendment to its funding arrangements from being a General Fund supported activity to a Housing Revenue Account supported activity. In addition, the report proposed a change to the agreed leasing arrangements so that properties are leased to CBS for periods of up to seven years instead of up to ten years.

The Cabinet Member highlighted the administration was elected on a manifesto that made it clear that it would act decisively to reduce homelessness and take action to improve the poor quality and precarious temporary accommodation in which nearly 3,000 homeless households in Haringey live. The administration argued: “Poor housing has knock-on effects everywhere; from education to health to crime. And the regular churn of families and children moving from one temporary tenancy to another makes it difficult to build strong local communities.” The administration promised that it would do housing differently.

The Cabinet Member outlined that in July 2018, Cabinet approved the establishment of the Haringey Community Benefit Society, with its sole aim being to improve the housing available to Haringey’s homeless households. Many of these households often ended up in private rented accommodation, which was expensive, insecure and often not of the quality the Council would like. Also, much was provided outside of Haringey. The recommendations in this report were the final steps in putting in place the CBS, which would help the Council ensure homeless families can have a home which is better, more stable and with lower rents than that provided by the market. Meanwhile, the Council would make substantial savings in its annual temporary accommodation budget and, ultimately, re-municipalise stock that was lost under Right to Buy.

RESOLVED

1. To approve the new lease arrangements set out in paras 6.15 to 6.16, with each lease lasting up to seven years and comprising a portfolio of properties.

2. To note that 52 residential units have already been acquired for transfer to the Community Benefit Society on its registration pursuant to the authority given on 17 July 2018 and:
3. To agree to the acquisition of a further 17 residential units up to the end of financial year 2019/2020: and

4. To agree to the acquisition of a further 65 residential units per year from financial year 2020/21; and

5. To agree that this authority replaces that given on 17 July 2018

:

6. To note that properties bought and leased to the CBS should be accounted for in the Housing Revenue Account, rather than the General Fund as set out at 8.15 below.

7. To note that the detail of this change is set out in a report titled ‘Approval of additional Housing Revenue Account budget for new build properties and acquisitions of existing properties to house homeless households’ to be presented to Cabinet on 12 November 2018. [decision item 73]

8. To give delegated authority to the Director of Housing, Regeneration and Planning, after consultation with the Assistant Director of Corporate Governance and Cabinet Member for Housing and Estate Renewal to make any changes that may be required by the Financial Conduct Authority to the Rules for the CBS so the CBS can be registered.

Reasons for decision

The decision being made is essential to the operation of the CBS.

The approval of seven-year leases and the “batching” of a number of properties into each lease will negate the need to seek approval for the leasing of each individual property from the Secretary of State. Seeking approvals in that way would inevitably significantly increase void times, delay the benefits to the households who would be offered the home and reduce the financial savings to the Council. The change to the purchasing of properties to be leased to the CBS being undertaken in the HRA rather than in the General Fund (proposed in a separate report and noted here) is necessary to comply with statute.

The Cabinet of July 2018 approved the acquisition of the first 100 homes with a further report to be presented to Cabinet for authority to acquire the additional 300 properties. With 52 homes already purchased for the CBS, and a further 17 expected before March 2020, it is anticipated that this target will be reached in the summer of 2020. To avoid a further report in the spring of 2020, or delays in continuing the programme, authority is sought as set out at 3.2.1-3.2.3

The July 2018 report set out expectations that the CBS would have two Council nominated Directors and that the Council would hold two of the CBS’s five shares. These rules were approved by the Director for Housing, Regeneration and Planning as delegated by the Cabinet and submitted to the FCA. However, the FCA had concerns about any shareholder having more than one share. These rules have thus been amended and resubmitted and the CBS is currently awaiting a response on whether these are acceptable to the FCA. A delegated authority is therefore required to deal with any further changes that the FCA may require before the CBS can be registered.

Alternative options considered

To keep the lease at 10 years: This option was rejected because leases of more than seven years on properties purchased through the HRA would require the specific consent of the Secretary of State. That process could be expected to take up to 6 months and may not result in an approval, which will add to void times and undermine the viability of the CBS model.

To return to Cabinet to seek approval any purchased over the first 100 as set out in the July 2018 report: This option was rejected because the sale process can take up to 6 months and with the limit expected to be reached in summer of 2020, this would require a second CBS report in early 2020.