[ Report of the Director for Housing, Regeneration and Planning. To be introduced by the Cabinet Member for Housing and Estate Renewal.]
Cabinet approval will be sought for a suite of measures to optimise the rehousing options for Love Lane Estate residents at 500 White Hart Lane, including consultation on a draft Local Lettings Plan and authority to enter into equity loan agreements with leaseholders.
The Cabinet Member for Housing and Regeneration introduced the report which offered Love Lane resident leaseholders the opportunity to acquire a property on 500 White Hart Lane site with a reduced equity requirement. This allowed the Council to maximise rehousing options for leaseholders and directly deal with affordability concerns.
The Cabinet Member reiterated that the Council was committed to working with leaseholders to identify rehousing solutions that met their needs. The Council understood that Love Lane Estate leaseholders had concerns about their current and future homes and faced some difficult decisions about whether to stay in the area or purchase a new home now outside of the Estate. The Council also understood that no two households were the same and each household would have different needs and varying financial positions.
It was noted that the Cabinet had made a decision in March 2020 to agree a new High Road West leaseholder offer for consultation with leaseholders, which proposed an enhanced equity loan for new properties within the High Road West Scheme. It was noted that it was also for these reasons, that the attached report sought authority to offer Love Lane resident leaseholders shared equity loans with a lower threshold requirement at 500 White Hart Lane.
Further to considering a response to the leaseholder’s concerns at item 24 and exempt information at item 25,
a) the resident leaseholder contributing the full market value of their
current home plus home loss payment where this is possible; and
b) the equity requirement to qualify for a Portable Equity Loan be
within the agreed cost envelope set out in the EXEMPT report which permits equity amounts below the 60% level.
Reasons for decision
The reason for this decision is to ensure that the Council can keep its commitments to resident leaseholders on the Love Lane Estate, to maximise their rehousing choice and provide affordable rehousing options.
As described in paragraph 6.9 below, the Council’s Estate Renewal Rehousing and Payments Policy (the ERRPP) sets out the Council’s minimum commitments to residents affected by regeneration schemes. For resident leaseholders it details the arrangements of equity loans, which aim to help them acquire new homes by providing additional finance, which is only repayable upon the subsequent sale of the property or the death of the leaseholder.
The ERRPP normally requires resident leaseholders to contribute 60% of the equity of the new home they wish to acquire to qualify either for an equity loan in the renewal area or (the “portable equity loan”) elsewhere in the borough. The resident leaseholder must contribute the full market value of their current home plus the Home Loss payment.
The ERRPP also requires that any additional contribution by the leaseholder beyond 60% must go to increase the leaseholder’s equity share in the replacement property, thereby setting a maximum value of the replacement home of 1.83 times the value of the leaseholder’s current home. If this is greater than the borough-wide upper quartile house price, that latter becomes the maximum value of the replacement home.
Recent valuations of both the new homes at 500 White Hart Lane and of properties on the Love Lane Estate have suggested that the some resident leaseholders may not be able to raise the 60% equity requirement for an equivalent size home at 500 White Hart Lane and that therefore some properties at 500 White Hart Lane may exceed these maximum replacement home values. This would mean that some of the homes could be unaffordable, hence the proposal outlined below.
The ERRPP does however allow for individual schemes to offer a lower minimum equity share, and therefore a higher maximum replacement home value. Officers recommend setting a lower minimum equity requirement where a resident leaseholder on Love Lane cannot afford to contribute 60% of the value of the new home at 500 White Hart Lane. This will ensure that the Council meets its commitment to provide affordable rehousing options for Love Lane resident leaseholders as well as maximising rehousing choice.
Should Love Lane resident leaseholders not wish to take up the offer of a property at 500 White Hart Lane, the Council needs to make sure it makes best use of these intermediate properties. As such, a marketing strategy will be required to ensure that any surplus properties are marketed to those who the Council believes has the greatest need for the homes. This could include other resident leaseholders affected by estate renewal schemes. For this reason, this report also seeks a delegated authority for the Director of Housing, Regeneration and Planning to agree, in consultation with the Cabinet Member for Housing and Estate Renewal, the marketing strategy for any intermediate properties at 500 White Hart Lane, which are not acquired by Love Lane resident leaseholders.
Alternative options considered
Not to offer an equity loan
If the Council choose not to offer an equity loan on the purchase of these units, it is unlikely that they would be affordable to Love Lane resident leaseholders. This is because the cost of the new homes will be higher than the value of the leaseholders’ current property on the Love Lane Estate. This would mean that 500 White Hart Lane would not help the Council to meet its commitments to resident leaseholders on the Love Lane Estate.
To offer an equity loan under ERRPP terms but not with the option of a lower equity share from the leaseholder
The Council could choose to offer an equity loan on the purchase of these units only where the value of the current property plus 10% Home Loss equals 60% of the new property and not with a lower minimum equity share where necessary. This may mean that some resident leaseholders from the Love Lane Estate that wish to purchase a property at 500 White Hart Lane are not able to.