Agenda item

The Panel received a report which provided an update on the Council’s Housing Delivery Programme. The report was introduced by Robbie Erbmann, AD for Housing, as set out in the agenda pack at pages 11-26. Cllr Ruth Gordon, the Cabinet Member for Council House-building, Placemaking and Development was also present for this agenda item. The following arose during the discussion of this item:

a.    The Panel noted that to date, 1503 homes had received planning permission, with 1444 homes started on site. In response to a clarification, the Panel was advised that these two figures did not necessarily directly correlate. Some of the homes that had started on site, had not received planning permission yet and vive-versa. It was not the case that 2947 homes had either received planning permission or started on site.

b.    The Cabinet Member set out that Haringey was doing well in comparison to other boroughs, lots of councils were building homes but not at the scale that Haringey was and not with the focus on homes at social rent that Haringey was. The Cabinet Member suggested that she was also proud of the quality of the housing that was being built, with the use of Passive Haus design techniques were possible, and accompanying public realm improvements to compliment new developments. This would improve areas for existing residents as well as those in the new developments.

c.    The Cabinet Member highlighted the impact of the current financial situation on borrowing costs and that this would inevitably increase the financial risk associated to the programme. The Cabinet Member advised that she would update the Panel with further information once the situation and possible impact was made clearer.

d.    The Panel sought clarification about whether the Ashley Road development was included in both of the figures referenced above in paragraph a. In response, officers advised that the site had recently received planning permission as so would be included in both. Officers agreed to come back with further information about the relationship between the figures of homes started on site and those with planning permission and the degree of overlap in these figures. (Action: Robbie Erbmann).

e.    In relation to a clarification, officers confirmed that 35% of new homes would be 3 beds and 10% would be four bed or more and that these figures were independent of each other, so that 45% would be 3 bed or more.

f.     In response to a question, the officers advised that the BCIS index was a measure of indices used to determine inflation within the building industry.  

g.    The Panel raised concerns about financial risk associated with the homes for private sale and the fact that mortgage rates were going up.

h.    The Panel sought assurances about what was being done about re-provisioning businesses in Wood Green, where the site was being developed for new homes. In response the Cabinet Member advised that the Council was exploring how best to support these businesses stay within their local areas and that Cumberland Road was being developed as a site that could be used by small businesses. Officers acknowdged the need to balance housing needs with demand for businesses in the area. Officers agreed to provide a written response on what was being done to support businesses on the site of the chocolate factory. (Action: Robbie Erbmann).

i.      The Panel commented that the target for building homes with 3 beds or more was 50% and sought clarification on whether there was consideration of a target for four and five bedroom homes. In response, the Cabinet Member advised that it was the case for most Council’s that the biggest demand was for three or four bedroom homes. The key point was around viability on bigger homes and the fact that the Council was not able to charge higher rents, commensurate with the higher building costs incurred for three or four bedroom homes. Therefore, these generated a loss. The HRA needed to have a balanced budget, so there was a limit to the number of loss generating homes that could be subsidised by rental income and other means such as private sales. In general, it was advised that 1 bedroom homes made a profit, two bed homes broke even and the anything at 3 bedrooms or above generated a loss. The number of three or four bedroom homes that were feasible needed to be considered at a programme level.

j.      The Panel were advised that part of the solution was to release existing stock with three or four bedrooms that may no longer be needed and that the Council was making downsizing possible for residents through the Neighbourhood Moves scheme. Cllr Carlin advised the Panel, that the Council was also looking at converting street properties as well as adding additional bedrooms to empty (void) properties.

k.    In light of two developers in the borough having gone into administration, the Panel sought reassurances about the economic risk of further developers going into administration and the impact this would have on the Housing Delivery Plan. In response, officers advised that the only development agreements in the borough were held with Lendlease and Argent, both of which were historical. Other developments were done through contracts and an open tender process, part of which involved conducting thorough due diligence on those organisations. Officers advised that the two firms that had into administration were sub-contractors and that no major contractors had gone into administration yet. Officers would continue to monitor this situation closely.

l.      Officers acknowledged that it was a very challenging market but that the Housing team were monitoring this closely and were doing all they could to mitigate the financial risk involved, such as using fixed price contracts where possible. Officers advised that the costs of steel had risen by 80% and that this had had a significant effect on construction costs.

m.  The Panel sought clarification about street properties, in response, the panel was advised that they would be leasehold and the Council would retain the freehold.

n.    In relation to developing properties for sale as part of cross-subsidy, the Panel sought clarification about what calculations were being done that this was better than building council homes that were not at social rent. In response, the Cabinet Member advised that she was pushing for as many houses at social rent as possible and that the number of properties for sale would be kept down to a minimum. It was suggested that this had been the policy of the Council for a number of years. The Cabinet Member elaborated that the current policy was for cross-subsidy through sales rather than other options, but that she was not opposed to looking at this again. The Cabinet Member highlighted concerns about the possible impact of future funding cuts from central government. Officers advised that private sales still offered the best cross-subsidy return at the present time.

o.    In response to an alleged comment from the Cabinet Member for Finance around seeking new business models for schemes, The Panel was advised that Cllr Williams was referring specifically to capital projects in the General Fund rather than HRA. In terms of the HRA, rental incomes had to cover the entirety of the cost of repairs to housing stock and could not be subsidised by the General Fund.

p.    In response to a question, the Cabinet Member advised that there was no political appetite for joint ventures with private companies in future and that she did not envisage that this would happen.

q.    In relation to concerns about a private company being used to sell homes for private sale, the Cabinet Member confirmed that the sale pipeline tended to come in blocks and that it was financially better for the Council to use an agency rather than employ its own staff at present. It was clarified that the budgetary provision for this service was a budget envelope and that the Council only paid out based on a commissioned rate for every property sold. In relation to a follow-up question, the Cabinet Member did not rule out insourcing this service in future but had no timescales for when this might be.

r.     In relation to the Community Benefits Society, officers  advised that Temporary Accommodation properties were being purchased through this organisation and that they would revert back to the Council’s HRA after seven years. Officers advised that the HCBS was on track to purchase 60 homes this year, which would be around 300 homes in total, which was considered a good return given that it was from a standing start.

RESOLVED

That the report on the Housing Delivery Programme was noted.