Agenda item

Report of the Corporate Director of Finance and Resources (S151 Officer). To be presented by the Cabinet Member for Housing and Planning (Deputy Leader)

DECLARATIONS OF INTEREST FOR ITEM:

None

RESOLVED:

That Cabinet:

1.    Approved the strategy for purchase and lease of residential accommodation as outlined in this report.

2.    Approved the development and incorporation of a Limited Liability Partnership for the purpose set out in this report.

3.    Approved the initiation of a market exercise by the LLP (with the Council’s approval as majority member) to select a suitable funder to provide financing on acceptable terms. Such offering will include as part of the transaction a registered provider associated with the funder as part of the same funding submission to the LLP. This will enable application of GLA Grant Funding. 

4.    Approved that an initial capital budget of up to £5m, funded from the capital programme contingency budget is agreed for the negotiated purchase price of the Residential Housing Units and associated costs within the Council’s Capital Programme.

5.    Delegated authority is given to the Corporate Director of Finance and Resources to agree individual property purchases.

6.    Approved that any potential deal will come back to Cabinet for a decision in advance of the transaction.

Reasons for decision

It was considered that the purchase of homelessness discharge accommodation is necessary for the Council to meet the increasing demand for the provision of temporary accommodation for the Borough and to meet the strategic, and financial objectives of the Council. These are explored in more detail within the main body of the report below.

By initially acquiring the Residential Housing Units for use in this scheme the Council will have the opportunity to drive up the standard of rental property for use for homelessness discharge, and to secure units specifically for the benefit of the Borough.

Alternative options considered

 5.1     Do Nothing - If the Council did not acquire Residential Housing Units, it is anticipated that the Council will have a considerable shortfall of homes to meet the growing needs of the Borough and will fail to meet a key part of its medium-term financial strategy (MTFS).

Direct Purchase of the properties by the Council – the Council already has an ambitious acquisitions programme for the purchase of properties. The purchase of the number of properties outlined in this report would add further debt onto the Council’s balance sheet, which is already high and above the average for similar authorities. In addition, the Council’s strategy for addressing the temporary accommodation crisis is to have a number of different initiatives in place and the proposal set out in this report would support that strategy.  

Cabinet agreed to amend the running order of the meeting to take the item FUNDING AFFORDABLE HOUSING THROUGH LONG-TERM INSTITUTIONAL FINANCE as the next item

The Cabinet Member for Housing and Planning, and Deputy Leader of the Council introduced the report.

It was explained that the Council’s mission was to build a fairer and greener borough, and that the housing crisis in London resulted in more local residents being unable to afford rent, with home ownership becoming increasingly unattainable. It was explained that, to help address this issue, and with financial support from both the Mayor of London and the government, the Council aimed to build thousands of new council homes let at council rents. It also acquired homes from private developments and converted them into council homes. However, it was explained that further housing provision was still required.

It was noted by the Cabinet Member that funding limitations restricted the extent to which councils could build or buy homes independently. External sources of funding were already being used, including grants from the Mayor of London and national government, but these resources remained limited.

Following the delivery of a significant number of homes, the Council sought to secure funding from institutional investors—such as pension funds—to support the development of additional affordable housing in the borough. In the initial phase, this funding was expected to support the construction of hundreds of new affordable homes.

These homes were intended for residents living in temporary accommodation, including bed and breakfasts or private rented housing, who required the stability of secure housing.

The Council aimed to support the development of a fairer borough in Haringey by delivering affordable housing at scale. This funding approach provided additional financial capacity to accelerate the delivery of homes for residents in need.

In response to comments and questions from Councillors Chandwani and Barnes, the following information was shared:

• It was explained that the Limited Liability Partnership (LLP) would have a contractual relationship with Registered Providers (RP) and that the LLP would also have a relationship with the Council – the Council would have a strong contractual relationship with the LLP.
  
  
• It was explained that there were some potential risks to the scheme, but that it was too early to consider what these risks would be at this early stage. However, it was stressed that the Cabinet would receive future updates on the development of the policy. It was stressed that the biggest risk would be not getting the correct deal for Haringey, but that officers would work to ensure that the Council got the best deal.
  
  

RESOLVED:

That Cabinet:

1.    Approved the strategy for purchase and lease of residential accommodation as outlined in this report.

2.    Approved the development and incorporation of a Limited Liability Partnership for the purpose set out in this report.

3.    Approved the initiation of a market exercise by the LLP (with the Council’s approval as majority member) to select a suitable funder to provide financing on acceptable terms. Such offering will include as part of the transaction a registered provider associated with the funder as part of the same funding submission to the LLP. This will enable application of GLA Grant Funding. 

4.    Approved that an initial capital budget of up to £5m, funded from the capital programme contingency budget is agreed for the negotiated purchase price of the Residential Housing Units and associated costs within the Council’s Capital Programme.

5.    Delegated authority is given to the Corporate Director of Finance and Resources to agree individual property purchases.

6.    Approved that any potential deal will come back to Cabinet for a decision in advance of the transaction.

Reasons for decision

It was considered that the purchase of homelessness discharge accommodation is necessary for the Council to meet the increasing demand for the provision of temporary accommodation for the Borough and to meet the strategic, and financial objectives of the Council. These are explored in more detail within the main body of the report below.

By initially acquiring the Residential Housing Units for use in this scheme the Council will have the opportunity to drive up the standard of rental property for use for homelessness discharge, and to secure units specifically for the benefit of the Borough.

Alternative options considered

 5.1     Do Nothing - If the Council did not acquire Residential Housing Units, it is anticipated that the Council will have a considerable shortfall of homes to meet the growing needs of the Borough and will fail to meet a key part of its medium-term financial strategy (MTFS).

Direct Purchase of the properties by the Council – the Council already has an ambitious acquisitions programme for the purchase of properties. The purchase of the number of properties outlined in this report would add further debt onto the Council’s balance sheet, which is already high and above the average for similar authorities. In addition, the Council’s strategy for addressing the temporary accommodation crisis is to have a number of different initiatives in place and the proposal set out in this report would support that strategy.