Issue - meetings

(Housing Portfolio Holder) To consider the attached report (C-101-2009/10).

(1)        That, following consideration of the financial implications, the proposal for the Council to form a Local Housing Company be pursued no further; and

(2)        That the Local Government Association be advised of the outcome of the Council’s Feasibility Study.

The Housing Portfolio Holder presented a report concerning the legal and financial appraisals of the proposed formation of a Local Housing Company by the Council.

The Portfolio Holder reminded the Cabinet that it had previously agreed to investigate the feasibility of forming a Local Housing Company to which the Council could provide mortgages, in order to enable the purchase of properties from the open market and to then let them with assured shorthold tenancies at market rents to Council nominees. Details of the legal advice received from a specialist firm of solicitors on the proposal, and information on the outcome of the financial appraisals undertaken were provided, and it had been concluded that the proposal should not be pursued further. It was proposed that the Local Government Association be advised of the outcome of the Council’s Feasibility Study, as the Association had previously shown interest in the Council’s proposals.

The Cabinet was disappointed that the appraisals had indicated the formation of a Local Housing Company should not proceed, as the proposal would have been an imaginative scheme to help those less affluent applicants on the Housing Register. The Officers involved in the feasibility of the scheme were thanked for their efforts.

Decision:

(1)        That, following consideration of the financial implications and legal advice received, the proposal for the Council to form a Local Housing Company be pursued no further; and

(2)        That the Local Government Association be advised of the outcome of the Council’s Feasibility Study.

Reasons for Decision:

The financial appraisals undertaken by the Council’s Finance and ICT Directorate had shown that, although the proposal was likely to be financially beneficial to the Council, it was unlikely that the Local Housing Company itself would be viable, due to the anticipated shortfall in rental income to meet the anticipated costs. The legal advice received by the Council had also indicated a number of risks to the Council.

Other Options Considered and Rejected:

To continue with the formation of the previously proposed Local Housing Company, which had now been shown to be both risky and not financially viable.

(Housing Portfolio Holder) To consider the attached report (C-084-2009/10).

Report withdrawn at the request of the Housing Portfolio Holder.

(Housing Portfolio Holder) To consider the attached report (C-023-2009/10).

(1)        That the feasibility of the Council setting up a Local Housing Company to purchase properties off the open market to let at market rents, funded by a loan from the Council, be investigated further;

(2)        That the specialist solicitors, Trowers and Hamlin, be appointed to advise the Council on the legal issues involved;

(3)        That a more detailed financial appraisal be undertaken by the Director of Finance and ICT on the financial issues involved, based on the legal advice obtained;

(4)        That a virement of £6,000 be agreed from the District Development Fund Budget for Private Sector Housing Assistance Policy, held by the Housing Portfolio, to fund legal and financial fees; and

(5)        That a further report be considered by the Cabinet in due course, setting out the legal, financial and other issues and whether the initiative should be considered further.

In the absence of the Housing Portfolio Holder, the Director of Housing presented a report concerning the possibility of the Council forming a local housing company, and the appointment of specialist solicitors to advise the Council on the legal issues involved.

The Director reported that a feasibility study was proposed into the formation of a local housing company, which would purchase open market properties to let at market rents, funded by a loan provided by the Council. One London Borough Council was investigating a similar proposal and discussions had taken place. The loan would be provided by the General Fund, and the market rents would be set at the permitted level of maximum housing benefit. This proposal would not preclude the Council from building its own properties at a later date, following the recent Government guidance, for which a report to the Cabinet would be forthcoming.

The Director advised the Cabinet that specialist solicitors should be appointed to advise the Council on the legal issues involved in the formation of such a company, and that a detailed financial appraisal should be undertaken by the Director of Finance & ICT based upon the legal advice received. A further report would be submitted to the Cabinet in due course on whether the initiative should be pursued further.

The Cabinet felt that the initiative would be innovative, of benefit to local people and was worthy of further investigation.

Decision:

(1)        That the feasibility of the Council setting up a Local Housing Company to purchase properties off the open market to let at market rents, funded by a loan from the Council, be investigated further;

(2)        That the specialist solicitors, Trowers and Hamlin, be appointed to advise the Council on the legal issues involved;

(3)        That a more detailed financial appraisal be undertaken by the Director of Finance and ICT on the financial issues involved, based on the legal advice obtained;

(4)        That a virement of £6,000 be agreed from the District Development Fund Budget for Private Sector Housing Assistance Policy, held by the Housing Portfolio, to fund legal and financial fees; and

(5)        That a further report be considered by the Cabinet in due course, setting out the legal, financial and other issues and whether the initiative should be considered further.

Reasons for Decision:

The Council might be able to obtain a higher financial return from funding a local housing company to purchase private properties, rather than from its usual investment sources.

Other Options Considered and Rejected:

To not proceed with the feasibility, or to undertake the feasibility in a different manner than that proposed.