Agenda item

To consider a report outlining proposals for how the Council might build Council homes on land owned by the Council and declared surplus and other options to increase the numbers of affordable housing in the Borough.

(Appendix 2 to this report contains exempt information as defined in Paragraph 3 of Part I of Schedule 12A to the Local Government Act 1972, as amended. For this reason it has been circulated to Members and relevant Officers only.)

(Report attached)

A report was received which outlined proposals for the Council to develop homes and other options to increase the amount of affordable housing in the Borough to meet affordable housing demand. Officers had investigated the possibility of building Council homes on land owned by the authority but had also considered a number of other options to increase the stock of affordable housing.

The background to the proposals put forward was a cap on the Housing Revenue Account (HRA) of £122M which was the present level of the total HRA debt and an existing HRA Capital reserve of £9.4M which could be used to support capital or revenue expenditure.

Officers presented Members with a predicted average cost for building properties which was considerably greater than the current average cost of buy-back on Right to Buy properties and for this and similar reasons it was not considered viable or efficient  to push ahead with house-building by the authority at the present time.

It was reported that there was an opportunity for the Council to become a syndicated partner in a Mortgage Rescue Scheme with the possibility in the 2013/14 financial year of achieving significant grant funding from Central Government in the process. Given that this would lead to the Council’s housing stock being enhanced at an average cost of approximately £63K per property and would remove the risk of eviction for a number of households this was proposed as an option to pursue. The grant funding was only available until 31^st March 2014 and it was therefore suggested that urgency procedures might be required following the meeting to expedite this course of action.

A number of members spoke in favour of the Mortgage Rescue Scheme. The suggestion that the Council did not build its own houses was discussed in depth. Some Members felt that it was appropriate in the present circumstances for the Council to take a calculated risk and use the HRA Capital Reserve to build new properties with anticipated rent helping to bridge the shortfall in currently available capital. It was pointed out that the New Homes Bonus, as well as forming a part of the General Fund, could not be relied upon as a source of funding as there was consultation around elements transferring to the Local Enterprise Partnerships (LEPs) in 2015. Aside from questioning the prudence of diverting the HRA Capital Reserve to house-building, Officers also noted that there were other pressures such as the need to maintain the Decent Homes standards and the potential for the introduction of Universal Credit to impact upon rental income in the short term. A separate residential housing fund within the General Fund was also raised as a possibility but it was noted that this would not offer up affordable housing. The Leader undertook to seek to provide an example to Councillor Brandon Clayton of a Registered Social Landlord’s (RSL) rents that were comparable to Council rents following the meeting.

RESOLVED that

1)        the Executive Committee notes the report and the current financial position of the HRA;

2)           due to the various risks and unknowns in the HRA business plan the Council does not build new homes in the short term;

3)           Members note the options within the report at 3.12 and task Officers to provide a further report on the options for further consideration of the Executive Committee;

4)           authority be delegated to the Head of  Housing Services and Head of Legal, Equalities and Democratic Services to enter into a Service Level Agreement with WM Housing to become a syndicated partner for the Government Mortgage Rescue Scheme;

5)           authority be delegated to the Head of Housing Services to agree each individual case for purchase through the Government Mortgage Rescue Scheme;

6)           Officers undertake a review of the Government Mortgage Rescue Scheme to determine if further funding needs to be invested and report back to the Executive Committee before 31 March 2014;

7)           the Committee notes the intention to use urgency procedures to consider the recommendation to Council at 8), below, prior to the next available meeting of the Council in view of the timescales involved in establishing a Mortgage Rescue Scheme; and

RECOMMENDED that

8)        authority be delegated to the Executive Director of Finance & Resources and Head of Housing Services to use up to £400,000 from Housing Revenue Account reserves for the Government Mortgage Rescue Scheme and support.