Agenda item

The report will follow in a supplementary pack for this meeting after it has been published for the meeting of Executive Committee (due for publication on Monday 30 June).

This item includes confidential appendices and may need to be discussed in exempt session.

The report on the subject of the acquisition of properties was presented and it was explained that the Council had been approached by a developer regarding 12 shared ownership properties that the developer had been unable to sell. The authority had concluded that these properties could be offered as social housing and the cost of this acquisition could be funded through one for one capital receipts. The Council had had the properties valued and would take this information on board in the process. There was a need for the sale to be completed by October 2025, so the timescales for completion were tight.

It was highlighted that the properties did correspond with the type of homes that were in demand on the Council’s housing waiting list, in particular there were over 900 families on the register with a 2-bed need and around 800 families with a 3-bed need. With this mind, the proposal to purchase the 12 properties had been fully supported by the Council’s Allocations Manager.

The properties were currently under construction and were being built to Energy Performance Certificate (EPC) B rating. It was highlighted that the estimated cost of upgrading these properties to EPC A rating was £200 per property and opportunities to upgrade the energy efficiency of the properties would be explored by the Council’s Housing Development Team.

It was noted that Part 2 of the Housing Act 1985 permits local authorities to build/acquire new housing. The properties under consideration fall under a section 106 agreement for the provision of affordable housing and currently comprise the shared ownership element.

It was noted that the developer would need to apply for a deed of variation to the Section 106 to be completed for the Council to purchase properties for social rented accommodation. The variation application would need to be reported to the Planning Committee. The developer would also be responsible for any initial snagging issues as well as during the first 12 months for any defects. Thereafter, a 10-year insurance-backed warranty would apply.

Members questioned why the developer had experienced difficulties with selling these properties as shared ownership units and why other Registered Providers operating locally had not expressed interest. Officers explained that this was part of a national issue for smaller developments. This development had a low number of units which was not considered attractive for many larger developers. Some Registered Providers would also only consider the purchase of properties in particular locations.  However, the Council was keen to ensure that there continued to be a balanced housing market in the Borough and this proposed investment was deemed appropriate in helping to support this ambition.

Members queried whether this purchase would set a precedent in terms of council purchasing properties directly from developers. It was responded that similar purchases had been undertaken by the Council in the past also with similar aim to support social housing.

It was noted that providing the twelve properties at social rent would give an annual rental income of £81,681. The local housing allowance rent would give an annual rental income of £98,130.34. An affordable rent at 80% market rent would provide an annual rental income of £144,000. It was stated that viability assessments indicated that the pay back period would be approximately 23 years if properties were rented at social rent levels.

During discussion, concerns were raised by some Members about the value for money in purchasing this site given the high building costs on the site.

Following consideration of the report, the recommendations contained in the report were endorsed by Overview and Scrutiny Committee.

RECOMMENDED that

1)    The option to acquire a package of twelve affordable housing units from a developer to increase Council housing stock to support the Council Housing Growth Programme be approved;

2)    authority be delegated to the Deputy Chief Executive and S151 Officer and the Assistant Director of Communities and Housing, following consultation with the Portfolio Holder for Housing and the Portfolio Holder for Finance, to agree expenditure within the approved budget in the Housing Capital Growth Programme; and

3)    the properties be acquired to be let at a social rent commensurate with the Council’s Housing Capital Growth Programme.