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 Committee considered a report on the Redditch Council Housing Growth Programme. It was recapped that the Executive Committee agreed the Council Housing Growth Programme in January 2017.The Council received funding in this programme through a process of one-for-one receipts when Council houses were sold. This had a requirement that the receipts be spent within five years or else the funds had to be returned to Central Government with interest.

It was stated that a further report in 2018 identified specific sites to be utilised as part of this Programme. The present report identified a number of options, set out as part of the proposed recommendation, to increase the Council’s housing stock to meet the housing growth target of achieving 230 additional units by 2030. These options were explained by the officers present. It was highlighted that the mortgage rescue policy had been removed from the Buy Backs and Acquisitions Policy as it was found that lenders now offered various mortgage relief schemes.

The Council Housing Growth Programme had already delivered 107 units, with a plan in place for delivery of further 56 units. This meant the Council needed to secure an additional 67 units to achieve the target by 2030.

Appendix 1 set out the two packages of sites which were approved for development within the Council Housing Growth Programme, with officers currently working on schemes for the submission of planning applications.

Under the current terms of the Council Housing Growth Programme, there was a capital budget of £3 million per year to spend on developing or purchasing new Council houses. Once this figure was spent, additional funding could not be accessed without agreement from the Executive Committee. Officers were asking for greater flexibility in the Council Housing Growth Programme to enable expenditure over this level where needed and this would help the Council to respond to opportunities on the open market as they arose in a timely manner.

It was being proposed that all properties delivered through the Council Housing Growth Programme be let at social rent levels, subject to viability in respect of the repayment of any capital funding on the given property being repaid within a set period of 30, 40 or 50 years. If this proved not to be viable, then the rent level of 65 per cent of market rent would be applied, and if that was also unviable, then affordable rent level of 80 per cent of market rent would be applied.

When developing new properties, Officers were aiming to install materials and to use design methods that would ensure that those properties achieved an Energy Performance Certificate (EPC) A rating. This would have both a positive impact on climate emissions and help to reduce the energy costs that needed to be met by tenants living in those properties.

Once the report had been presented, Members discussed the following points in detail:

• The risk that the £15 million Council Housing Growth Programme would be spent before the whole programme could be delivered if a £3 million per year spend limit be removed – Officers explained that the Council was working with Homes England to deliver the programme and would also be applying for additional funding to supplement the costs of housing delivery. There would be a continual effort to manage the existing budget and the flexibility would allow spending to be concentrated as and when opportunities to purchase housing became available.

• Viability of house building at present time for keeping rent costs down – It was explained that officers anticipated that housing and construction costs would continue to increase. This was in addition to Government targets for house building. Current viability assessments undertaken by the Council showed that the pay back period for council housing, under the programme, at social rent was circa 25 years. This was below the 30 years mark and would enable the Council to provide these social housing at social rent levels if building was undertaken at present time. It was also highlighted that with this Council Housing Growth Programme the costs could be kept down as the Council was building on its own land.

• The risk of repair costs due to housing wear and tear and damage by tenants – It was commented that the potential high costs that could arise if properties were damaged and needed structural repair and through wear and tear. Some Members expressed the opinion that it was preferable to set rents at affordable rather than social rent level in order for the Council to have the contingency to cover these possible costs.

It was noted by officers that the Council was applying for further funding from Homes England. That funding, if awarded, had the condition that rent levels would need to be set at social rent level.

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

RECOMMENDED that

1)    The following options for the Council Housing Growth Programme are approved:

a)    Commissioning the construction of new Housing Revenue Account housing stock;

b)    Purchasing existing housing properties on the open market;

c)    Bidding to purchase housing properties provided by developers through the Section 106 process;

d)    Purchasing properties ‘off plan’ from new housing developments;

e)    Purchasing housing stock from other Registered Providers of social housing;

f)      Regeneration of existing housing stock where additional units are achieved;

g)    Buying back former Council house properties under the Council’s ‘First Right of Refusal.

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2)    Authority be delegated to Deputy Chief Executive and Chief Finance Officer and the Assistant Director of Communities and Housing, following consultation with the Portfolio Holder for Finance, to approve the financial and development appraisal of each site in Appendix 1 and future development sites.

3)    The Buy Backs and Acquisitions Policy, Appendix 2, be approved.

4)    That the budget of no more than £15 million previously approved from the HRA Capital budget for the Housing Growth programme to 2030 be applied to the current capital programme to be used flexibly within the capital expenditure limit.

5)    Properties delivered through the Council Housing Growth Programme are let at social rent levels, where permitted and subject to viability.

6)    In cases where resolution 5 is unviable, to approve rent levels at:

a) 65% of the market rent; or

b) in cases where resolution 6(a) is unviable, at affordable rent levels of 80% of the open market rent level.

7) that the Council’s rent setting policy be updated as per recommendations 5 and 6 above.