Issue - meetings

Cabinet is recommended to:

1. Approve in principle the establishment of a wholly owned housing company limited by shares.

2. Delegate to the Executive Director of Finance and Corporate Services in consultation with the Cabinet Member for Finance and Reform and the Director of Legal Services:

3. Note that the company business case/s prior to incorporation of the company with be brought back to Cabinet for approval.

Councillor Rowan Ree, Cabinet Member for Finance and Reform introduced the report proposing to establish a council-owned housing company to help to address the borough’s affordable housing shortage. This company  would give the Council additional flexibility in offering a broad range of affordable housing products to meet the varied needs of residents and to promote inclusive economic growth.

Councillor Adronie Alford asked what type and qualities of properties the company would be looking for. Her concern was about the suitability of the properties and the potential increase in the rental market if rents were at a higher rate than the Council’s rates. This could provide a knock-on effect on raising all the local rents.

Councillor Ree replied that each investment would be assessed on a case-by-case basis and the scale of picking up properties off the market would not be significant enough to move the local housing market. The rates would be higher  than the Council’s rent in properties where a lot of work was necessary to restore it. This would help paying off the cost of the development and to bring it back to the Council’s housing stock. Therefore, this would not have an impact on the private sector market or local rents.

Councillor Victoria Brocklebank-Fowler asked where the idea to create this company come from and how it would be financed.

Councillor Ree replied that this had been successfully tried and tested by many other local authorities. He added that the Council would borrow money at a discounted rate from the Public Works Loan Board, a government body, into this council-owned company. Each investment would be accessed individually to determine the value of the borrowing.

Councillor Ree added that the Council was not aiming at building up a large property portfolio. This company would give the Council extra flexibility and an option to take advantage of competitive housing market conditions in the future.

The Leader spoke about the concerns related to temporary accommodation, the unregulated private rented sector, and rents rising in line with market forces. The housing sector was not working for large parts of the population.

The Leader praised Councillor Andew Jones for the robust negotiations with property developers, leading to hundreds of millions of pounds coming from CIL and Section 106. The Council currently had more social housing being built than anywhere else in London, and possibly the UK. However, more housing was needed to accommodate the population in the borough. Therefore, the Council wanted a legal mechanism that would step into the marketplace and be able to take wise judgments and make decisions backed up by a very strong business case.  He reiterated that this company would make investments on a case-by-case basis. 

AGREED UNANIMOUSLY BY THE CABINET MEMBERS:

Cabinet is recommended to:

1. Approve in principle the establishment of a wholly owned housing company limited by shares.

2. Delegate to the Executive Director of Finance and Corporate Services in consultation with the Cabinet Member for Finance and Reform and the Director of Legal Services: