Agenda item

Report of the Cabinet Member Housing

The Cabinet Member Housing introduced the report which set out what the Council planned to do in order to bring about the required step change in the delivery of housing. He stated that if approved, these proposals would provide a range of benefits to Cheltenham, not least an increase in the provision of affordable homes and the delivery of private rented homes to be let on a long-term basis, thereby providing more households with greater security of tenure.

This was against the background of a national housing crisis. Social housing delivery was low, and affordable homes had become more unaffordable as house price values continued to rise. Ultimately this had led to a phenomenal growth in the private rental sector but this had still failed to deliver enough homes.. The Cabinet Member stated that since the self-financing changes in 2012 relating to the housing revenue account the council and Cheltenham Borough Homes had endeavoured to provide more homes in the town, albeit few in number. Demand for homes therefore remained high.

To address some of the issues, working within the system the council was now proposing to invest £100 million to enable a significant step change in the delivery of homes.

The proposal for delivery was outlined in the report.  Entering into the private sector of the rental market represented a new step, but one which was significant and needed. He made reference to a motion brought to Council by Cllr Wilkinson highlighting the plight of the under 35’s. With this broad approach and larger investment, it would provide the council with more flexibility in delivering larger viable schemes, which in turn would present more opportunities for sustainable communities through a blended and balanced tenure mix where possible. In his view this was ultimately not only investing in bricks and mortar but also  in shaping communities.

In terms of financing, the Cabinet Member referred to section 5 of the report containing details of a  loan facility and grant from this council to Cheltenham Borough Homes.

The £300k grant from unapplied capital receipts  would be used to fund additional CBH officer support and external professional fees.  It was envisaged that the loan funding would be used wholly or in conjunction with existing housing capital receipts, commuted sums as well as any available grant funding depending on the nature of the individual proposals.

Governance proposals were set out in section 6 of the report and he outlined as follows :

·    Cabinet Member Working Group, which would provide oversight and challenge and focus on priorities and outcomes

·    Strategic Housing Development Group (SHDG)  comprising senior directors from CBC and CBH to develop business cases for review by the Working Group on an individual basis.

·    CBC-CBH Housing Supply Review Group (operational) comprising officers to consider all potential supply opportunities, details and evidence.

He emphasised that final approval would be required from the CBH Board, CBC S151 Officer, the Managing Director Place and Growth, Cabinet Housing and the Cabinet Member Finance.

He believed that  through this report and member briefing sessions Members should be reassured that this proposed housing investment plan was both clear and robust and sought their approval.

Finally, he wished to put on record his thanks to all the officers involved in the development of this housing investment plan. Working collaboratively with Cheltenham Borough Homes had resulted in this unique and exciting opportunity, providing homes, investing in Cheltenham and shaping the community.

Councillor Babbage proposed the following amendment :

Recommendation 1e) Council requests that a cross party Cabinet Member Working Group is created to consider and recommend viability assessments received from CBH. The CMWG will challenge each site proposal to prioritise and maximise the social benefit with an ambition to not only meet but exceed the councils minimum 40% social/affordable housing target.

In proposing the amendment Councillor Babbage said the Cabinet Member Working Group was a positive step and the 40% target should be exceeded wherever possible in order to maximise the social benefit.

The amendment was seconded by Councillor Payne.

Following a brief adjournment the amendment was accepted as a recommendation by the Cabinet Member Housing.

In the debate that followed the following points were raised and responded to by the Cabinet Member :

• It was both unacceptable and shocking that there were 2200 people on the housing waiting list but this bold and ambitious step to address the issue was to be welcomed
• The report was light on detail regarding oversight and review of the process going forward
• The proposal would give security of tenure in the private rented sector and would thereby help retain young people in the town who were key to its economic growth and prosperity going forward
• The homeless were being failed by the private sector particularly in the light of requirements of private sector letting agents which were now only accepting salaries of £20k plus a year or guarantors earning £20-£30k per year which was totally unrealistic. In addition, many letting agents would not take account of certain types of benefits. This was an intransigent approach making the situation untenable in the town. This should be considered by the Cabinet Member Working Group.
• In response to a question as to what the advantage was when the council had to charge market rent due to competition policy rules the Cabinet Member explained that this would be a more quality product. The market did not offer a fixed 5 year tenancy. In addition there would be an opportunity going forward as any profits could be used to cross subsidise affordable housing.
• The Cabinet Member clarified that Right to Buy only applied to Housing Revenue Account properties and not this private sector housing policy. Discussions on Right to Buy were however ongoing with government.
• A Member highlighted that this plan was not only about housing but building communities, skills and education and mental and physical wellbeing. She made reference to SGEI-Services of  General Economic Interest- which were economic activities that public authorities identified as being of particular importance to citizens and that would not be supplied (or would be supplied under different conditions) if there were no public intervention.
• A Member suggested that in terms of annual review, this be brought to Overview and Scrutiny. This was accepted by the Cabinet Member
• When asked whether the council’s investment strategy policy reflected on the return expected from providing private rented housing the Cabinet Member explained that there would be capital appreciation over the loan period and the council would be able to comfortably repay associated loans, i.e. there would be a positive NPV (Net Present Value) over 40 years and annuity loans repaid by year 40.
• The plan represented the single most important policy decision this council had taken. Delivery of things want to happen in the town. Number of homes was important and aim was to deliver better communities. Post war communities, learn from experiences. Engage communities affected by development/refurbishment. Holistic approach. Cultural provision all around town and drivers for those changes. CBH had an excellent record of providing housing

Finally, the Cabinet Member Housing emphasised that this plan was about investing in communities and whilst the delivery of homes would take time it would make a huge difference to the town.

RESOLVED (UNANIMOUSLY) THAT

a)  a grant of £300,000 to Cheltenham Borough Homes Limited (‘CBH’) be approved to enable it to fund the costs set out in section 3.2 of the report to support the development of this initiative.

b) subject to tax and treasury management advice being provided to the satisfaction of the Executive Director Finance and Assets (Section 151 officer), the council enter into an appropriate credit / loan agreement with CBH for up to £100 million to finance the capital costs of delivery of the new housing by CBH.

c) authority be delegated to the Executive Director Finance and Assets to, in consultation with the Borough Solicitor and Cabinet Member Housing, agree the use of commuted sums paid to the council in lieu of affordable housing to enable the provision of ‘additionality’ as detailed in section 2.5 of the report.

d) loan finance be sourced of up to £100 million to be used for onward lending to CBH to finance the capital costs of it delivering the housing as set out in this report.

e) Council requests that a cross party Cabinet Member Working Group is created to consider and recommend viability assessments received from CBH. The CMWG will challenge each site proposal to prioritise and maximise the social benefit with an ambition to not only meet but exceed the councils minimum 40% social/affordable housing target.