Decision details

Following discussions with the Homes and Communities Agency and the outturn of the Government's Comprehensive Spending Review the outlook for securing external funding for priority regeneration schemes is poor. The report considers a number of strategic options the council could take to pursue its recently identified priority of housing regeneration, making particular reference to any likely budgetary implications for the council's General Fund and Housing Revenue Account.

(Cabinet Members with Special Responsibility Councillors Hanson and Leytham)

Cabinet received a joint report from the Head of Regeneration and Policy and the Head of Health and Housing which sought approval for the preferred direction for strategic housing and regeneration priorities in light of the current financial climate, existing housing regeneration commitments and the introduction of self financing for council housing.

The options, options analysis, including risk assessment and officer preferred option, were set out in the report as follows:

The council potentially had two main options to consider in the current circumstances, although should new funding become available in the future it could revise its options. 

Option 1: To do nothing and rely on the private sector to engage in housing supply. As a result to dispose of the properties already bought (within Chatsworth Gardens and Bold Street/Marlborough Road) and undertake no regeneration. 

This option would mean that the council would seek to minimise its risk by avoiding engaging in further regeneration work.  It has acquired 56 properties using external funding and would seek to dispose of them on the open market to remove liabilities amounting to just over £100,000 per annum which arise from securing and maintaining the properties.  It would be highly unlikely that any element of profits from sales would be achieved, and more likely that sales would result in a notional financial loss. The only level of affordable housing provision the council would then influence would be through restrictions on planning decisions requiring private sector provision.

Advantages:  Removal of liabilities from continuing to own the properties, and avoiding the need to spend further monies to undertake refurbishment as part of a regeneration programme. 

Disadvantages:  The council would not be engaging in housing regeneration.  It would be placing a further burden on the local housing stock by adding a significant number of unfit properties onto the market and it would fail to add value to the money already spent by public funding to make greater use of the existing housing stock to provide good quality new homes.

Option 2:  To work up a means of engaging in housing provision targeted towards affordable housing using a variety of methods.

This will consist of  a variety of means including: a) allocating land in the Local Development Framework and securing contributions from Section 106 agreements and eventually through Community Infrastructure levy, b) opportunities arising from the self financed Housing Revenue Account coming into effect from April 2012, c) examining options for the completion of outstanding housing regeneration projects at Chatsworth Gardens and Marlborough Road/ Bold Street and d) the provision of the Lend a Hand mortgage support scheme.  If as indicative figures show, the HRA business plan can viably support and contribute to the regeneration and provision of additional council homes, it may also be worth considering it as an alternative solution to finance the refurbishment of the empty properties in current regeneration schemes, bringing other empty properties back into use, and to construct new homes on council land. 

Advantages:  Such a move would introduce greater certainty into the outcome of housing regeneration projects as there is likely to be a more assured rental income from rents.  It would also provide the council as a landlord with a much wider variety of properties to offer for rent to address the changing demands from society for affordable housing.  

Disadvantages:  There may be resistance within communities to the provision of council housing in this manner as it could be perceived that the council will be concentrating social rented properties in areas which already experience high levels of deprivation.  

The officer preferred recommendation was to pursue option 2.  It afforded the council the opportunity in these very difficult economic times to engage proactively in housing regeneration whilst balancing its exposure to financial risk from investing high levels of capital in housing which may not be capable of achieving adequate returns for that investment through sales on the open market.  It also allowed the council to rise to the new challenge by the government for councils to demonstrate that they are worthy providers of social and affordable housing, in a market where the private sector was currently stifled.   

The council clearly wants to engage in housing regeneration even in what are unarguably the toughest economic conditions for decades.  To do so maintains its credibility as a forward looking authority but it had to try and do this in an affordable manner.  There could be no safer method available at the present time than to do this with a guaranteed end user available.   If Members chose Option 2 Officers would prepare further reports for Cabinet on the opportunities to create affordable homes through the LDF and planning decisions, options arising from the revised rules governing the HRA, and a comprehensive options appraisal for the Chatsworth Gardens scheme, to give Members the choice of how to match their aspirations to the budget which could be available to them.

Councillor Leytham proposed, seconded by Councillor Hanson:-

“(1)    That Members reaffirm that the strategic housing regeneration priorities for the foreseeable future are:

a)      To increase the supply and delivery of affordable housing schemes. 

b)      To complete existing unfinished schemes in the West End.

c)      To bring empty properties back into use.

(2)     If Members reaffirm the above priorities further reports be prepared for Cabinet to consider examining the potential of affordable housing provision for each of the above categories through:

a)      Options for the completion of outstanding housing regeneration projects at Chatsworth Gardens and Marlborough Road/Bold Street along with the report to include financial options in relation to the Council borrowing to complete the schemes if there is no other external funding available- also that negotiations are entered into with the HCA to agree a change of direction/contractual agreement based upon the possibility that the Council are able to fund completion of the scheme.

b)      The self financed Housing Revenue Account coming into effect from April 2012.

c)      Allocating land in the Local Development Framework and securing contributions from Section 106 agreement and eventually through Community Infrastructure Levy.

d)      The provision of a Lend a Hand mortgage support scheme “

Councillors then voted:-

Resolved unanimously:

(1)     That Members reaffirm that the strategic housing regeneration priorities for the foreseeable future are:

a)      To increase the supply and delivery of affordable housing schemes. 

b)      To complete existing unfinished schemes in the West End.

c)      To bring empty properties back into use.

(2)     That having reaffirmed the strategic housing regeneration priorities further reports be prepared for Cabinet to consider examining the potential of affordable housing provision for each of those categories through (a) to (d) below which are set out in order of priority:

a)      Options for the completion of outstanding housing regeneration projects at Chatsworth Gardens and Marlborough Road/Bold Street along with the report to include financial options in relation to the Council borrowing to complete the schemes if there is no other external funding available- also that negotiations are entered into with the HCA to agree a change of direction/contractual agreement based upon the possibility that the Council are able to fund completion of the scheme.

b)      The self financed Housing Revenue Account coming into effect from April 2012.

c)      Allocating land in the Local Development Framework and securing contributions from Section 106 agreement and eventually through Community Infrastructure Levy.

d)      The provision of a Lend a Hand mortgage support scheme.

Officers responsible for effecting the decision:

Head of Regeneration and Policy

Head of Health and Housing

Reasons for making the decision:

In January 2011 council resolved that housing regeneration be included in its corporate priorities noting that these projects required significant funding. The decision enables Officers to prepare further reports for Cabinet on the opportunities to create affordable homes through the LDF and planning decisions, options arising from the revised rules governing the HRA, and a comprehensive options appraisal for the Chatsworth Gardens scheme, to give Members the choice of how to match their aspirations to the budget which could be available to them.