Agenda item

Cabinet RECOMMENDED to Council:

(a)  The adoption of the pilot proposal and action plan.

(b)  Approval to advance £7m of funding to South Cambs Ltd on a secured basis funded from prudential borrowing in line with individual investment appraisals being developed before property acquisitions are made, requiring the prior approval of the Executive Director and Director of Housing in consultation with the Finance and Staffing Portfolio Holder.

(c)  To instruct the Executive Director (Corporate Services) and the Director of Housing to develop the business case(s) for the further expansion of South Cambs Ltd and to report back with detailed recommendations to Cabinet by the Autumn of 2015.

Cabinet considered a report which sought a recommendation to Council to authorise the commencement of a pilot scheme to take forward the Council’s new housing company.

Councillor Mark Howell, Portfolio Holder for Housing, presented the report and reminded Cabinet that South Cambs Ltd had been registered as a private company with Companies House in December 2012.  He explained that the development of the company could enable the Council to meet a number of objectives, including:

·         the generation of a revenue stream and capital gains for the benefit of wider Council services;

·         meeting housing need and addressing gaps in the housing market, particularly in respect of those people who were unlikely to be granted an affordable housing tenancy or who did not wish to join the housing register and were experiencing difficulties in buying a house or renting a home;

·         assisting economic development in the district by helping to provide good quality, flexible rental housing for the many local businesses that had workforces with a high turnover of staff;

·         demonstrating place leadership and supporting community development by investing in the local district and working alongside other private and public sector bodies.

Councillor Simon Edwards, Portfolio Holder for Finance and Staffing, made reference to the demand for rented housing in the district and added that a significant number of businesses in South Cambridgeshire had a high turnover of specialist staff working on temporary contracts.  He explained that he was currently exploring the options available to finance the company, such as a bond issue, a loan by the Public Works Loan Board or pooling with other local authorities, but emphasised that it was too early to commit to anything at this stage.

Appendix A to the report set out a project summary timeline, providing details of the pilot which included the acquisition of approximately 40 homes during June 2014 and July 2015 under the ownership of South Cambs Ltd.  It was proposed that these properties would initially be purchased ‘off the shelf’ in order that they could be rented-out as soon as possible. 

Councillor Sebastian Kindersley, Leader of the Opposition, asked about the selection process that would be followed for people wanting to rent these properties.  Councillor Howell explained that the Council, through South Cambs Ltd, would be entering into the private housing market and would, as such, undertake similar checks to other private landlords before offering a tenancy.

A further question was raised as to what the Council could bring to a company, compared with others already well-established in the housing market.  Councillor Edwards responded by saying that South Cambs Ltd would use the same principles as the Council’s Housing Revenue Account.  In addition, he stated that South Cambs Ltd would be in a strong position because of its borrowing power and the fact that the company would not need to make a profit.

Discussion ensued on those people whose aspirations were to get onto the property ladder.  It was suggested that tenants could be given an opportunity to buy their properties from the company, with the proceeds being reinvested into more housing stock.  Members agreed that this was perhaps something to be considered as part of the company’s long-term future.

Councillor Ray Manning, Leader of the Council, referred to further reductions in government grant and insisted that the Council had to do something in response to that.  He praised lead Members and officers for their forward thinking with regard to entering into the private housing market and the setting up of South Cambs Ltd.

Cabinet RECOMMENDED to Council:

(a)  The adoption of the pilot proposal and action plan.

(b)  Approval to advance £7m of funding to South Cambs Ltd on a secured basis funded from prudential borrowing in line with individual investment appraisals being developed before property acquisitions are made, requiring the prior approval of the Executive Director and Director of Housing in consultation with the Finance and Staffing Portfolio Holder.

(c)  To instruct the Executive Director (Corporate Services) and the Director of Housing to develop the business case(s) for the further expansion of South Cambs Ltd and to report back with detailed recommendations to Cabinet by the Autumn of 2015.