Relevant report

1.1 The Executive received a report in November 2008, to update the criteria for disposal of residential and commercial properties from the Housing Revenue Account (HRA) in order to generate £110m from disposals to fund the Investing in Camden’s homes strategy. This strategy has three main components:

· an investment programme that targets decent homes failures and the replacement of mechanical and electrical equipment

· generating £110m in capital receipts for investment in Council owned housing

· developing a programme of estate regeneration to meet £100m of investment need.

1.2 The report also highlighted the uncertainty within the sales market over the medium term, particularly the difficulty in obtaining mortgages, which may impact on the Council’s ability to dispose and the resulting income. The report also stated that the credit crunch and likely recession will change the risk profile for the investment strategy.

1.3 Officers are exploring an alternative to disposal alongside other ways of funding the decent homes work, which would be to market rent properties to private tenants for a period in order to generate income. This proposal has been encouraged by Government particularly in its feedback on the stock options appraisal. Market renting properties is considered as an addition or an alternative to the outright disposal of council properties, with an aim to ensure that the £110m funding requirement is met. A further benefit being that the stock would after a specified period, for example, e.g.35 years, would be returned to the mainstream council housing stock.

1.4 The housing stock options appraisal explained that, without investment, 70% of the Council’s 24,000 tenanted properties would not meet the decent homes standard by 2010. The government has refused to give Camden the direct investment that other areas have enjoyed, which left a £242m gap once current and projected capital resources are taken into account. The council has made a commitment to reaching the Decent Homes standard by 2012 and given the current situation alternatives funding sources are needed.

1.6 A proposal to the Executive on renting properties is therefore planned for April 2009. If the proposal is approved, the plan would be to rent out roughly 100 empty properties a year from the Council’s stock of 24,000 tenanted rented homes. An equivalent number would otherwise have been going forward for sale.

1.7 When it agreed the investment strategy in December 2007, the Executive agreed

‘to authorise the Director of Housing and Adult Social Care to undertake a study of the feasibility of the Special Purpose Company ……with a view to a further report being made to the Executive in due course’.

1.8 The technical model is that the Council would get a loan, potentially from the Public Works Loan Board (PWLB), to use for the Investing in Camden’s homes programme. The rental income generated by the market rental of the properties would then be used to meet the loan repayments.

1.9 While government are encouraging Camden to pursue this option, the HRA rules at present do not facilitate market renting of council properties. In order for the Council to rent the properties at market level they would need to be held in a company outside of the HRA, so the Council would lease the properties to a specially established company for a period of 35 years. At the end of the period the properties would return to the Council. Officers have also been asked to look at options for the stock to be returned to council use sooner.

1.10 This report updates the DMCs on the proposal for such a company and sets out the next steps.

2.1 The purpose of this proposal is to bring in additional investment to improve council homes, to assist in meeting the Decent Homes standard and tenant aspirations for improvement of the council housing stock.

2.2 The properties passed to the Company will be identified according to criteria agreed by the Executive. These criteria will be straightforward and essentially it is anticipated that only 1 or 2 bed properties will be identified and that either estate or street properties may be put forward. The Council will also need to consider whether a property will secure sufficient rent and this will be assessed as properties are identified.

2.3 The proposition is that properties will be refurbished and leased to the Company as they become vacant over a 4-year period. Funding for the pre-letting refurbishment work will be paid for via future rental income from the Company.

2.4 The Company would be responsible for letting them, creating a rental income stream. The homes would be market rented by the Company over the 35 years and would generate sufficient rental income to service a loan of at least £100m loan to the Council and up to £10m of pre-letting refurbishment costs. The £100m loan plus all the profit generated by the Company would go directly into the decent homes works.

2.5 When the 35 years is up, the properties would revert to the HRA affordable housing portfolio at nil cost once the task of funding the Investing in Camden’s homes programme had been achieved.

2.6 Initially, it is planned to offer the homes for full market rent for the life of the Company, but the option to let a proportion of the homes at below the market rent at a later date, sometimes referred to as “intermediate rented” housing. Intermediate rented housing is sometimes developed for key workers and people on lower wages. However, the Company needs to become fully operational in covering the debt charges before this can be considered, which is planned to be in at least 4 years time. Running the Company at full market rents for the 35 years could achieve a surplus which could be held as a contingency in the early years in case demand falls.

2.7 The flats rented out by the Company would benefit from the same communal housing services as everyone else and would contribute fully towards these costs. Details on how the management, lettings and internal repairs work to the properties could be configured are being worked up. These services could be managed in house by the Council or by an external contractor. The Executive report will need to explore this and consider the pros and cons of both approaches.

2.8 Which ever way that the services are delivered, it is intended that District Management Committees and tenants will receive monitoring information on the level of income generated by the Company, numbers of properties leased to the Company and/or available to rent.

2.9 Anyone on the waiting list for council property has options to access housing at market rent, for example, using private landlords or housing associations and this is intended to be another way that people on the waiting list could access housing.

3.1 The loan sum will be used solely to refurbish the housing stock to meet the Decent Homes standard.

3.2 The cost of running the Company is estimated at £270,000 per annum, and set-up costs could be some £500,000. As stated above, the aim is for the company to generate £110m of additional resources for the Council over a 35 year period.

4.1 The Company would be responsible for reviewing and setting the rent levels and agree the terms and conditions of rental and choice of tenants for the mix of available properties; ensuring the Company meets all financial, legal and audit requirements and report annually on progress to the Council’s Executive.

4.2 The governance structure would include a constitution, memorandum of articles and financial regulations.

4.3 The properties will remain the Council’s as they would revert back to the council ownership in the event of any operational problems. This would form part of the legal agreement between the Council and the Company.

5.1 In order to progress, an application for consent to lease the properties to the Company needs to be sent to the Secretary of State. The Government Office for London and Communities for Local Government have encouraged Camden to pursue this proposal.

5.2 The proposed timetable is set out below and progressing this is subject to approval by the Executive in April. A report to the Executive is scheduled for April, which will include a proposal for the establishing the Company structure, for a formal decision to be made, followed by proposed timescales should the Executive approve the Company set up. If a decision is taken to progress, DMCs will have a further opportunity to comment on local arrangements at the July DMC meetings and on overall performance at suitable points.

Task	Date
DMC meetings	4, 5, 6, 10, 19 March 2009
Executive report submitted	17April 2009
Executive decision	29 April 2009
Application for consent to Secretary of State	May 2009
Response expected to application for consent from Secretary of State	May 2009
Company set up	May - July 2009
Implementation - policies, processes and documents developed	May - July 2009
DMC report on implementation	July 2009 (for August/Sept meetings)
Company commences lettings	To be determined

Item

REPORT TO: HEX

DATE: 26 Feb 2009

TITLE: Housing Policy News (February 2009)

AUTHOR: Lucy McGoldrick, Senior Strategy Officer, SCU

PURPOSE OF REPORT:

To provide an update on recent policy news, research reports and publications and forthcoming conferences.

RECOMMENDATIONS:

Note contents

HASC strategy & commissioning unit (SCU)

Housing policy news Feb 2009

Repossessions have hit a 12-year high with homebuyers losing 40,000 properties in 2008 (Council of Mortgage Lenders). Private forecasts from home loan firms point to at least 75,000 repossessions in 2009. If this forecast holds true, it threatens to be the worst year ever for repossessions. The right-wing Centre for Policy Studies claims this year’s figure will be much higher – at 145,000. It says government plans to tackle the crisis – including the new £200 million mortgage rescue scheme – are likely to help only a ‘very small number’. The think tank argues the courts could save 100,000 households from homelessness by changing their approach to granting repossession orders - suspending or postponing a higher proportion of the repossession claims that come before them, giving borrowers more time to repay.

Mortgage rescue scheme was rolled out in January and Camden was one of a selection of local authorities chosen to spearhead the scheme. Through Metropolitan Home Ownership, struggling home owners can access help either by selling an equity stake and thereby reducing their mortgage, or by selling their home and becoming a social housing tenant. To access the scheme, home owners would need otherwise to be eligible for homelessness assistance and there is a property value cap of £296,000. For more information, call Housing Options Development Team Manager Simone Scarnera on 020 7974 2743.

Councils could offer mortgages A decision by CLG to cut the "standard national rate" at which councils are able to lend may pave the way for authorities to begin to plug the gap left by building societies and specialist lenders that have stopped lending. The reduction in the standard national rate is regarded as essential to entice councils back into the mortgage arena. Local authorities in Manchester, Bristol, Portsmouth, Lambeth and Hackney could soon be offering mortgages to help struggling home buyers onto the property ladder.

House prices fell by 10% across the UK during 2008 CLG’s House Price Index shows the average price of a home fell to £195,317 in December, down 2.3% on the previous month. First-time buyers have benefited from greater reductions than homeowners, paying an average of 13% less than a year ago compared with a 9.2% reduction for those already on the property ladder. Prices in England and Wales saw a 10% drop in prices. London remains the most expensive area, with an average price of £304,421, and the north east is the cheapest at £136,057. Recent surveys suggest a slight increase in prices in January but report authors say this is unlikely to represent the start of prolonged growth.

Potential home buyers attracted back to the market by falling prices Members of the Royal Institution of Chartered Surveyors have reported an increase in the number of enquiries from new buyers for the third month in a row. 71% of surveyors attributed this to falling prices. Only 23% are coming from first-time buyers. Existing houses were the most popular type of property, with 95% of potential buyers express an interest in existing homes rather than new build (new build flats were only mentioned in 6% of enquiries). RICS warns against interpreting the data as a sign of housing market recovery.

Parkinson report recognises credit crunch's impact on regeneration Professor Parkinson in his independent report "The Credit Crunch and Regeneration: Impact and Implications" (30 Jan) identifies that the tough economic conditions are making life difficult for the regeneration sector but acknowledges many schemes are continuing, especially those that are financially sound or have public backing. The Government agrees that councils, regional agencies and the private sector have to remain focused on the long term and play their part to support the sector through the downturn. Parkinson notes there has been much successful regeneration across England over the past decade because of the strong national economy and the Government's financial commitment. The report includes useful summaries of cross-tenure impacts on housing markets.

Building new council homes The government is consulting on proposals to enable council’s greater flexibility to borrow and invest to build new homes. Under the proposals, councils would be able to keep money from rental income and right to buy sales. See information on consultation below.

Affordable housing targets still to be agreed More than half of London's local authorities have not yet agreed affordable housing targets put forward by the Mayor to help London deliver 50,000 more affordable homes in the capital within three years. Figures released by city hall show that Johnson has a "provisional agreement" from 14 London boroughs to deliver his proposed targets for affordable homes in their area. The remaining 19 have agreed to build 20,500 more affordable homes, but this falls short of the amount needed to meet the mayor's overall target to help Londoners off the housing waiting list. Negotiations are ongoing.

Media coverage of `tenant bribes’ National newspapers in February carried front-page stories suggesting councils are unfairly bribing tenants with incentives to leave council tenancies.

No duty of care to tenants for social landlords In a case where an elderly man was murdered by his neighbour, the House of Lords has ruled against the victim’s family, arguing that `there wasn’t a close enough relationship between them to be a duty of care.’ James Mitchell, 72, died after his neighbour James Drummond beat him round the head with a stick in 2001. The attack followed complaints made by Mr Mitchell about Mr Drummond’s behaviour, and a meeting between Mr Drummond and landlord Glasgow Council. Mr Mitchell’s family took the case to the highest court in the land in an attempt to prove that Glasgow Council should have done more to protect Mr Mitchell – including informing him of its meeting with Mr Drummond. But the Lords ruled against the family.

TSA update The TSA has launched its ‘national conversation’ that gives tenants the chance to have their say about what is important to them. It will run until 11 March 09 and will include local and regional events and conventions. See their website for more information http://www.nationalconversation.co.uk/. This month, the TSA has also published its corporate plan.

National Tenant Voice The proposals suggested by tenants were accepted this week by ministers and include a National Tenant Council made up of 50 social housing tenants from across the country. This national body will enable tenants to influence policy at regional and national level. New ways of speaking and listening to tenants, particularly those not in tenants groups will be developed.

Housing Strategy & Policy Forum The forum, chaired by Councillor Naylor, will meet at 6.30pm on the 26 Feb 09 to discuss the implications to the Rugg review to the private rented sector. The forum will look at improving enforcement standards, improving knowledge and tenants rights and increasing the PRS evidence base. Residents of all tenures are welcome.

	Title	End date
CLG	Changes to revenue and capital rules for new council housing: excluding new council housing from HRA subsidy rules http://www.communities.gov.uk/publications/housing/capitalruleschanges	17 April
LBC	Review of strategy for accommodation for homeless people (focusing on: reducing LBC hostel footprint, reconfiguring remaining stock to better fit demand and ensuring robust procurement strategy)	30 April
LBC	Asking residents what they think about changes to caretaking and cleaning services in West Hampstead, Kilburn and Swiss Cottage	April
LBC	Focus group with tenants and leaseholders to look at a draft compensation policy	March
LBC	TAG consultation about cleaning services in hostels	To be confirmed

This report provides key information on housing statistics for England (and its regions), Wales, Scotland and Northern Ireland. It features over 200 charts and tables (including on housing supply, demand, conditions, arrears and repossessions) and is a key resource for those interested in housing policy and finance, in both the public and private sectors.

CLG have published research based on a new set of indicators that aims to measure child well being at a local (super-output) level. Housing indicators include measures of overcrowding and homelessness and shows statistically significant correlations between housing and other measures, particularly education. It ranks some boroughs by their average score on child well being.

The Government has published its white paper on social mobility. Key measures include:

· New £15m New Communities Fund to tackle deprivation on the worst estates and support the work of the HCA (the NCF will initially support around 10 local authority pilot programmes)

· Plans to launch a new adult advancement and careers service providing information, advice and guidance to people `on any issue that is preventing someone from getting on – from their skills, to housing or childcare.’

· 35,000 new apprenticeship places to be created with a guarantee of a place for all applicants by 2013

4) Report of the Independent Commission for Social Mobility (Liberal Democrats, Jan 2009)

In January 08, Nick Clegg set up an independent commission on social mobility that has reported this month. A number of the recommendations reflect government measures proposed in the New Opportunities white paper. Recommendations include:

Interim findings of an evaluation of the outcomes for residents resettled from two of Glasgow’s large-scale, council-run male hostels:

· An evaluation of the experiences of those presenting as homeless in Glasgow after the conclusion of the hostel decommissioning programme

6) Changing Supporting People funding in England: Results from a pilot exercise (CLG, Nov 2008)

A pilot exercise in removing the ring fence from Supporting People funding was conducted in fifteen local authority areas during the financial year 2008/9. The fifteen 'Pathfinder' authorities were selected to ensure coverage of Government Office Regions and to reflect a wide range of administering authorities.

Conferences/events and exhibitions

3 April How will we best take forward effective policy on housing in the economic downturn? London

LONDON BOROUGH OF CAMDEN

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HASC strategy & commissioning unit (SCU)

Housing policy news Feb 2009

Conferences/events and exhibitions