Agenda item

Cabinet Member: Cabinet Member for Resources & Financial Governance, Councillor Callton Young

Officer: Interim Director of Homes & Social Investment, Ozay Ali

Key decision: yes

The Leader of the Council delegated authority to the Cabinet to make the following decisions:

RESOLVED: To

1.    Agree to a one year extension of the Council’s participation in the Real Lettings Property Fund 1 from February 2022 to February 2023 with a planned sale date of December 2022 for the reasons set out in this report and delegate to the Chief Executive acting in consultation with the section 151 officer and the Council’s Monitoring Officer the authority to agree all necessary documentation to secure that extension; and

2.    Agree to the variation of the Limited Partnership Agreement to provide for a winding up period of the fund after the end of its legal term of one year, rather than the current three years, with the effect that the latest possible date for return of capital to Croydon is therefore brought forward from the current position of February 2025 to February 2024. 

The Cabinet Member for Resources & Financial Governance (Councillor Callton Young) informed Members that in 2014 the council had invested £29.4 million for the acquisition of 182 properties which were let by St Mungos on a temporary basis to homeless household. 289 secure tenancies had been provided to homeless households during the period of the investment and in addition broader support was provided to the families at no cost to the council.

On exiting the funding the Cabinet Member stated the council would benefit from a capital receipt which was anticipated to be in excess of the original capital investment and would be used to offset council borrowing costs and support the council’s financial recovery. Members were informed that the original date for the council to exit the fund had been February 2022, however given the adverse economic impact of the pandemic Resonance had approached the council and other large investors to recommend that the fund be extended to better support the planned exit.

It was noted that the report detailed that by exiting in February 2023 it was expected that the anticipated increased capital receipts would be protected and that it would be easier for residents to sell the fund onto an institutional investor, as originally planned. This would avoid disruption to existing tenants whilst providing the council with an annual investment income of just over £1 million. It was further noted that the latest possible date for the capital return would be brought forward from February 2025 to February 2024.

The Cabinet Member for Homes (Councillor Patricia Hay-Justice) stated that she was pleased with what had been achieved with the investment, as in addition to the investment 289 tenancy lettings had been secured which had benefited those homeless families. It was noted that 182 homes had been delivered as part of the scheme for the council’s use for temporary accommodation. The proposed extension, it was noted would be positive for tenants as it would mean there were no disruptions to their tenancies and St Mungos would continue to assist those tenants in securing permanent tenancies. The Cabinet Member further confirmed that the council would acquire first bidding rights for those properties for use as temporary accommodation in perpetuity.

It was noted by the Shadow Cabinet Member for Resources & Financial Governance (Councillor Simon Hoar) that it was positive that 182 homes had been delivered through the Real Lettings Scheme which gave homes to families at affordable rents. However, it was noted that the scheme had been agreed in 2013 when it was suggested by the Shadow Cabinet Member the council was more interested in providing affordable housing. In light of the anticipated capital receipts from the sale of the fund being returned to the council, the Shadow Cabinet Member queried whether the Administration had lost interest in investing in affordable housing.

In response, the Cabinet Member for Resources & Financial Governance that the capital receipt would be used to reduce the council’s borrowing and there would be a net benefit to the council. Furthermore, the Cabinet Member confirmed that the council did support the delivery of affordable housing.

The Shadow Cabinet Member for Homes (Councillor Lynne Hale) requested confirmation the long term position for the council was to reduce the availability of suitable housing for homeless people and families in the borough. In response the Cabinet Member for Resources & Financial Governance stated the council was looking to manage its finances and live within its means. To meet this priority it was important that the council took a different approach. It was important to balance the budget and to look at alternative options for affordable housing without allowing those two priorities to come into conflict. The Cabinet Member for Homes further reiterated that when the council exited the fund it would have first bidding rights to the properties. It was stressed that the council remained committed to ensuring the delivery of homes within the borough and to drive homelessness levels down to zero; through the delivery of homes and working with organisations such as Crisis.

The Leader of the Council delegated authority to the Cabinet to make the following decisions:

RESOLVED: To

1.    Agree to a one year extension of the Council’s participation in the Real Lettings Property Fund 1 from February 2022 to February 2023 with a planned sale date of December 2022 for the reasons set out in this report and delegate to the Chief Executive acting in consultation with the section 151 officer and the Council’s Monitoring Officer the authority to agree all necessary documentation to secure that extension; and

2.    Agree to the variation of the Limited Partnership Agreement to provide for a winding up period of the fund after the end of its legal term of one year, rather than the current three years, with the effect that the latest possible date for return of capital to Croydon is therefore brought forward from the current position of February 2025 to February 2024.