Decision details

The Head of Regeneration and Housing submitted an exempt report which sought approval for a recommendation to Council to create a Local Housing Company as a vehicle to develop, own and manage affordable housing assets and ancillary activities including existing housing assets in the Council’s ownership, both built (and occupied) and in development. 

Resolved

(1)          That Full Council be recommended to approve of the creation of a Local Housing Company, registered with the Financial Conduct Authority (FCA) as a Community Benefit Society, HMRC as an exempt charity and the Homes and Communities Agency (HCA) as a registered provider. 

(2)          That Full Council be recommended to approve the sale of existing affordable housing assets (both completed and occupied and in development) as itemised in the exempt annex (as set out in the Minute Book) at existing market value as certified by an independent valuer to the Local Housing Company (once incorporated and registered with the FCA and the HCA) and it be noted that any proposed future disposals of Council owned assets to the Local Housing Company will form the subject of future reports to Executive or full Council as appropriate.

(3)          That Full Council be  recommended to approve the lending of finance from the Council to the Local Housing Company as long as this is viable for both the Local Housing Company and the Council and is within the Council’s peak borrowing limits and the legal requirements relating to the prohibition of unlawful State Aid.

(4)          That Full Council be recommended to approve the Council undertaking a key financial role in the Local Housing Company subject to such role complying with the legal requirements in relation to the prohibition of unlawful State Aid, in particular:

·         Through the provision of loan finance on a formal loan arrangement with the Council

·         Through providing a contingent guarantee for external finance and lease arrangements

(5)          That Full Council be recommended to delegate authority to the Director of Resources, in consultation with the Leader of the Council, to approve the business plan of the Local Housing Company and to appoint Council Directors to the Board of the Local Housing Company (if incorporated and registered with the FCA and the HCA) including such future appointments as are necessary to fill vacancies that might arise.

(6)          That Full Council be recommended to delegate authority to the Head of Regeneration and Housing, in consultation with:

·         The Leader of the Council

·         The Lead Member for Housing

·         The Lead Member for Estates and the Economy

·         The Lead Member for Financial Management

·         The Director of Resources

·         The Director of Development

·         The Head of Finance and Procurement

·         The Head of Law and Governance

to take the necessary operational, legal and financial steps to ensure effective implementation of the above, including the naming of the Local Housing Company and its subsidiary, subject to there being no conflict of interest arising for the Head of Regeneration and Housing between the Council and the Local Housing Company in respect of any actions to be taken following the Company’s incorporation and registration with the FCA and HCA.

Reasons

Members are asked to approve the recommendations as set out in this report. This is believed to deliver the best financial and strategic outcomes for the Council and local residents.

This proposal is a critical ‘thread’ to the future growth of the district, in particular affordable housing and challenging brownfield sites and its ability to attract further inward investment, in particular from the HCA who have been very supportive.

Local Housing Company

Officers have worked with Directors from CCLT and external finance and legal; experts to consider the optimum model for Cherwell, taking into consideration the context: 

·      Cherwell as a non-stock holding Council, with a closed Housing Revenue Account (HRA)

·      Cherwell as a Registered Provider (RP) in its own right, with a HCA funded development programme

·      Cherwell as an outward-facing Council which seeks to work in partnership with the community, harnessing the skills, influence and knowledge for the best outcomes for residents

·      Cherwell as a key growth area, with an on-going requirement for affordable housing and further opportunities for regeneration of brownfield sites.

In this context, it has been clear that a Community Benefit Society, registered as an exempt Charity with HMRC and registered with the HCA as a Registered Provider is the most ideal legal entity and as such recommended for approval

Alternative options

Local Housing Company

Alternative options can be considered by members but are not recommended for the following reasons

Option One: To retain all assets (existing and in the pipeline) is not recommended as this, in the long term would most likely require the Council to re-open its Housing Revenue Account, bringing with it:

·      caps on lending

·      limitations on the opportunity to attract inward investment

·      limitations on the opportunity to harness the investment of time and expertise from community/independent representation.

Option Two: To sell all assets (existing and pipeline) is not recommended as this would deliver a lesser financial return and would not guarantee local governance, management and retention of investment within district boundaries.

Option Three: To establish an alternative vehicle (e.g. a wholly owned company limited by shares) is not recommended as this would create further barriers in HCA registration and registration with HMRC as an exempt charity and the benefits this brings with regards to not paying SDLT or corporation tax.