Agenda item

Property Purchase to alleviate Temporary Accommodation Pressures

Decision:

Cabinet delegates authority to the Director (Housing) in consultation with the Section 151 Officer and Lead Member to undertake all the necessary practical, financial and legal steps to purchase the new properties as outlined within the report. 

 

Cabinet recommends to Council to agree to amend the 2023/24 Capital Programme.

 

Minutes:

The Cabinet was informed that the Council had a duty under the Homelessness Reduction Act 2018 to prevent and relieve homelessness. Where homelessness cannot be prevented and cases move to relief duty, temporary accommodation (TA) may be needed until alternative settled accommodation can be secured or the relief duty ends. Whilst there had been an increase in TA placements, it was important to note that not all households seeking housing assistance from the Council will be placed into TA, and this will only happen if the household was deemed to be in priority need as per the legislation.

 

There had been an increase in the number of placements made in TA and due to difficulties in accessing the private rented sector and it being unaffordable, there had been a steady rise in the use of expensive nightly paid accommodation. This had considerably, and negatively, impacted the TA budget contained within the Council's General Fund.

 

Difficulties in accessing private sector accommodation were also exacerbated by other local authorities procuring accommodation within Gravesham where it was more affordable for them to do so when compared to their own local authority area. The Leader of the Council had made contact with counterpart in these Boroughs robustly stating Gravesham’s position, asking them not to add to the ever-increasing problem every authority was grappling with however the issue continued.

 

Since April 2022, the Head of Housing Solutions had been regularly reporting to Management Team to confirm the monthly position and each month TA placements continued to rise despite increasing the resources in the TA Team to ensure income was being maximised however it continued to be a significant pressure and therefore, it was essential to take action now to help with the financial stability of the Council and to protect cuts in other service areas of the Council that were non-statutory.

 

As of 12 October 2023, Gravesham had 221 households in TA of which 64% were in expensive nightly paid accommodation by various providers. Gravesham predominately used self-contained units and for some single households, shared HMO accommodation would be utilised.

 

In addition to an unaffordable private rented sector locally, various other factors had and will have an impact on the Council’s TA position which were detailed in sections 2.3 and 2.4 of the report.

 

Officers had been exploring options as to how the Council could mitigate the impact; these options included increasing use of Council-owned stock temporarily, partnership working with Housing Associations to access their stock, working with local landlords and agents, the creation of a social letting agency (GBC Lettings) and purchasing properties from the open market all of which were being progressed. On the latter option, the Director (Housing) had been progressing with discussions with two developers to purchase vacant units before they were advertised on the open market that could be used for TA thereby reducing the need for expensive nightly paid accommodation by 60 placements as set out below:

 

·         Scheme 1 – Crescent House, Gravesend. An offer had been made and accepted; officers were now working through the due diligence.

·         Scheme 2 – Northfleet Embankment East, Gravesend. An offer had been made and provisionally accepted but further discussions were required to finalise the detail.

 

The Director (Housing) advised that, as discussions were ongoing with the developers, the position and total cost could change. However, assuming nothing changes, the total capital budget requirement for purchasing the units would be circa £15.9m including all associated costs with purchasing such schemes. This would be funded through a combination of borrowing and Homes England grant funding however it was anticipated that the rental income would cover the cost of borrowing.

 

The purchase of the units would amend the Council's approved 2023/24 Capital Programme, therefore, should the Cabinet approve the recommendation, a recommendation would need to be made to Full Council to amend the 2023-24 Capital Programme in-year.

 

The cost of purchasing the extra units would increase the Council’s total debt by £13.8m. The Capital Financing Requirement (CFR) measures the amount of capital spending that had not yet been financed and showed the underlying need to borrow. Being over borrowed, would expose the Council to potential credit and refinancing risk. The Council had recently secured new PWLB debt following the exit of the financial and legal arrangements with Aviva Investors, as a result, the current debt position was higher than the CFR. This overborrowed position was identified in the report to Cabinet on 11 September 2023 entitled “Interests in land and assets belonging to the council”. The additional borrowing to purchase these properties would not make this position any worse as it was directly linked to capital expenditure.

 

The Director (Housing) advised that, should the Cabinet approve the recommendation, one of the schemes would potentially be available within the 2023/24 financial year and the other scheme would be available within the 2024/25 financial year (around summer/autumn time).

 

The Cabinet acknowledged the ongoing increase in TA and stated that the Council needed to explore alternative options to mitigate the impact, therefore, supported the recommendation.

 

The Cabinet expressed concern regarding the other factors that were impacting on the Council’s TA position but acknowledged that they were outside of the Council’s control for example Kent County Council’s (KCC) proposal in relation to care leavers. Gravesham had the highest number of care leavers within the area and therefore if KCC's proposed changes were approved, this would see an impact of 440 19+ care leavers requiring assistance from the Council. The Cabinet stated that it was essential for KCC to formally notify the Council, in good time, on any proposed changes that will have an impact on its services and expressed its disappointment with how it had been notified of the proposal in relation to care leavers.

 

Resolved that:-

 

1.    delegated authority be given to the Director (Housing) in consultation with the Section 151 Officer and Lead Member to undertake all the necessary practical, financial and legal steps to purchase the new properties as outlined within the report; and

2.    the Cabinet recommends to Council to amend the 2023/24 Capital Programme.

 

Note:   Cllr John Burden left the Chamber during consideration of this item.

 

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