Agenda item

The Executive considered a report advising on the option to acquire approximately 242 properties under a funding arrangement with Orchard and Shipman for use as accommodation to help reduce the current pressures in relation to homelessness and temporary accommodation.

The Portfolio Holder for Renewal, Recreation and Housing, Councillor Peter Morgan, commented that, with around 1,800 homeless families in temporary accommodation, this would be an important scheme to reduce homelessness and budget pressures.

The report had been scrutinised by the Renewal, Recreation and Housing PDS Committee on 2^nd February 2021 and the Committee supported the recommendations.

RESOLVED that

(1) It is agreed to enter into the limited liability partnership (LLP) arrangement described in this report with Orchard and Shipman for the acquisition of approximately 242 residential properties (dependent upon final purchase price).

(2) It is agreed that the acquired properties will be leased by the LLP to Orchard and Shipman Homes for a 50-year period on an FRI basis.

(3) Council be recommended to agree the loan of £20m to the LLP for a period of 50 years with annual repayments starting from year 3 of 1.6% (£320k) per annum and increasing annually by CPI (collared at 0-4%), funded from the Housing Invest to Save Fund (£14m) and uncommitted Investment Fund (£6m) earmarked reserves.

(4) It is agreed to enter into (i) the Members’ Agreement for the LLP (between the Council, Orchard and Shipman, and the LLP), (ii) a guarantee agreement  with the Funder (see part 2 report) to guarantee the loan facility of £60-£65m to the LLP and undertake to meet the liabilities of the LLP in respect of the loan facility in the event of loan repayment default, (iii) a loan facility agreement between the Council and the LLP for the loan made by the Council, and (iv) a Nomination Agreement with Orchard and Shipman Homes to secure nomination rights to the acquired properties, and (v) all other ancillary documents in connection with the scheme.

(5) Authority be delegated to the Director of Housing, Planning and Regeneration in consultation with the Director of Corporate Services and the Portfolio Holder for Renewal, Recreation and Housing to carry out due diligence in connection with the scheme,  agree the details of each agreement and enter into all relevant agreements in connection with this scheme.

(6) It is agreed to appoint Sara Bowrey, Director of Housing, Planning and Regeneration and James Mullender, Head of Finance, Adults Health & Housing, as the Council’s nominees to the board of the LLP, with authority to act on behalf of the Council in relation to all matters not reserved to the Council under the Members’ Agreement; such nominees to be indemnified by the Council and on the basis that the LLP will arrange suitable insurance for its Board members; and to delegate to the Chief Executive, as Head of Paid service, to make a replacement appointment of suitable seniority with the agreement of the person nominated if the final structure requires a different skill set or if a vacancy arises.

(7) It is noted that, subject to the approval of the above, the scheme will provide full year savings of £1.5m per annum.

(8) It is noted that, should there be any material change to the scheme from the details set out in this report, then a further report will be presented to the Executive to inform members of such change.