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Councillor Beavan, the Deputy Leader and Cabinet Member with responsibility for Housing introduced report ES/1913 which outlined a proposal to present a revised business case for East Suffolk Property Investments Limited (ESPIL) and sought Cabinet’s support to progress with its development.
East Suffolk Property Investments Limited (ESPIL), a subsidiary of East Suffolk Holdings Limited, was incorporated in October 2019. The company sits within a Group structure and was one of the five Local Authority Trading Companies (LATCos) owned by East Suffolk Council. Despite having an approved business plan, development of ESPIL had not been pursued for several reasons.
Sustainable Housing was one of the four priorities of the Council’s Strategic Plan ‘Our Direction 2028’, and as such provided a greater focus and a new impetus to find innovative ways to provide more quality homes that people in East Suffolk can afford to live in. As a LATCo, 100% owned by the Council and under its full control, ESPIL was one approach that could contribute significantly to the delivery of this priority.
It was proposed that ESPIL, funded by the Council initially to the tune of up to £5m (subject to approval of a business case) to enable it to set itself up, would purchase some five residential properties within the district, which it will then rent at open market rent for a financial return.
The company will be designed to operate with minimal fixed costs and will be evaluated at the end of the first year. If operating successfully and demonstrating proof of concept, the intention would then be to provide further finance to enable the company to purchase additional properties on the same basis.
Unlike the Housing Revenue Account (HRA), homes owned by ESPIL would not be subject to Right To Buy and would charge social rent, not market rent. Each property that was bought would have a full business case to ensure it would provide value for money for the Council and in due course, this would help to reduce the amount of funding spent on temporary accommodation.
Councillor Langdon-Morris stated that he had discussed this matter in great deal with Councillor Beavan and the Chief Finance Officer. They had undertaken research and he looked forward to receiving the detailed business case.
Councillor Candy asked about the type of properties that would be purchased. Councillor Beavan stated that it was not yet known what types of property were needed. However, the business cases produced would need to demonstrate sufficient demand, the level of rent and any retro fitting work that may be needed.
Councillor Candy stated that she had seen an initiative in Grimsby, where derelict houses were bought at auction, at much cheaper prices, which were then renovated and rented to local people. Councillor Beavan stated that he would be open to that initiative, however, care would need to be taken regarding the costs involved in any renovation.
Councillor Smith-Lyte commented that the Grimsby initiative sounded very positive and she queried whether local apprentices could be used to gain skills during any future redevelopment works. Councillor Beavan stated he would be receptive to this and would explore it further.
Councillor Whitelock sought reassurance that the new properties purchased would not be subject to Right To Buy. Councillor Beavan confirmed that was correct.
Councillor Candy queried if there was funding available from the Community Housing fund. Councillor Beavan confirmed that there was a small amount of funding still available however there were significant criteria and paperwork involved. Councillor Langdon-Morris commented that house prices were currently stable or may even dip slightly in the future, with borrowing costs falling, therefore, it was a positive time to look at purchasing properties.
Councillor Byatt commented that it would be useful to purchase empty properties in the district. He also stated that Waveney District Council had had a scheme where homeowners in arrears with their mortgage could sell the property to the Council and rent the property back from them. He asked if that scheme could be resumed? Councillor Beavan stated that he would look into this further.
Councillor Beavan moved the recommendation in the report, which was seconded by Councillor Langdon-Morris and upon being put to the vote it was unanimously
RESOLVED
That Cabinet considered the proposal to produce a revised business case for ESPIL and supported its production on the timetable set out in section 3.4 of this report.