20 May 2013
Subject:
Status:
Report Ref:
Ward(s):
Report of:
Contact:
Appendices:
Bid from the Affordable Housing Reserve Fund
Open
All
Housing Manager
Kate Randall
1. Affordable Housing Reserve Decision Making
Framework
2. Detailed Bid Assessment
Papers relied on to produce this report
SUMMARY
None
1 This Report
1.1 The purpose of this report is to seek approval to release funding from the council’s Affordable Housing Reserve. This is in response to a bid for
£250,000 received from Sentinel Housing Association to deliver a minimum of
7 affordable housing units through an Existing Satisfactory Property programme.
1.2 The report notes the priorities for use of the reserve and the mechanism agreed for assessing bids and releasing funds, which have been approved by
Cabinet and Full Council.
1.3 The report notes the detail of the bid from Sentinel Housing Association, which is the only full bid so far received for funding from the reserve. It demonstrates how the bid meets the criteria set out in the decision making framework and demonstrably offers value for money, particularly in the current development climate.
2 Recommendation
2.1 It is recommended that the Portfolio Holders for Housing and Regeneration and Property and Finance agree:
2.1.1 to release £250,000 from the Affordable Housing Reserve to fund a capital scheme for Existing Satisfactory Purchases in the Housing and Regeneration
Portfolio in 2013/14, and
2.1.2 to fund Sentinel’s affordable housing delivery bid, subject to the conditions set out in section 6.3 of the report.
1 of 5

PRIORITIES, IMPACTS AND RISKS
Contribution to Council Priorities
This report accords with the c ouncil’s Budget and Policy Framework and directly supports the Council Plan priority/priorities creating neighbourhoods where people feel safe and want to live.
Impacts
Impacts for
BDBC
Impacts on
Wellbeing
Involving
Others
Type
Financial
Personnel
Legal
Equality and Diversity
Rural/Urban
Crime and Disorder
Health
Environment and Climate
Change
Economic
Communication/Consultation
Partners
No significant impacts









Risk Assessment
Some impacts


Significant impacts
Number of risks identified: 0
GLOSSARY OF TERMS
Term
ESP
Definition
Existing Satisfactory Property
MAIN CONSIDERATIONS
3 Background
3.1 In January 2010, Cabinet set up a reserve fund of £884,000 to support the delivery of affordable housing in the borough.
3.2 At its meeting on 26 June 2012, Cabinet then approved a set of priorities for use of this fund. The agreed priority uses were:

Maximising supply (per se)

Ensuring rent levels in social housing stock are affordable
2 of 5


Delivering smaller units for single people / couples

Accommodation for older people

Rural Housing
3.3 Cabinet also agreed a framework for ensuring best use of this resource, as well as a decision making template aimed at ensuring key strategic objectives would be realised through use of the fund.
3.4 At its meeting on 12 July 2012, Council agreed the mechanism for releasing funding. Schemes costing between £50,000 and £250,000 would require agreement between Head of Residents Services, Section 151 Officer and
Portfolio Holders for Housing & Regeneration and Property and Finance.
Council also resolved that a cap of £442,000 be applied to the maximum amount of reserve which could be allocated during the first year of operation of the framework (i.e. to July 2013).
3.1 The approved decision making template and funding release mechanism is attached for information in Appendix 1.
4 Current Position
4.1 To date, in spite of significant activity by officers (to promote potential use of fund) and some of our preferred Housing Association partners (to attempt to identify suitable initiatives), no proposals have come to fruition. In particular no new build (non - section 106) proposals have come forward, which is generally reflective of the wider economic and housing development downturn.
4.2 In the meantime, t he council’s new affordable housing delivery projections fall some way short of the council’s target to deliver 300 affordable homes per annum, as set out below:
Year
2014-15
2013-14
2012-13
Sentinel Bid
Total Affordable Housing (gross) completions
194 (estimate)
99 (estimate)
27 (actual)
5
5.1 Sentinel Housing Association have submitted a bid for an Existing Satisfactory
Property (ESP) programme. ESP programmes involve the acquisition and repair of properties currently for sale on the private market, to convert them into affordable housing
5.2 A total acquisition of 7 units is proposed. Depending on market supply, the property mix should ideally be 2 x 1 and 5 x 2 bed houses. The assumed market value cost of properties (purchase and / or repair) is £150,000 (2 bed) and £130,000 (1 bed) producing a total cost of £1.010 million. All properties will be located within the Basingstoke urban area.
5.3 The total value of grant requested is £250,000 with an average grant rate per property therefore of £35.7k. The programme will be undertaken using an
3 of 5

open book approach whereby if the overall property acquisition costs are below the assumed amount of £1.010m, the saving will either be used to reduce the final total grant requirement or to increase the number of properties within the programme to 8, if achievable within the maximum grant requested. (NB this could not be guaranteed until all initial 7 properties have been acquired).
5.4 Significantly, a special lettings approach will be agreed for the properties, whereby allocation will be prioritised for any RSL transferring tenants impacted by the implementation of the underoccupation charge (or other welfare reform measure), and wishing to downsize to smaller accommodation.
In so doing, the proposed programme will facilitate the further release of a subsequent larger unit of accommodation, thereby offering additional value for money.
5.5 The expectation of both Sentinel and the council is that the acquired properties should remain available within the social hosing stock as affordable housing in perpetuity. Nonetheless Sentinel would be agreeable to include a clause in the funding contract to repay the grant sum, in full, together with a proportion of any equity value increase which is equivalent to the initial grant :
Open Market Value
6 Assessment and Recommendation
6.1 T he detail of the bid is assessed in accordance with the council’s decision making criteria for Affordable Housing Reserve Fund bids and is attached at
Appendix 2.
6.2 The assessment concludes that the bid satisfies each requirement of the decision making framework by evidencing that it will:
- Meet housing need and other key strategic priorities
- Is deliverable within a reasonable timescale
- Offers value for money as well as potential for the council to recoup its investment in the event the properties be disposed of in future
- Attract additional investment into the programme by Sentinel, of approximately £760,000.
- Secure 100% of nominations for the council in perpetuity.
6.3 It is therefore recommended to approve the funding request subject to:
- Agreement of an appropriate funding and nominations agreement (to secure 100% nomination rights to the council in perpetuity and in accordance with special lettings criteria)
- Delivery within 2013/14 (unless agreed otherwise in writing by the Head of
Residents’ Services)
- The council recouping its investment in the event of a property being sold / disposed of
4 of 5

7 Financial Implications
7.1 The recommended grant of £250,000 can be funded from the Affordable
Housing Reserve, which currently has a n uncommitted balance of £884,000.
Subject to approval of the grant, a capital budget for £250,000 will be included in the Housing and Regeneration Portfolio capital programme in 2013/14.
7.2 As the scheme is for a one-off grant there are no on-going revenue implications. Should any of the houses in the scheme be sold at any point in the future the council will receive a capital receipt equal to the average grant per property.
8 Legal Implications
8.1 Other than the need to enter into a funding and nomination agreement already identified in this report there are no legal implications.
5 of 5