UPDATE: Brent Council's housing companies report tonight - positives and risks

 UPDATE: I hoped to report on the discussion of this item at last night's meeting but the live stream was not resumed for some time after a break in the meeting. The 'silent' period was when the discussion of the items below took place so I shall have to wait for the minutes to record any key points.

 

Brent Council owns two companies that act in the housing market on the Council's behalf. Tonight they report at the Standards and Audit Committee on their activities and financial position.

Elsewhere in London such companies have had financial difficulties so the Committee will be interested in their situation.

 

i4B (Investment for Brent) report:

At our last meeting in September, we raised the issue that i4B was likely to use up its remaining funding by the end of the financial year, and both then and since, received helpful signals that further funding would be available to support good acquisition prospects. Assuming that is still the case, the company will continue to look out for such prospects

 

With a profit forecast, excluding tax, for the year, the company is in a healthy cash position, so there is no risk of insufficient liquidity to carry out its normal business activities. However, if i4B Ltd is to engage in future refurbishment projects, e.g. Granville, they will require a cash injection from the London Borough of Brent  as the business plan for 2025/26 onwards shows a risk that the company’s cash position could be overdrawn.

 

As of January 2025 i4B has housed and discharged the Council’s housing duty to 504 families and 1138 children. The majority of these families were previously housed in stage one TA [Temporary Accommodation]. The number of families housed is higher than i4B’s PRS portfolio due to a number of families moving on to other accommodation, with new families moving in.

 

The main risks the company faces are detailed below:

 Poor rent collection performance due to unaffordability of rent for tenants

 High void turnaround times, costs and rent loss lead to financial losses for i4B

 High capital programme costs, including stock condition, energy efficiency and decarbonisation expenditure, adversely affect the company business plan

 Company cash flow (capital and revenue) is insufficient to manage expenditure

 i4B does not effectively manage its contract for the remote management of Home Counties properties, leading to poor performance and risk to tenant satisfaction

 Challenges in the regulatory and external environment

PRS is Private Rented Sector

I queried the figures below as they clearly do not add up but I had not had a reply from Brent before delayed publication. Possibly 4 bed+ should be 156 but that is subject to clarification. UPDATE: Brent Council confirmed today March 26th that the correct 4 bed figure is 56 making the overall figure if 465 correct.

i4B has a profit forecast of under £1m for 2024-25 compared with £1.39m  the previous year. It has a net rental income of £10.279m.

First Wave Housing has similar risks:

The main risks the company faces are detailed below:

 Poor rent collection performance due to unaffordability of rent for tenants

 High void turnaround times, costs and rent loss lead to financial losses for FWH

 High capital programme costs, including stock condition and energy efficiency expenditure, adversely affect the company business plan.

Brent Council has agreed the acquisition of 294 units of the Fulton Road development that is currently under construction. 118 of the units will be leased to First Wave subject to financial review and approval by the First Wave Board. They will be let at London Living Rent. 

First Wave  has an operating surplus of £0.508m and a net rental income of £3.41m. 

 

I asked about the 'Settled Homes' category above and was told that:

Settled Homes are a form of long-term temporary accommodation. They are let on assured shorthold tenancies, and have a target rent of the affordable rent level (80% of market rent).

So very few of the homes above are at social rent and none at council rent.