Guest post by Philip Grant in personal capacity
Earlier this month I sent a letter to Brent Council’s Leader and Chief Executive headed “Council Housing and Common Sense”, which was published as a guest blog. It set out my view that the Council has become too complicated in the way it seeks to provide the new Council homes that many local people need.
My letter focused on two Cabinet decisions in the past six months. One was to spend at least around £48m of borrowed money to buy 155 leasehold flats in a 26-storey tower block, yet to be built on the former Alperton Bus Garage site. These would not be acquired directly from the developer, Telford Homes, but from an unidentified “Asset Special Purpose Vehicle”.
The block in Alperton where the 155 leasehold flats will be built.
The second decision was to allow a private developer to buy 152 of the 250 homes that Brent Council will be building on land that it owns at Cecil Avenue in Wembley, and sell them for profit, rather than using all 250 of those homes as affordable housing for local people who need them.
What the High Road frontage of Brent’s Cecil Avenue development will look like.
I have received a reply to my letter, from Brent Council’s Director of Finance, and this is what he has written:-
‘Dear Mr Grant,
The Council continues to increase the delivery of affordable housing for our residents through self-delivery, via the use of S106 agreements with developers and working in partnership with Registered Providers. To maximise the delivery, the Council utilises GLA subsidy to support scheme viability but this is becoming increasingly challenging. This means the Council has to explore more complex ways of delivery, one of which has been the Alperton Bus Garage Development.
The development at the Alperton Bus Garage site provides a unique opportunity to purchase the affordable units in the wider development as part of a lease structure. The original proposal contained a tenure mix of 57 shared ownership units and 97 rented. By entering into this lease structure, it allows the Council to convert the shared ownership units into more affordable rented units. In this specific development, without the involvement of the Council a Registered Provider is unlikely to be able to offer the most affordable rented product due to viability limitations so the acquisition will further Brent’s key priority of providing homes that are most affordable. The lease option demonstrates value for money against our average development cost across our New Council Homes Programme of £280k per home, which includes both leasehold and freehold tenures.
The acquisition of the homes takes place through a lease structure that includes both the development and lease agreements. These areas of the report are exempt as they contain the following category of exempt information as specified in Paragraph 3, Schedule 12A of the Local Government Act 1972, namely: “Information relating to the financial or business affairs of any particular person (including the authority holding that information)".
The Council has undertaken due diligence with regards to the SDLT exemption for the acquisition and assumes the Council will receive the exemption given the Council is deemed to be the relevant housing provider that is controlled by its tenants and the application of GLA grant receipts meets the requirement of a qualifying public subsidy. Until this has been confirmed by HMRC on acquisition, the potential cost needs to be highlighted as a factor of the scheme’s viability.
The Cecil Avenue site is part of a wider development in the Wembley Housing Zones Programme and includes the adjacent site Ujima House. This site is intended to deliver 100% affordable housing and a target of 50% across both sites. The development will also include workspace to support job creation and economic growth, community space, highway and public realm improvements and new publicly accessible open space. The Council needs to ensure the entire programme is financially viable within the GLA grant available hence the requirement for a mixed tenure development in order to subsidise the delivery of the affordable elements. The application of the funding structure available for the Alperton Bus Garage site cannot be applied to improve viability in the Wembley Housing Zone Programme to provide more affordable housing within the existing development.
As evidenced, the Council is committed to seek all opportunities to deliver more affordable housing within the financial viability constraints to ensure the optimum housing mix can be provided for our residents.
Regards
Minesh Patel
Director of Finance’
The main messages in this reply seem to be that the Council has to use more complex methods of funding, in order to make its Council housing schemes viable, but because this involves information relating to the Council’s financial affairs, they don’t have to explain the details to us. So much for openness and transparency!
The reply does not mention the shadowy “Asset Special Purchase Vehicle” for the Alperton acquisition, simply referring to ‘a lease structure that includes both the development and lease agreements’, which we are not allowed to know about, because that is ‘exempt information’.
The response over the Cecil Avenue homes may sound familiar. Some of it appears to be from the same source as Cllr. Butt’s recent reply to me. At least one sentence is identical, and must have been “copied and pasted”!
Parody Brent Council publicity photo for its Cecil Avenue development.
I still do not understand why the Cecil Avenue development, on land the Council already owns, can only be viable if just 37 of the 250 homes (just under 15%!) are made available to Council tenants at affordable rents. And why 152 of them (over 60%) have to be for the contractor, who Brent will pay to build them, to purchase for a fixed price and sell at a profit. I will continue to question that, as best I can.
Philip Grant.
