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.