Issue - meetings

Cabinet discussed proposals for the purchase of 32 new affordable homes, using the additional capital budget, approved by council at its meeting on 12 October 2023. The letting of these homes in accordance with the council’s Allocations Policy, at an affordable rent as set out in the council’s Tenancy Strategy.

In July 2023, Council approved an accelerated affordable housing development programme of at least 400 new homes, constructed or acquired, by 2027. The underlying requirements behind the strategy were simple; affordable units were being lost, due to lack of uptake from Housing Associations, and we needed to ensure that no further units were lost, and that affordable housing produced was kept for the benefit of residents.

Officers had been working with BDW on a number of sites. BDW contacted the Council regarding Phase 3 at Spitfire Green, New Haine Road. Although they had made enquiries with other registered providers, no offers for the units had been received, and they were also keen to maintain continuity throughout the sites by working with the Council. These homes were anticipated to be EPC B and construction would start early next year.

The capital cost for these 32 x section 106 affordable rent units at Phase 3 of Spitfire Green, New Haine Road, Ramsgate was £4,050,000 and £212,000 for associated costs. As had been discussed previously, the Council had a strong assessment model in relation to these purchases. If affordability and return did not add up within the viability model, the Council would do not move forward with the purchase. Each proposal was assessed separately against these guidelines by the Finance department.

For this acquisition, Paragraph 3.4 of the report shows that the proposed purchase would generate a cash flow deficit in year 1 of £43,813 with a break-even point in year 16, with surpluses accumulating between year 16 and year 50. The project shows a surplus over a 30 to 50 year period. The Council was being exceptionally proactive in its approach to what had been described as the 'market failure' across the South East. Councils and developers from Kent, Essex and East Sussex had been discussing the difficulty in sourcing registered providers to take the affordable housing set aside in s106 allocations. Thanet was a leading Council in its determination to address this need. These proposals  would have multiple positive impacts, that include the following:

• Ensuring affordable homes are not lost to the open market;
• Providing homes that can be not only let to those on the housing register but directly let through local lettings plans to those in temporary accommodation;
• Actually help with the completion of genuinely affordable housing.

However, the changes to the multiple dwellings relief for Stamp Duty Land Tax (SDLT) that were announced in the Spring 2024 budget had provided a further obstacle to our due diligence and viability tests to buy larger numbers of homes. As a result the Council had written to the Chancellor of the Exchequer to raise concerns regarding this new obstacle. Cabinet was  ...  view the full minutes text for item 5

Ashley Jackson, Head of Housing and Planning introduced the report and made the following points:

• Council approved an accelerated affordable housing development programme of at least 400 new homes, constructed or acquired, by 2027;
• Officers were already working in partnership with BDW on a number of sites, and they contacted the Council regarding Phase 3 at Spitfire Green, New Haine Road;
• Although they had made enquiries with other Registered Providers, no offers for the units had been received and they were keen to maintain continuity throughout the sites by working with us. These homes were anticipated to be EPC B and construction would start early next year;
• The capital cost for these 32 Section 106 affordable rent units at Phase 3 of Spitfire Green, New Haine Road, Ramsgate was £4,050,000 and £212,000 for associated costs;
• Paragraph 3.4 shows that the proposed purchase would generate a cash flow deficit in year 1 of £43,813 with a break-even point in year 16, with surpluses accumulating between year 16 and year 50. The project shows a surplus over a 30 to 50 year period;

• The Council was being very proactive in its approach to what had been described as the 'market failure' across the South East;
• Councils and developers from Kent, Essex and East Sussex had been discussing the difficulty in sourcing registered providers to take the affordable housing set aside in s106 allocations. Thanet was among those councils seizing the opportunity and stepping in. This was actually having multiple positive impacts, as it was achieving the following:

§  Ensuring those affordable homes are not lost to the open market;

§  Providing homes that can be not only let to those on the housing register but directly let through local lettings plans to those in temporary accommodation;

§  Actually helping developers with their investments in our district.

• However, the changes to the multiple dwellings relief for Stamp Duty Land Tax (SDLT) that was announced in the Spring 2024 budget had provided a further obstacle to the Council’s due diligence and viability tests to buy larger numbers of homes;
• The Council had since written to the Chancellor of the Exchequer to raise with them these concerns. Officers realised the rationale for bringing the measure was to prevent perceived abuse of the rules and speculative claims for relief, but increasing the amount of SDLT Councils pay on larger acquisitions had the significant potential to adversely hamper attempts to deliver the positive outcomes listed above;
• As the homes had been designated as affordable homes in the planning consent and section 106 agreement, they had been designed specifically for that purpose and accordingly were considered appropriate for the HRA, in line with the needs of households on the council’s register or those living in temporary accommodation. There was a significant level of need for 1-bedroom homes, as well as for larger family homes. The unit sizes and the mix of dwellings were as follows: 

·  18 x 1 bed units

·  14 x 2 bed units

• It is proposed  ...  view the full minutes text for item 34