Webmaster's note: Sorry this file is a little banjaxed. (Camden use proprietary file formats)
WARDS:
Belsize
Camden Town with Primrose Hill
Cantelowes
Fortune Green
Gospel Oak
Kentish Town
Kilburn Swiss Cottage
West Hampstead
REPORT OF:
Director of Housing
FOR SUBMISSION TO: Executive
DATE: 24 September 2003
SUMMARY OF REPORT:
This report follows up on the decisions taken at Executive on 4 December 2002 to investigate the options of a transfer of the stock to PCHA or the setting up of a Housing Co-operative. Residents had set up a body to represent them (CRISH) and have now chosen CDS (The Co-operative Development Society Ltd) who are working with CRISH to firm up the scheme.
This report summaries the basis on which houses will be selected to be transferred to CDS to be refurbished or to be sold, with the capital receipts coming to the Council. The report requires the decision of the Executive as it concerns disposal of Council property. The report establishes a long stop date by which the scheme must have progressed or the properties be returned to the Council.
There are two properties which were in short life use and which are considered in a Part 2 report on this agenda. These cannot be economically repaired by the Council or by a housing association, and it is proposed that it be agreed that they be sold on the open market and that the capital receipts from their sale be agreed to be ringfenced towards the costs of refurbishing remaining shortlife property which cannot be funded by the Housing Corporation’s Social Housing Grant. If this is agreed, then the Executive is also asked to consider a proposal for individual flats which are not suitable for disposal to CDS as they are in properties where other flats are owned by the Council. These ring fenced receipts could (if agreed) fund works to these flats, which are otherwise too expensive for the Council itself to fund.
These are:
1)4 scattered flats currently in short life use which, if Executive agrees, could be brought up to Decent Homes Standard for letting after the works are complete by the Council on secure tenancies to current residents for about £250,000.
2) An associated vacant non self contained flat for a further approximately £50,000
3)And an associated non self contained flat let to a secure Council tenant for about £75,000
This proposal is only viable if the two properties are agreed for sale in the Part 2 report and if it is agreed to ring fence the receipts for this purpose. Otherwise it may be necessary to consider the sale of these individual flats (except the tenanted one) on the open market and offer rehousing elsewhere to the 4 short life occupants.
The houses at 152 – 158 (evens) Mill Lane NW6 are owned by the Education department and are potentially required for a future school extension. It is therefore proposed to enter a new short life lease arrangement with CDS for a 10 year period (to be confirmed).
There is a further group of short life properties (not Pathmeads managed) that will require some public subsidy to create suitable permanent homes for their eligible short life residents, and it is proposed that any remaining receipts from the sales, if agreed, be ring-fenced for them, with any residue contributing to the Council’s disposals programme. These properties and the proposals will be subject to a future report to the Executive.
RECOMMENDATIONS:
That the Executive agree that they wish negotiations to continue with CDS for the preparation of detailed proposals for submission for a future Executive decision whether to sell to CDS properties from those listed in Annex A, on the terms to be set out in a future Part 2 report. This will be subject to each eligible resident entering into a binding legal agreement with CDS prior to their transfer regarding their rehousing. Further properties from those listed in Annex A will in the next Executive report be identified as available either for open market sale or for other use by the Council. In principle decision only is sought at this stage, as the next report will contain options appraisals.
Subject to agreement at the future Executive meeting, these properties would then be
for the rehousing of eligible residents of Pathmeads short life properties owned by the Council, (with CDS supporting the management of the properties by residents through a new housing co-operative) or
for other housing use by the Council OR sale vacant at market value by the Council or by CDS where a property had previously been occupied and in a manner to be agreed between CDS and the Council when the property then becomes vacant with the nett proceeds of sale then being passed to the Council .
That the agreement with CDS places with CDS the liability for any legal costs associated with obtaining possession of the houses where occupants are part of the scheme. Where occupants do not sign up to the scheme or are not eligible for the scheme Pathmeads will be responsible for obtaining vacant possession and handing the properties back vacant to Camden.
That the capital receipts from the sale of the 2 properties listed in the Part 2 report be applied initially to bringing those 6 flats listed in Section of Annex A to the Decent Homes Standard (estimated at £375k) and that once works are complete, secure Council tenancies be offered of 4 of those flats to the current short life residents where they are already living in suitably sized accommodation. This is subject to detailed costings demonstrating that this is the best option. Should the offer be refused the eligible resident would be offered Council or HA housing elsewhere and the flat brought back into use for letting on a secure tenancy.
That the balance of the receipts from the two sales detailed in the Part 2 report and subsequent sales as outlined above be held for use on other (non Pathmeads) short life and be the subject of a further report to the Executive
That the Council consider retaining the property listed in Section 4 of Annex A for use for the time being as temporary accommodation for homeless persons if the options appraisal supports this.
That the Executive, subject to the formal agreement of the Director of Education, agrees to grant a 10 year short life lease to CDS (the Co-operative Development Society Ltd) for the ongoing short life use of 152 – 158 (evens) Mill Lane (excluding the 1 Council tenancy)
That the Executive agree that if social housing grant has not been secured by the end of June 2004 the Council will then secure the return to the Council of the properties with vacant possession, seeking to rehouse the eligible residents in other Council or HA owned property, and the Council’s support for this project would then end. The properties would then be sold or brought back into use by the Council.
Local Government Act 1972 – Access to Information
Executive reports 7th August and 4th December 2002
Contact Officer:
Janet Sutherland Head of Housing Partnerships
Room 413, Bidborough House , London WC1 H 9BF
Telephone no: 020 7974 5524
Email: Janet.Sutherland@camden.gov.uk
Signed by Director/Assistant Director: .......................…………………………
Date: .......................…………………………
The future of West Hampstead Short Life Housing
At the Executive meeting on 7th August 2002 it was agreed that
“..officers should further explore the two options outlined:
a) undertake negotiations with Genesis (Paddington Churches Housing Association) to establish whether satisfactory heads of terms can be agreed for disposal of the remaining WHHA short life properties to them, and to secure Housing Corporation funding. If it is not possible to reach a satisfactory agreement, then alternate options will be explored and reported to the Executive.
b) explore further the options of forming a Housing Co-operative of existing short life residents and to report back to Executive on the potential viability of this route by November 2002
2) to request the Council to rescind the Council resolution of 28 10 98 regarding rehousing of short life residents which is quoted in para 3.1 and to reinstate the original Short Life Strategy objective of accepting that to obtain a viable scheme long term residents will be rehoused back into the scheme where possible, but cannot expect to return to their existing home. In some individual cases, to achieve a viable scheme, rehousing out of the scheme will be required.”
At the Executive meeting on 4th December 2002 it was agreed
to discuss with the Housing Corporation which is the most viable of the bids from CDS and PCHA , accepting that both will need further detailed work and that the PCHA bid will need to be reduced to exclude the most expensive properties.
If the HC agrees to fund CDS, to support the bid from CDS for £3.97m of Social Housing Grant to redevelop and refurbish the properties to provide 99 bedspaces in 28 homes (flats and houses) for management and possible future ownership by a co-operative whose initial members would be residents of the WHHA short life homes who are eligible for permanent rehousing. If the Housing Corporation will not fund at this level the Executive is asked to indicate if it would consider discounting the value to a level that the Housing Corporation can agree to fund (subject to consent of the Secretary of State and further report on details to the Executive).
If the Housing Corporation will not fund CDS, to work with PCHA and CRISH to develop a viable scheme based initially on rehousing existing long term residents.
that officers in consultation with CRISH – representing eligible households – and CDS or PCHA, finalise the details of which properties in Annex 1 are to be transferred for development for the rehousing of the eligible households
that the Council carry out an options appraisal of alternatives for the remaining properties after the eligible households have been rehoused within the scheme. This would include as an option that the Council considers open market sale to benefit from the proposal that 100% of receipts can be recycled in housing properties, as well as one to support future bids by CDS, or PCHA for Social Housing Grant to develop additional homes to meet priority housing needs.
And that subject to
There being Social Housing Grant available from the Housing Corporation
Agreeing values and a decision on whether discounts can be considered
A further report to Executive on these matters
That it is agreed in principle
that some of the transferred properties at Annex 1 will be sold to CDS or PCHA at prices agreed by the Head of Property Services for the development of homes for the rehousing of the eligible households, subject to detailed proposals being agreed by the Executive
to agree to consider disposal at a discount if this is required to secure Housing Corporation funding, and subject to further detailed analysis of the benefits to the Council to be submitted to the Executive for consideration
Recent events
3.1 The Housing Corporation said they were content for either CDS or PCHA to carry out the development. They wanted residents to make an informed judgement on the decision between CDS and PCHA. Officers supported CRISH (Camden Residents in Short Life Housing) in a process that led to the overwhelming selection of CDS.
3.2 The HC have now indicated that potentially up to £5m of ADP grant is available over 2 years (2003-4 and 2004-5).
3.3 Following further inspection of five individual flats (in Section 3A of Annex A) which are in buildings owned and managed by the Council, it seems appropriate (if the funding proposal below is agreed) to retain these in Council ownership and bring these to Decent Homes Standard and – in the four cases where the current residents are eligible under current policies for permanent rehousing – to offer the current eligible residents a secure tenancy of that flat after the works have been completed. In principle agreement to this is sought subject to detailed costings demonstrating that this is the best course of action. It is not possible to consider offering Council tenancies in any other than these four flats, because only in these are both the conditions met: that the rest of the property is managed by the Council AND that it appears that current occupants have space requirements which match that of the flats they occupy. It is not intended that this should be seen as setting any precedent for other properties in the scheme, and it can only be achieved with funds being available for the Council to meet its obligations to achieve Decent Homes Standard
3.4 The 5th flat (153a Goldhurst) consists of non self contained rooms and is not very attractive to the market without first being upgraded including self containment. As the upper part of the 4 storey house is Council owned and subject to a secure tenancy it is recommended to retain this 1 bedroom flat for letting to a secure tenant (works costs approx £50,000) and carry out works to a 6th flat (in Section 3B of Annex A) -the secure tenanted flat above at a further cost of approximately £75,000
3.5 It is estimated that the costs of bringing these 6 flats to Decent Homes Standard will be about £375k. This can be funded from the sales of the 2 properties proposed for open market disposal in the Part 2 report if agreed.
3.6 Officers looked the option of transferring the 4 flats occupied by short life licencees (estimated works cost £250k) to CDS on a lease or taking them back vacant and then either selling long leases on the open market or bringing the flats to Decent Homes Standard for letting on secure tenancies.
3.7 On the basis of economic management and the current eligible residents having lived in 4 of these flats for around 20 years officers recommend that the Council proceed to upgrade them and grant secure tenancies to the occupants once works are complete.
3.8 A further flat (52a Grafton Road) may be considered more suitable for sale following further investigation and an options appraisal. It is on two floors above a shop (HRA commercial) in a building where the freehold is owned by the Council. The flat has 2 bedrooms and a poor layout for a family. The results of the option appraisal will be reported with a recommendation in the next report to the Executive on this scheme.
3.9 A final list of eligible households has not yet been reached. After consultation with CRISH and taking into account the needs of eligible residents and the financial framework within which developing Housing Associations are required to operate, CDS will agree to take the transfer of properties amongst those listed in Section 1 of Annex A. The terms of the proposed disposal will be considered in a future report to the Executive where details of the proposed scheme will be given.
3.10 Any net gain in homes after refurbishment and the rehousing of eligible households will be the subject of 100% nomination rights to the Council in perpetuity.
3.11 Where the Council sells to an individual only 25% of the receipt is then available for investment in social housing. To maximise the useability of the receipt it is therefore proposed that all the occupied properties are sold to CDS who then resell in accordance with these principles. Vacant properties cannot be sold to CDS unless they are to be developed as part of the scheme, as if they were to be resold by CDS it appears there would be a substantial capital gains tax liability on CDS. Thus vacant properties not required for the scheme will be retained by the Council.
3.12 Properties that are not refurbished for this purpose will either be brought back into use by the Council or be sold by the Council.
3.13 The estimated receipt from any proposed open market sale will be agreed with the Council’s Head of Property Services and will be reported to the Executive or to relevant Executive Member where a decision is required under the Council’s Standing Orders.
Contingency
4.1 Although progress has been and is being made it has been a much slower process than was anticipated last summer. Obtaining agreement of residents to the process has been slower than anticipated. It was also more difficult making progress with two Housing Associations in the period before residents chose CDS.
4.2 The choice of CDS has made working relationships easier and CDS have been very diligent in progressing the scheme. However, there has been considerable delay in establishing which residents were eligible for permanent housing, what their needs are and thus in deciding which properties should be transferred to CDS and which should be retained for sale or further use by the Council. This process is not yet complete and will require a further report to the Executive. Because of this delay, CDS were unable to start their surveying and negotiations until late July 2003. It is essential for the scheme that CDS are able to confirm the properties and their (probable) costs to the Housing Corporation by the beginning of October 2003, and able to secure Housing Corporation funding by June 2004 at the very latest. CDS are working with CRISH to a programme to meet these deadlines.
152 – 158 Mill Lane
5.1 The properties at 152 – 158 (evens) Mill Lane are owned by the Education Department and may be required for a future school extension. It is therefore proposed that they be excluded from the scheme and that a new short life lease be entered into with CDS Co-operative Services for a period of 10 years (to be confirmed) to continue their present use. Works will be required and it is hoped that these works may be funded by proceeds from the sale of surplus properties (by agreement with Camden). If this is not possible then an alternative source of funding will be sought. The current occupants would remain in occupation. One of the flats (at 154 Mill Lane) is occupied by a Council tenant, and works will be required to bring this flat to Decent Homes Standard within the next ten years, unless she wishes to be transferred to another flat.
5.2 The Director of Education has indicated informally that a 10 year lease would be acceptable. If members agree the formal agreement of the Director would be sought and obtained before any lease was offered. Any such lease would exclude the flat of the secure tenant.
Comments of Head of Property Services
6.1 The Head of Property Services has been consulted as these negotiations have progressed and has provided valuations for each of the properties. Further advice will be provided as referred to in the report to assist with the final negotiations which will form part of a subsequent report to the Executive."
Comments of Borough Treasurer
7.1 This report mentions the sale of two short life properties being considered in part 2 of this agenda. It is normal practice to pool capital receipts but in this case members are being asked to consider ring fencing the receipts from the sale of the properties in the part 2 report so they can be used towards refurbishing other shortlife property and bring them up to the decent homes standard.
8.
Departmental Finance Comments
8.1 A financial appraisal of the options for all properties in Annex A will be carried out when the further report is submitted to Executive and more detailed information on the costs of the various options is available. Members are therefore being asked to agree a general approach at this stage, subject to the completion of the detailed analysis and negotiations.
A Part II report to this meeting of the Executive recommends the sale two properties and the financial appraisal shows that disposal is the best option. However members should note that the council will only be able to utilise 100% of the sales from these properties if the criteria set out in the financial regulations are met, i.e. that the purchaser does not occupy or intend to occupy the property as his only or principal home. This condition would need to be met in order to provide sufficient funds to meet the costs of works on properties which may be retained as part of the overall strategy for these short life properties.
9.
Comments of Borough Solicitor
9.1 With the exception of the houses at 152 – 158 (even) Mill Lane NW6 (for which please refer to paragraph 6 below) the Council has power to dispose of these properties under Section 32 of the Housing Act 1985, subject to the consent of the Office of the Deputy Prime Minister (“ODPM”).
9.2 The specific consent of the ODPM will be required for the disposal, unless one of the general consents issued under section 32 will apply in the circumstances of the disposal.
9.3 If the proposed disposal of these properties to CDS is at less than market value, it will constitute financial assistance to that housing association. Unless one of the general consents applies, the specific consent of the ODPM to such disposal will be required under Section 25 Local Government Act 1988.
9.4 Section 133 of the Housing Act 1988 stipulates that where the consent of the ODPM is required for a disposal by virtue of Section 32 of the Housing Act 1985 and that consent does not provide otherwise, the person who acquires the land on such disposal shall not dispose of it except with the consent of the ODPM. Since any disposal of land covered in this report will require the consent of the ODPM by virtue of Section 32, any subsequent disposal of the same by CDS will also require the consent of the ODPM. In order to ensure that the consent of the ODPM to any disposal by CDS will be forthcoming, it may well be necessary to apply to the ODPM for such consent at the same time as application is made for consent to the disposal by the Council, if this is possible.
9.5 In addition the consent of the Housing Corporation to any disposal by CDS may be required under Section 9 of the Housing Act 1996. The Borough Solicitor will investigate this with CDS’s legal advisers.
9.6 With regard to the houses at 152 – 158 (even) Mill Lane NW6 the Council has power under Section 123 Local Government Act 1972 to grant leases of these properties. That section stipulates that a local authority may dispose of land (which includes the grant of a lease for a term of 10 years) as it chooses, but the consent of the ODPM is required, if it is intended to dispose of land at a consideration less than the best that can reasonably be obtained. On 4 August 2003 a new General Disposal Consent was issued by the ODPM. This enables local authorities to dispose of property under Section 123 at undervalue provided that this undervalue does not exceed 2,000,000 pounds and the disposal is for the economic, social or environmental well being of the Borough. In making a decision falling within this consent the authority is to have regard to the objectives set out in the authority's plan.
9.7 The sale documents will contain contractual obligations by CDS as required by the provisions of this report.
9.8 On the basis that the Council tenant mentioned in paragraph 5 of this report is a Secure Tenant, a lease of her flat cannot be granted to CDS by the Council without Schedule 3A consultation and the consent of the ODPM under Section 43 of the Housing Act 1985 which applies to Secure Tenants of non-housing property.
9.9 With regard to Recommendation 6 in this report, by paragraph 4 of Schedule 1 of the Housing Act 1985 (as amended by the Housing Act 1996) where a property is let as accommodation for homeless persons the occupant does not become a Secure Tenant and therefore does not acquire security of tenure or the Right to Buy.
9.10 The Executive is reminded that when considering transactions relating to land, they must always act reasonably and should bear in mind the Council’s fiduciary duty (in the case of a disposal under the powers contained in Section 123 Local Government Act 1972) to Council Tax and ratepayers of the borough or (in the case of a disposal under the powers contained in Section 32 Housing Act 1985) to its tenants and leaseholders to protect public funds. The Executive should consider whether a sale of the property would be conducive to the effective, economic and efficient discharge of the Council’s functions.
Under Financial Standing Order 8(b) the approval of the Capital Review Panel will be required to the grant of a lease of 152 – 158 (even) Mill Lane for a term of 10 years to CDS Cooperative Services and to the grant of the lease mentioned in paragraph 3.8 of this report (if such is granted).
10.
Conclusion
10.1
Unfortunately the survey is not yet complete and the full details of the scheme are not yet available, therefore this report outlines the proposed approach and seeks agreement that if the open market sale of the 2 properties listed in the Part 2 report (at Belsize Road and Grafton Road) is agreed, that the capital receipts from these sales be ringfenced to enable the works to the 5 flats detailed in this report to proceed. Any balance would be put towards further works to properties currently in short life use which will be the subject of a future report to the Executive.
10.22 If agreement on the detailed scheme is not progressed according to the schedule in para 4.2, then it is recommended that the Executive agree that the Council will then have to secure the return to the Council of the properties with vacant possession, seeking to rehouse the eligible residents in other Council or HA owned property, and the Council’s support for this project would then end. The properties would then be brought back into further use by the Council or be sold.
10.3 The nature and condition of the properties means that the Council would be unable to fund the works itself. Doing nothing is not an option as many of the properties have substantial defects and are in much need of renovation.
Annex A
Section 1 (to be transferred to CDS for sale or refurbishment)
Gainsborough House
(24 Lithos Road)
29 Fordwych Road
3 Lithos Road
9 Lithos Road
51 Loveridge Road
53 Loveridge Road
120 Maygrove Road
154 Maygrove Road
94 Shoot Up Hill
27 Minster Road
45 Primrose Gardens
88Messina Avenue
Clairmont House (32 Lithos Road)
17 St Augustines Road
188 Grafton Road
191 Belsize Road
41 Broomsleigh St
72 Messina Avenue Section 2(to be considered in next report)
52a Grafton Road Section 3A(to be brought to Decent Homes Standard and let on secure tenancies to current eligible residents)
43a Goldhurst Terrace
153a Goldhurst Terrace
13a Ariel Road
72 Hillfield Road
153 Goldhurst Terrace (GF) vacant Section 3B to be brought to Decent Homes Standard for the existing secure tenancy
153 Goldhurst Terrace (1+ 2F) Secure tenancy Section 4 (to be retained by the Council for use as Temporary Accommodation)
62 Minster Road.
End of Report.