Agenda item

8.1

The Executive Director, Place submitted a report in relation to the disposal of affordable housing.

8.2

RESOLVED: That Cabinet:-

(a)

notes the ongoing issues regarding securing development finance for affordable housing and supports the principle of assisting Registered Providers where appropriate by offering flexibility around mortgagee exclusion clauses;

(b)

supports the requests from Registered Providers for mortgagee exclusion clauses on the schemes named in Section 6.12 of the report subject in the case of new disposals, to the Registered Provider entering into an agreement for lease with the lease to be granted upon completion of the construction and that the Director of Capital and Major Projects be authorised to negotiate or renegotiate terms for the leases as appropriate and to instruct the Director of Legal and Governance to complete the necessary legal documentation; and

(c)

delegates authority to the Director of Capital and Major Projects, in consultation with the Director of Regeneration and Development Services and the Cabinet Member for Homes and Regeneration, in relation to social housing sites that have previously been disposed of by way of a long lease, to consider and where appropriate agree future requests from Registered Providers to vary the terms of those leases to include mortgagee exclusion clauses and to instruct the Director of Legal and Governance to complete the necessary legal documentation.

8.3

Reasons for Decision

8.3.1

The 2013 Strategic Housing Market Assessment identified an annual requirement for 725 affordable homes in addition to the projected supply. Whilst the Council is embarking on a Stock Increase Programme for Council Housing, the Housing Revenue Account does not have sufficient resources to meet the projected need for affordable housing. Further investment is required from Registered Providers and the Homes and Communities Agency.

8.3.2

As grant funding to Registered Providers reduces, they must look to maximise the potential of their existing asset base to realise additional resources for new affordable housing supply. By accepting a small measure of risk in granting Registered Provider’s requests for mortgage exclusion clauses, the Council would increase Registered Provider development capacity by 20% at no financial cost to itself.

8.3.3

The Council’s emerging Housing Delivery Investment Plan is designed to accelerate total housing delivery across all sectors. Removing restrictions on mortgages as a barrier to delivery would significantly improve delivery within the social sector.

8.4

Alternatives Considered and Rejected

8.4.1

The refusal of Registered Provider’s requests for mortgage exclusion clauses would absolutely protect the ongoing social housing status of any social housing built by Registered Providers on Council land. However, it would not increase the available funding for social housing and may lead to some Registered Providers ceasing to develop in Sheffield.

8.5

Any Interest Declared or Dispensation Granted

None

8.6

Reason for Exemption if Public/Press Excluded During Consideration

None

8.7

Respective Director Responsible for Implementation

Simon Green, Executive Director, Place

8.8

Relevant Scrutiny and Policy Development Committee If Decision Called In

Economic and Environmental Wellbeing

8.1

The Executive Director, Place submitted a report in relation to the disposal of affordable housing.

8.2

RESOLVED: That Cabinet:-

(a)

notes the ongoing issues regarding securing development finance for affordable housing and supports the principle of assisting Registered Providers where appropriate by offering flexibility around mortgagee exclusion clauses;

(b)

supports the requests from Registered Providers for mortgagee exclusion clauses on the schemes named in Section 6.12 of the report subject in the case of new disposals, to the Registered Provider entering into an agreement for lease with the lease to be granted upon completion of the construction and that the Director of Capital and Major Projects be authorised to negotiate or renegotiate terms for the leases as appropriate and to instruct the Director of Legal and Governance to complete the necessary legal documentation; and

(c)

delegates authority to the Director of Capital and Major Projects, in consultation with the Director of Regeneration and Development Services and the Cabinet Member for Homes and Regeneration, in relation to social housing sites that have previously been disposed of by way of a long lease, to consider and where appropriate agree future requests from Registered Providers to vary the terms of those leases to include mortgagee exclusion clauses and to instruct the Director of Legal and Governance to complete the necessary legal documentation.

8.3

Reasons for Decision

8.3.1

The 2013 Strategic Housing Market Assessment identified an annual requirement for 725 affordable homes in addition to the projected supply. Whilst the Council is embarking on a Stock Increase Programme for Council Housing, the Housing Revenue Account does not have sufficient resources to meet the projected need for affordable housing. Further investment is required from Registered Providers and the Homes and Communities Agency.

8.3.2

As grant funding to Registered Providers reduces, they must look to maximise the potential of their existing asset base to realise additional resources for new affordable housing supply. By accepting a small measure of risk in granting Registered Provider’s requests for mortgage exclusion clauses, the Council would increase Registered Provider development capacity by 20% at no financial cost to itself.

8.3.3

The Council’s emerging Housing Delivery Investment Plan is designed to accelerate total housing delivery across all sectors. Removing restrictions on mortgages as a barrier to delivery would significantly improve delivery within the social sector.

8.4

Alternatives Considered and Rejected

8.4.1

The refusal of Registered Provider’s requests for mortgage exclusion clauses would absolutely protect the ongoing social housing status of any social housing built by Registered Providers on Council land. However, it would not increase the available funding for social housing and may lead to some Registered Providers ceasing to develop in Sheffield.