Council approves ‘largest financial commitment ever’
£390M TO BUILD ‘GENUINELY AFFORDABLE’ HOMES
EALING Council is set to undertake its “single largest financial commitment ever” in a bid to drive the building of genuinely affordable homes in the borough.
Council leader Julian Bell’s top team approved a £390 million loan to Broadway Living Registered Provider – a subsidiary of its fullyowned housing development company Broadway Living – to carry over a 50-year period.
The business plan aims to build 1,370 affordable homes in the next six years, as the number of people waiting on the council’s housing register has spiralled to more than 10,000 households.
Last year just 500 council homes were available for new tenants to rent. The council is yet to complete its target to build 2,500 genuinely affordable homes by April 2022, but officers gave assurances at a cabinet meeting on November 10 that they were “confident” it could be done.
Genuinely affordable homes are defined as social rent, London Affordable Rent or London Living Rent, while affordable housing can also include intermediate housing types such as shared ownership homes.
The council’s new housing business plan will also be using a £99m grant from the Greater London Authority.
Cllr Bell told members at the meeting: “This is crucial for our delivery of 2,500 genuinely affordable homes.
“Given market conditions, it is right as the council, through Broadway Living Registered Provider, works to come forward with our own land and our own borrowing capacity as a council to deliver significant numbers of those 2,500 genuinely affordable homes that are in our manifesto.
“This is an awful lot of work – it’s a significant investment that the council is making. It’s not every day we would borrow £388m.
“This is over a period of 50 years, but there are 23 sites we are working on to deliver these new genuinely affordable homes that we are committed to have built for our local residents.
“The significant thing is we can borrow this money and over the 50-year period this brings in a financial surplus.”
Alongside the affordable housing, 143 homes will also be sold and let to subsidise the development project. Of the 1,370 affordable homes, 1,008 have been planned to be genuinely affordable.
The scheme is expected to pay for itself over the course of 50 years, with the initial investment being recollected through sales and rents.
Newly-appointed housing lead Cllr Mik Sabiers said: “Through Broadway Living, the council is shareholder, landowner and funder for houses built under this plan. This means that public money stays public rather than ending up as profits for private companies.
“And by creating hundreds of jobs, the plan will provide a real boost for the local economy.
“It is a hugely positive step towards creating a better borough for everyone.”
Asked by Conservative opposition leader Greg Stafford for reassurance on the financial risks of the investment, officers explained that by Broadway Living Registered Provider being a 100% council-owned company, it was the sole shareholder and funder, meaning it has tight control over the finances.
The plan to build homes on council-owned land was also a factor of control over the project, as well as scrutiny from council and overview and scrutiny bodies.
Officers said a quarterly monitoring process would take place so they can “see very quickly” any deviations from the plan.
The report also read: “The investment being made by the council is the single largest financial commitment ever to be undertaken. It is based on an assessment of the BLRP Board-approved business plan and has been assessed as viable based on the assumptions contained in the plan provided by BLRP.
“It should be openly recognised that such undertakings are complex and carry risk, covering many different facets that should be understood and recognised as commensurate with such programmes involving housing development, asset sales and rental incomes.”
It added: “The council has prepared a comprehensive financial model using the business plan provided that combines individual scheme financial appraisals in a 50-year cashflow and a 50-year Net Present Value basis, to test the viability of the development programme as a whole.”