Temporary Accommodation Provision

AGENDA ITEM 8

BOROUGH OF POOLE

CABINET

30th May 2006

REPORT OF HEAD OF HOUSING AND COMMUNITY SERVICES

Temporary Accommodation Provision

Purpose of the Report

1.1To implement the proposals contained within the temporary accommodation reduction plan in relation to leased accommodation as agreed by Community Support Overview Groupon the 21st March 2006.

Decisions Required

2.1Members are asked to agree that leases currently held by Bourne Housing Society and Twynham Housing Association, are assigned to the Borough of Pooleand leased under its Homelessness powers. Negotiation of the terms of these assignments will be undertaken by officers of Housing and Community Services. This is subject to formal confirmation from Financial Services that the requirements of the review as outlined in 5.5 have been implemented.

2.2Members are asked to agree that subject to negotiation of terms, the assignment of these units will be agreed by the Housing Portfolio Holder.

2.3Members are asked to delegate authority to enter into leases for individual propertiesnot exceeding £91,000, for a maximum of a 10 year term, to the Head of Housing and Community Services.

Background

3.1Housing and Community Services reported to Community Support Overview Group Members on 21 March 2006 regarding temporary accommodation. The report sets targets which will meet new government requirements for Local Authorities to reduce the number of homeless households occupying temporary accommodation by 50% by 2010.

3.2In order to meet the Government target, it is necessary to reduce the number of households in temporary accommodation to 143 by the end of this financial year. Further targets will then be set for future years.

3.3 Housing and Community Services operates a private sector leasing scheme, which currently has 23 properties in management.

The scheme is an effective way of the Council providing temporary accommodation to households and allows close management of this resource through a dedicated officer. The service has been operating for two years and is self financing through management fees.

Assignment of Leases by Bourne Housing Society and Twynham Housing Association

4.1Bourne Housing Society have been providing the Borough with temporary accommodation which they lease from private landlords, and the Borough secures through a management agreement, for the last 12 years. The terms of the management agreement require the Council to pay Bourne Housing for void costs as well as former tenant arrears.

4.2Bourne Housing Society have advised the Council that they intend to end the scheme by the end of the 2006/7 year. The loss of 35 units of accommodation is not something that the Council can accommodate at this time as it is not possible to re-house all of the current tenants within such a short timescale, nor are the costs of such a sudden end to these leases something which the Council has allowed for as part of its Medium Term Financial Plan.

4.3Bourne Housing Society have proposed that they assign the leases to the Council. The benefit of this would be that Bourne Housing are able to close down their management of these units within their target timescale, and the Council gains control over the portfolio. This will reduce direct costs and enable the Council to manage the reduction in the number of units held. It is proposed that the maximum term of these leases is 3 years, and that the leases include break clauses as outlined at 6.3.

4.4If the Council does not agree to assignment of these leases, the implications are clear;

4.4.1The requirement to house 35 additional homeless households by the end of the financial year would significantly impact on the Council’s ability to operate a fair, open, and transparent system of allocating units of accommodation, and reduces the ability to house from the transfer list and housing register. The impact of any such reduction will impact on the prevention of homelessness, therefore threatening the ability to meet targets set in the Homeless Strategy, Housing Strategy, the requirement not to house families in Bed and Breakfast for longer than 6 weeks, and the requirement to reduce households in temporary accommodation.

4.4.2The cost of accommodating 35 households in Bed and Breakfast for the maximum permitted period of 6 weeks would be £20,025. There would of course be potential for this figure to increase as a result of any negative impact on homelessness prevention, as described in 4.4.1.

4.4.3The cost of meeting the Council’s obligations of the current management agreement with Bourne Housing Society would have to be met in full by the end of the financial year. The cost of each lease termination would be a minimum of £2,600. Therefore, the total cost would be £91,000.

4.4.4Cost and legal duties aside, the families living in these units of accommodation have already moved, in some cases, three times and are expecting that their final move will be to secure accommodation. The impact on these families must also be considered.

4.5In assigning these leases to the Borough of Poole, Bourne Housing Society also assigns all of its obligations to the landlords for these properties. The terms of the lease currently used by Bourne Housing requires them to bring each property back to the standard in which it was first let to them, subject to fair wear and tear. Over the past 6 months, Bourne have been gradually reducing their portfolio upon our agreement, and have reported that the average cost of the works required are £1,000 per unit.

4.6It is proposed that Bourne Housing make a payment to the Council upon assignment of any lease, of £1,000 which the Council will then hold on deposit to be used when the property is eventually handed back to the owner. It is intended that Property Services are instructed to carry out surveys on a sample of 50% of the units to be assigned in order to establish whether this is a reasonable amount in terms of Bourne’s discharge of their obligations under the current lease arrangements.

4.7The majority of tenants in Bourne Housing HALS currently have a level of arrears. Officers will come to an agreement with Bourne Housing regarding concerning the capped amount of arrears that the Council will meet after Bourne Housing have exhausted their ability to recover the outstanding monies. At present the Council pays arrears above £1,300 per tenancy.

4.8Appendix B sets out the financial appraisal of the scheme, and makes the benefits clear.

4.9By managing these units, the Council will also benefit from the direct control of them, and therefore the future use of them, and reduction in the use of them is within the Council’s gift.

4.10The Twynham HA scheme is very similar to the Bourne Housing leasing scheme aside from the fact that the scheme presents no direct costs to the Council. There are currently 7 units held within Twynham’s management in Poole.

4.11Twynham HA have advised the Borough that they intend to end these leases over the next two years, but have offered to assign the leases to the Borough.

4.12Assignment of these leases is therefore proposed under the same terms as described in relation to the Bourne Housing leasing scheme.

4.13It is proposed that provided Members agree to the principle of assigning leases, that a target date of 1st August 2006 is set for all assignments to be completed.

5.Delegated Authority to Enter into Leases

5.1Currently, officers operate under terms set by Member decisions on two occasions; 11th May 2004 and 26th November 2004. The decision made in November 2004 asked that Members agree that Housing and Community Services will enter into leases for individual properties not exceeding £54,600 for a maximum period of 7 years. This equated to a maximum of £150 per unit per week.

5.2It is necessary to review this maximum figure as a result of inflation and in order to reflect the market. It is recommended that the maximum lease payment for an individual property is increased to £91,000 over a ten year period.

5.3The proposed maximum lease payment equates to £175 per week in this financial year and it is proposed that the weekly maximum would increase in line with RPI in each subsequent financial year. This can be compared to the current maximum Housing Benefit capped level, which tenants of the scheme are entitled to, of £196.10. Members should note that this is a maximum, and that lease payments will be negotiated at a level appropriate to the accommodation being provided.

5.4Providing Members are agreeable to the proposals outlined in section 4 of this report, Housing and Community Services would manage the units of accommodation as additional units within their existing management service. The addition of these units would in fact, provide an opportunity to make this service more cost efficient.

5.5Whilst this management service is proven and can demonstrate value for money as well as effectiveness, the financial mechanisms for the management of these units is currently under review. Therefore this course of action is subject to the implementation of appropriate financial systems which will deal with the additional units. The review and the subsequent action taken is subject to formal approval by Financial Services. .

6. Financial Implications and Risk for the Council

6.1The basis of these arrangements is that the Council charges a rent to the tenant which includes the lease rental charge and the Council’s management and maintenance costs. With the exception of potential risk items outlined in appendix A, these arrangements represent no additional cost to the Council.

6.2The risk tables at Appendix A show the level of risk to the Council to be low in respect of entering into these arrangements. It also shows that the level of risk if they are not entered into, are high.

6.3The leases currently used by the Council include break clauses which will allow the Council to give the lessor six months notice to terminate the lease every six months.

6.4Provision is made for dilapidations and maintenance costs within the management fee charged by Housing and Community Services.

6.5Any Stamp Duty Land Tax liability which arises as a result of these leases will be recovered through management fees in the first financial year of the lease period. The maximum stamp duty payment incurred by these proposals would be for the Bourne Housing Society assignments. The maximum cost would therefore be £7,673. This would represent a cost of £4.22 per property per week, which would be recovered through the management fee collected.

Appendices

A – Risk Assessments

B – Financial Appraisal for Assignment of Bourne Leases

SIMON HENDEY

HEAD OF HOUSING AND COMMUNITY SERVICES

Officer Contact – Kelly Ansell, Housing Resources Manager

01202 633493

Appendix A

Risk Assessment of Options Available

1. Assignment of Bourne Housing Society Leases - No Action

Risks / Impact / Likelihood / Risk / Maximum Cost £
Cost of Lease Terminations / High / High / High / 91,000
Bed and Breakfast Costs / Medium / High / High / 20,025
Prevention of homelessness / Medium / Medium / Medium
Quality of Service / High / High / High

2. Assignment of Bourne Housing Society Leases

Risks / Impact / Likelihood / Risk / Maximum Cost per unit £
Void Rents / Low / Low / Low / 175
Rent Arrears / Low / Low / Low / 2,100
Damage to Property / Medium / Low / Low / Recharged to tenant
Void rent upon handover of property / Medium / Medium / Medium / 1,400

3. Assignment of Twynham Housing Association Leases – No Action

Risks / Impact / Likelihood / Risk / Maximum Cost £
Bed and Breakfast Costs / Medium / Medium / Medium
Prevention of homelessness / Medium / Medium / Medium
Quality of Service / High / High / High

4. Assignment of Twynham Housing Association Leases