Agenda item

The Director of Regeneration and Place introduced the report resulting from the ‘1000 Homes Initiative’. The proposed scheme would require the net investment of £200 million over a minimum 10-year period, taking place alongside the continued investment into the private rental sector and sale of housing properties.

It was highlighted that affordable housing was often provided through the use of Section 106 monies by registered providers. It was recommended that the Council focus on homes intended for affordable rent, being capped at the Local Housing Allowance, with a focus on town centre sites to align with the Council’s ongoing development of the Town Centre Strategy.

The risks associated with the proposal were briefly outlined, alongside the importance of securing land opportunities, when possible, due to the lack of Council owned land and properties available for the initiative.

A further report on the initiative’s corporate structure implications would be presented to the Committee at a later date. 

In response to questions, the Director of Regeneration and Place confirmed that the proposed modest acquisition of Section 106 stock from developers would allow the Council to secure affordable housing properties that might otherwise be lost. Options for creating a Maidstone Housing Investment Fund had been included in the report to highlight the operational considerations in entering into the Affordable Housing market and to maximise the processes’ transparency. It was suggested that the Council’s assets would be subject to ongoing review for potential inclusion into the programme as it progressed, with the affordable homes delivered contributing to the government mandated housing needs figure.

In response to the consideration of whether to exclude certain sites from the proposal, the Director of Regeneration and Place advised that it would be difficult to rule out specific locations before the scheme’s commencement.

The Committee expressed support for the proposal and noted the ambitious scope of and risks associated with the scheme. The importance of recognising further opportunities as the scheme progressed, such as partnership working, were highlighted.

RESOLVED:

That the following be noted:

1.  The proposed capital spend of circa £200 million, net of any grant to build a portfolio of 1,000 Affordable Homes over the ten-year period commencing 1 April 2022 with individual schemes subject to approval by the Committee;

2.  The preliminary officer advice and legal advice, provided as exempt Appendix 1 to the report, on the possible and likely corporate structure arrangements within which an affordable housing portfolio could be held once it passes 200 homes and that a further report on this matter, for decision, would be brought back to the Committee during the next financial year;

3.  A bid for grant to Homes England via the Continuous Market Engagement route would be made in the coming months but subject to a further detailed decision by the Committee to approve any grant Funding Agreement offered by Homes England;

4.  The Affordable Homes programme is proposed to be supplemented by further additional capital spend of circa £46.5 million in Private Rented Sector Housing, to build a further 200 such homes over the five-year period commencing 1 April 2022, with individual schemes subject to approval by the Committee;

5.  The proposed Affordable Homes and Private Rented Sector programmes will be supplemented by investment in circa 60 Market Sale homes, via joint venture arrangements with incumbent scheme contractors, with individual schemes subject to approval by the Committee. As the capital programme for approval, proposed exposure will be capital spend of circa £22 million over the programme period;

That:

6.  The scheme target hurdle rates for Affordable Housing and Private Rented Sector investments as being a positive Net Present Value and Internal Rate of Return of 4%, and that there will be cognisance of the challenges in respect of the likely cost/value ratio on some schemes, be agreed. The hurdles rates will be kept under review by the Director of Finance and Business Improvement and any changes will be delate with through reporting on the capital strategy; 

7.  The likely viability gap per Affordable Housing homes developed which will equate to circa £1.7 million per 100 homes built, and that provision will be made by the Committee elsewhere in the Council’s Medium-Term Financial Strategy to meet the viability shortfall, i.e. the creation of a Maidstone Housing Investment Fund, be noted;

8.  All the Affordable Housing would be let as Affordable Rented Homes, with rents set at 80% of the prevailing market rent but capped at the Local Housing Allowance, be agreed;

9.  The overall Development Strategy as set out in paragraphs 2.49 to 2.58 of the report, be agreed; and

10.The Affordable Homes delivery project be identified as a significant strategic project, within which all the decisions on the project be taken by the Committee.

Note: Councillor Purle left the meeting at 9.45 p.m.