Decisions for issue Housing Delivery Options - Living Wage Joint Venture

That the Committee

1)    Support in principle the living wage joint venture proposal subject to the further safeguards being put in place outlined below;

a)        That no HRA asset will be transferred or sold into the Joint Venture and this shall be written into the Heads of Terms, or equivalent legal agreement or final contracts.

b)        That the Council review options for any General Fund land being sold to the Joint Venture (including direct development), with member oversight of this being considered for any sum above and including zero pence at the Estate Regeneration Board.

c)         In order to ensure best value for money, any transfer of council owned land to the JV is publicised on the council website to any potential bidders, valued by an independent valuer or the District Valuer to ensure best consideration reasonably obtainable is achieved and submitted in the Committee papers for approval relating to the transfer.

d)        In the event of the Council’s General Fund revenue budget being placed under stress or in a deficit position as a result of the JV, that the Committee note mechanisms exist for the Section 151 Chief Financial Officer to advise Members of options for managing the deficit position in order to mitigate the impact on the General Fund services. Such mechanisms include reviewing the adequacy of risk provisions and/or reserves under Section 25 of the Local Government Act 2003 or, alternatively, re-financing.

e)        It should be explicit in the heads of terms or subsequent contracts that any profit from the Joint Venture should be split on a 50/50 basis.

f)          That the Council notes in future land transfers, a buy back clause for the council will be included if development does not commence by the JV within 3 years at the same price it was purchased by the JV.

g)        Changes to the Heads of Terms be made to ensure that only the relevant Committee can agree to a change in the reserved matters list and this cannot form part of the annual business plan to be changed.

h)        The Heads of Terms be amended at 4.15 to read that 90% of fair value of 3 independent valuers, including the district valuer, shall be transferred in the event of a default.

i)          That the Heads of Terms lock in period should read 10 not 7 years.

2)    Give delegated authority to the Executive Director of Economy, Environment and Culture following consultation with the Executive Lead Officer for Strategy, Governance & Law, the Executive Director of Finance & Resources, the Estate Regeneration Board and the Strategic Delivery Board to:

(a)     Develop and negotiate the deal with Hyde; in which the following are agreed:

(1)       The Shared Ownership properties should first be marketed locally to buyers with a connection to Brighton & Hove with a cascade for wider marketing to be triggered only after such reasonable marketing period has first expired.

(2)       That the rent formula proposed for the National Living Rent calculation in the SFVM be changed to make the rents more affordable for local people on lower incomes. Specifically that the current rent formula which is calculated based on 40% of gross income be reduced to 37.5% of gross income in the SFVM.

(3)       Should cost of living increases in rents for tenants of the joint venture rise at a rate that is in excess of actual increases in the rate of the National Living Wage, the parties to the Joint Venture agree to discuss the scope to address this issue when reviewing the business plan. Having regard to the required commercial performance of the project in line with the SFVM and Business Plan,

(4)       Should cost of living increases in rents for tenants of the joint venture rise at a rate that leads gross rents to exceed the Local Housing Allowance, the parties to the Joint Venture agree to discuss the scope to address this issue when reviewing the business plan. Having regard to the required commercial performance of the project in line with the SFVM and Business Plan.

(5)       That should the business model exceed its projected rate of return, all Brighton & Hove City Council surplus monies be ring fenced exclusively to provide additional council owned emergency accommodation for homeless people and additional living wage rented housing.

b)    Agree and authorise execution of the Heads of Terms and subsequently the documentation required to implement the proposed Joint Venture;

c)      Make the appointments from the Council to the management board;

3)    Note that reserved matters (as detailed in 3.30) will come back to the Housing and New Homes committee, as well as the Policy Resources and Growth Committee for approval including any business plans which are to be delivered through the Joint Venture, and the disposal of land/sites to the JV.

(1)          That the Housing & New Homes Committee recommends the report to the Policy, Resources and Growth Committee  as set out in paragraph 2.2, as amended.  

(2)          That  officers be instructed to take a report to Policy, Resources & Growth Committee addressing the issues raised in the Conservative draft amendment.

(3)          That officers arrange a briefing before Policy Resources & Growth Committee to which Housing & New Homes Committee members are invited to ensure members are fully briefed on the answers to the Conservative draft amendment.  

(4)       That the following amendments be made to the recommendations listed under point 2, so that the document reads as follows:

2.2 That the Policy, Resources and Growth Committee:

ii) Give delegated authority to the Executive Director of Economy, Environment and Culture following consultation with the Executive Lead Officer for Strategy, Governance & Law, the Executive Director of Finance & Resources, the Estate Regeneration Board and the Strategic Delivery Board to:

a. Develop and negotiate the deal with Hyde; in which the following are sought:

1)    100% of nominations for Living Wage Rented Housing are provided only for households from the BHCC waiting list, for whom specifically, the market rent for housing in the private sector exceeds 50% of their income.

This is estimated at an annual gross income of:

- £36,000 for a three-bed
- £31,000 for a 2 bed,
-£22,500 for a one bed
-£16,000 for a studio

2)    That 100% of nominations for shared ownership properties are achieved for residents with a local connection to Brighton and Hove, as defined in the Housing Allocations Policy

3)    That a ‘first refusal’ option is agreed in the event Hyde become bankrupt; and/or that in the event that Hyde should separately dispose of their stake in the partnership, that their stake be sold to the council or to a charitable housing association, with charitable objectives;

4)    That the rent levels set are reduced to the levels modelled in the 30% of living wage rent  sensitivity test, (made possible by lowering the rate of return in the base model)

b. agree and authorise execution of the Heads of Terms and subsequently the documentation required to implement the proposed Joint Venture;

b. the final terms of the agreement be put forward and agreed by full meeting of Council, prior to the completion of the deal;

c. Make appointments from the Council to the management board;

(5)                   That the following addition be made to the recommendations listed under point 2, section (iii), so that the document reads:

iii) Note that the reserved matters (as detailed in 3.30) will come back to committee for approval including any business plans which are to be delivered through the Joint Venture, and the disposal of land/sites to the JV


iv) That reserved matters for the Joint Venture should include:

(a) An option to veto any future rent increases that exceed increases in the National Living wage;

(b) An option to veto any future rents increases that raise combined rents and service charges above the Local Housing Allowance;

c) An option to increase allowances for maintenance of properties after year 10 in the model

(6)                That the following addition be made to the recommendations listed under point 2, section (iii), so that the document reads:

iii) Note that the reserved matters (as detailed in 3.30) will come back to committee for approval including any business plans which are to be delivered through the Joint Venture, and the disposal of land/sites to the JV.

iv) That should the business model exceed its projected rate of return, all surplus monies be ring fenced exclusively to provide additional council owned emergency accommodation for homeless people and additional living wage rented housing.