Haringey reveals £1bn housing investment plans following HRA cap removal
0London Borough of Haringey is set to approve a £1bn capital funding programme for council housing, following the lifting of the government’s housing revenue account borrowing cap.
The authority’s cabinet will next week consider budget proposals which would see investment in new council housing rocket from just £1.9m next year to £131m in 2023/24.
The figures are an early indication of the ambitious rise in council spending on housing likely to be sparked by the government’s announcement in October that it would scrap the cap.
An officer report set to go before councillors said: “The recent announcement to remove the HRA borrowing cap, which controls local authority borrowing for house building…was welcomed as it will support us in fulfilling our commitment to deliver at least 1,000 new council homes at council rents by 2022 and build our own housing on our own land.
“The current HRA business plan has therefore been comprehensively reviewed.”
The council’s new five-year capital budget shows spending on new build council housing leaping from £1.9m next year, to £11.2m in 2020/21 and then again to £180.6m in 2021/22, before falling back to £26.0m by 2023/24.
Total spending on new housing is expected to total £247.5m up to 2024, with a further £433m on buying new homes and holding them in the HRA.
When added to a proposed £285.3m on investment in the council’s existing stock, the total capital programme is budgeted at £965.8m across the period.
John Bibby, chief executive of the Association of Retained Council Housing, said: “That is an ambitious programme, but not necessarily one that will be out of the ordinary for a large London local authority following the lifting of the cap.”
However, he said some councils are currently being cautious about committing too much to new build housing due to hints in last year’s housing green paper that councils may face new requirements after a review of the Decent Homes Standard.
Chris Shepherd, director at housing finance consultancy 31ten, said: “We had a look at some other strategies with other authorities and Haringey doesn’t seem out of the ordinary.”
He said that Lambeth is planning to invest £300m in new homes over a five-year period, while Westminster is budgeting for schemes containing mainly affordable housing with a funding requirement of £465m.
Croydon’s housing delivery company, Brick by Brick, has a five-year budget of £437m across three large and 10 small sites, he said.
However, some have raised questions over the deliverability of Haringey’s proposals, with one source saying that the number of homes planned to be delivered before 2022 “would need to include some of the big estates such as Northumberland Park or Broadwater Farm” which were part of the scrapped Haringey Development Vehicle joint venture with developer Lendlease.
The source said: “I’m not sure how on earth they would deliver that number of homes without such a partner in place and in that timescale; not to mention the requirement to have a ballot on any estate regeneration proposals.”
A finance director at another London local authority, who wanted to remain anonymous, said: “As far as I can tell, this programme looks as I would probably expect.
“Borrowing seems to be releasing capacity to build new homes – the problem as for us all will be liberating the pipeline to get the cash out the door.”
Haringey’s programme will be boosted by a grant of £62m awarded to Haringey by the Greater London Authority last year.
However, borrowing will make up more than half of the borough’s proposed spending on council housing, budgeted at almost half a billion pounds (£493.0m) over the period.
Strategy shift
Due to the lifting of the cap, the council is also set to scrap plans to deliver any homes at social rents through its proposed wholly owned housing company.
The company was originally proposed as the vehicle through which the council would deliver on its housing manifesto commitment.
However, due to the GLA grant and lifting of the HRA cap, the council now intends to use the housing company to hold homes that cannot be held within the HRA.
A separate cabinet report said: “These are likely to include the intermediate rented homes developed as part of the mayor’s Building Council Homes for Londoners programme and any homes at private rented levels, should the council decide that it wishes to develop these at some future point.”
The cabinet will be asked to approve loans totalling £37m to the company, on condition that its business case demonstrates that the homes will generate sufficient rental to cover costs.
The plan will involve the creation of a subsidiary which will become a registered provider.
Compensation secrecy
Meanwhile, the council this week announced that it has reached an out-of-court settlement with developer Lendlease over the abandoned HDV.
A Lendlease spokesperson said: “While we remain disappointed about the decision not to proceed with the HDV, which was fully out of our control, we have now agreed a settlement with the council.”
The council refused to reveal the amount of compensation agreed with the developer, citing commercial confidentiality.
In a statement to Room151, it said: “The council recognises that there is a public interest in the disclosure of the requested information.
“The HDV matter was a significant and high profile project.
“There is a public interest in transparency in relation to the circumstances in which the project came to an end.
“There is also a public interest in accountability in relation to the expenditure of public money by the council in connection with the HDV project.”
However, it said that this was outweighed by the prejudice to the commercial interests of the council and Lendlease that would result from revealing the amount of public money paid to the developer.
It said: “Firstly, disclosure would make it more difficult for the council to settle disputes in future: those dealing with the council would be more reluctant to enter into confidential settlement agreements, since they would be concerned that the terms of any such agreement might nevertheless be made public.
“Secondly, disclosure would undermine the council’s bargaining position in future disputes.”
The third reason it gave was that releasing the information would interfere with the ability of the council and Lendlease to successfully deliver a separate development they are jointly working on.
The HDV joint venture sparked a bruising internal struggle within the council’s ruling Labour group, and resulted in the ousting of centrist candidates by left-wingers in last year’s local elections.
Last year, Room151 revealed that the council already faced costs of £3m as a result of the decision to scrap the HDV.
