Havering launches leasing company to tackle social housing demand

Havering Council hopes to save up to £13million over the next ten years through a new company set up to manage privately rented homes.

Urban Impact, a community interest company (CIC) wholly owned by the council, will buy houses from the open market and lease them to the authority for ten years.

Councillors say it will enable the authority to meet the demand for social housing, which currently outpaces demand.

CICs, also known as social enterprises, are limited companies that operate to benefit a community rather than private shareholders.

Havering’s cabinet approved the plan at a meeting on Wednesday June 12.

Councillor Natasha Summers, the new cabinet member for housing need, said it would be a “welcome relief” for families.

Over the next 18 months, the council will procure 150 homes for households on the verge of homelessness.

In 2021, the council began keeping families in “high-cost” hotels to offset housing demand. Cllr Summers said continuing the scheme could have a “devastating” impact on residents.

Havering had also been paying private landlords to house residents, but increasing rent prices – a result of rising mortgage prices across London – meant it was no longer viable.

The council ended up overspending by around £6m on temporary accommodation last year, worsening the financial pressure it’s under.

The scheme is expected to cost the council a further £6m over the next decade, at a time when it is looking to make cuts to plug a £32.5m budget gap.

However, Havering plans to fund it through the Government’s Homelessness Prevention Grant, which has been secured for 2024/25 at £3.3m.

If the council was to continue using hotels to house residents, it would cost an eyewatering £54.4m over the same ten-year period.

Patrick Odling-Smee, Havering’s director for ‘living well,’ said after the meeting: “The new company arrangement will be able to let the property on an assured short hold tenancy, which is financially advantageous compared to the other costs incurred from temporary accommodation.

“Establishing the new management company will mean we can let the homes, on affordable rents, to local families.”

In May, the council moved to a points-based system for allocating social housing.

Applicants will be awarded ‘points’ based on their local connection, whether they are homeless, if they live in unsatisfactory conditions, their medical requirements, their need for sheltered housing and whether they are a member of the Armed Forces.

The more points an applicant has, the higher they will be on the priority list. Keith Darvill, the former cabinet member for housing need, said: “The introduction of the points based award structure will also help ensure available homes go to those who need them most, but with existing applicants on the register being protected.”

Mercury Holdings, a land holdings company owned by the council, was initially considered for the leasing scheme but officers said they didn’t feel able.

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Sebastian Mann

Local democracy reporter