Watham joint venture housing scheme shelved due to high interest rates

Waltham Forest Council has shelved a scheme to buy hundreds of houses for people stuck in temporary accommodation due to “high interest rates”.

The move comes after the council had hoped to build on the success of a “More Homes” joint venture set up with housing giant Mears Group in 2018 to buy 400 properties and rent them to Waltham residents living in temporary housing.

The second joint venture, approved by the council in 2022, planned to buy 400 more homes in South East England.

However, according to an update on the joint venture published last week, none of the 400 homes in the second joint venture scheme have been purchased because the plan is no longer “financially viable”.

The report says that in September 2022, in the same month the second joint venture was approved by cabinet, the cost of borrowing “increased significantly”.

This meant that rent paid by the tenants in the homes, fixed at local housing allowance rates, was no longer enough to cover the cost of repaying the loan the council and Mears’ planned to buy the homes with.

The report added: “Mears will continue to monitor the financial markets to try to secure a favourable bond when available, but it is unlikely the second [joint venture] can be operationalised in the near future.”

Since it was set up in 2018, the first joint venture with Mears has provided 330 assured shorthold tenancies to Waltham Forest residents previously living in temporary accommodation.

It is unclear whether these homes are in Waltham Forest, other London boroughs or parts of South East England.

The update says market conditions and the pandemic slowed down the speed of purchases and cut the total by 70.

However, the council’s estimated savings from the joint venture – funded by an £88.5million bond issued by BAE Systems Pension Fund – increased from £290,000 in 2020/21 to £816,000 in 2022/23.

According to the most recently published statistics, the council supported about 900 households with temporary housing as of April this year.

The council has a duty to offer residents temporary housing if they are at risk of homelessness, for example if they can no longer afford private rents or have a breakdown in relations with their family.

Housing people at risk of homelessness in temporary accommodation is forecast to cost the council £10.7m in 2022/23, about £2m more than the previous year.

The rising costs of private rents and lack of social housing in the borough means this cost is unlikely to fall by the end of the financial year.

Josh Mellor

Local Democracy Reporter