Agenda item

Downshire Homes

Timothy Wheadon, Chairman of Downshire Homes, will attend the meeting to provide the Commission with a briefing on the operation of the organisation and how its work supports the Council’s objectives.

Minutes:

Timothy Wheadon, Chairman of Downshire Homes had been invited to attend the meeting to provide the Commission with a briefing on the operation of the organisation and how its work supported the Council’s objectives.

 

As part of this presentation it was explained:

 

·         Downshire Homes was not a social registered landlord

·         Downshire Homes had received advice from Trowers Hamlin (legal) and Social Finance Ltd (financial)

·         Reiterated the Executive recommendation which focused Downshire Homes activities on procuring accommodation to provide homes for homeless households, households with learning disabilities and/or autism and care leavers so as to reduce Council expenditure on accommodation         

·         Downshire Homes had 39 properties with a purchase price of £11.682m which was now worth £11.477m

·         Seven more offers had been accepted on properties which were being processed

·         Rent was charged to Downshire Homes residents at the Local Housing Allowance plus 2.5%

·         After the first year a review had been undertaken by Social Finance Ltd. The current yield was 2.3% but this was due to charging an affordable rent level rather than market level

·         In 2016/17 Downshire Homes had been affected by the increase in stamp duty costs from 2% to 8% which had contributed to the operating loss, but Downshire Homes’ activities had directly saved Bracknell Forest Council £560k

·         Services provided by Bracknell Forest Council officers were recharged to Downshire Homes

·         Downshire Homes’ objective to make a profit was a long-term issue

·         It had been acknowledged by Downshire Homes Board that greater transparency was needed and they were planning to bring an annual report to the Executive followed by six monthly update.

·         A regular review of Board members conflict of interest was undertaken and it was noted that when sitting as the Board then decisions were made in the interest of the company but the basis on which it had been set up were to reduce the Bracknell Forest Council’s spending. Downshire Homes had received advice on two occasions and it was agreed that it would be an issue if the role changed. 

 

Arising from questions and discussions the following points were made:

 

·         The Commission Chairman queried why the original resolution by the Executive was not reflected in the Memorandum of Agreement and the Chief Executive advised that the advice was that this should be cast as broad as possible so that Downshire Homes Ltd could undertake other activities that the Council wanted, such as key worker housing, without having to revise an Memorandum of Agreement.

·         The Commission Chairman was concerned that the activities of Downshire Homes did not appear to be restricted at all given that their funding came from Bracknell Forest Council.

·         There was no average stay in a household as tenants were monitored over periods of longer than six month then it could become their permanent home unless their circumstances changed.

·         All of the money funding Downshire Homes came from the Council which the Council may have borrowed. This was charged at the rate of 0.5% above the rate charged to the Council if the Council borrowed the funding.

  • In response to a query regarding the MRP rules change regarding the requirement to set aside capitol the Chairman of Downshire Homes advised that this was guidance for Councils, not Downshire Homes Ltd, which is a private company.  The Council would ‘have regard to’ the proposals but did not necessarily have to follow it, that being a matter for the Council and its external auditors. A number of members raised their concerns about this approach.
  • It was confirmed that Downshire Homes Accounts were externally audited and would be consolidated into the Council’s accounts.
  • The direct savings to the Council included the cost of families being brought into the borough by school transport if they were housed out of the borough and was an intangible benefit of Downshire Homes  helping students stay within the borough.
  • Accommodation such as Tenterden Lodge were temporary and for families is only suitable for six weeks. Therefore it is not proposed to expand that type of accommodation. Downshire Homes provides self-contained accommodation that can be used to discharge the Council’s homeless duty. 
  • Downshire Homes had a contract with Bracknell Forest Council to maintain its housing stock including ordering and managing repairs. This cost was charged back to Downshire Homes and was one full time equivalent member of staff. 
  • In response to concerns the Downshire Homes Chairman reiterated that Downshire Homes’ primary objective was to save the Council money and that it was proving to be very successful in meeting that objective.
  • In response to a query about Bracknell Forest Council acting as a sole shareholder and how it exercises its right to vote on Downshire Homes policy and decide the articles of association, the Downshire Homes Chairman said that this was exercised through appointing all the Board members.
  • In response to the work regarding recruitment and retention, the Council had asked Downshire Homes to look at the viability of shared accommodation for keyworker housing but the Council would need to manage the void if only 2 beds within a 3 bedroom house were accommodated.
  • The Commission Chairman queried whether the change to accommodating key workers was compliant with the original Executive resolution and the Downshire Homes Chairman agreed that the Council needed to formally ask Downshire Homes to undertake this role. 
  • It was confirmed that Downshire Homes did not currently have any external or non-Council employees, non-executive or executive directors of the company.
  • Downshire Homes had asked Council to undertake financial checks to make sure that residents were able to afford the rental of their properties. Potential residents were nominated by Bracknell Forest Council.
  • If residents were unable to afford the Downshire Homes rental of Local Housing Allowance plus 2.5% then they would be housed via other housing options. Bracknell Forest Council was unable to discharge its homelessness duty if residents could not afford the rental.
  • Downshire Homes could purchase homes outside of the borough but had not yet done this.

 

The Commission Chairman thanked the Chairman of Downshire Homes for his presentation and asked that the slides be circulated to members of the Commission.

 

Contact Information

Democratic services

Email: committee@bracknell-forest.gov.uk