Agenda item

The report and any associated appendices will be published in a supplementary papers pack to this agenda.

The Spadesbourne Homes Limited Business Plan 2025/26 was presented for the Committee’s consideration.

In considering the Business Plan, Members were asked to note the following:

·             The Business Plan detailed the company’s vision as well as the relationship between Spadesbourne Homes Limited and Bromsgrove District Council.

·             The company’s vision was to provide high quality private rented accommodation and to help support and complement other housing providers in the District, including Bromsgrove District Housing Trust (BDHT).

·             The Financial Regulations and Procurement Rules that formed appendices to the business plan had not been available to include in the agenda for the meeting as these had not yet been considered by the company’s Board.  These documents would therefore be provided for Members’ consideration at the following meeting of the Committee.

·             The Business Plan included selection criteria for eligible tenants.  Members were asked to note that the focus was on housing people in housing need with local links.

·             There was a lack of private rented accommodation available in Bromsgrove District and the housing units provided by Spadesbourne Homes Limited would help to address this gap.

·             A Board of Directors had been appointed, which currently comprised three senior officers from Bromsgrove District Council.  The Board was responsible for the day-to-day operation of the company.

·             A Chair was due to be appointed to the Board and it was possible that independent members would be recruited as Non-Executive Directors to the Board at a later date.

·             The company was already managing some properties and would aim to purchase more properties over time.

·             Management of the houses owned by the company had been contracted out to a specialist estate management company.

·             The Council would be providing financial assistance and ICT support to Spadesbourne Homes Limited moving forward.

·             The company was anticipating a net income of £221,000 per annum.

·             Rent levels had been identified and were detailed in the Business Plan.  Rent levels had been proposed in accordance with the size of a property.

Once the Business Plan 2025/26 for Spadesbourne Homes Limited had been presented, Members discussed the following points in detail:

·             The request that Members had made, prior to establishing Spadesbourne Homes Limited, that care leavers should be prioritised for housing.  Members were advised that care leavers were supported to receive accommodation through the work of BDHT.

·             The references to the company aiming to generate a small profit and what was intended by this.  The Committee was informed that as a company, Spadesbourne Homes Limited was operating as a commercial enterprise and needed to cover costs.  Any financial returns would be provided to the Council as the only shareholder in the company.

·             The timeframes by which financial income for the company was likely to start generating a surplus.  The Committee was informed that this had not yet occurred, although it was possible that this situation would change by the end of the following financial year.

·             The extent to which any additional Board members were likely to be recruited and whether they would receive financial remuneration.  Clarification was provided that the aim would be to recruit an independent Non-executive Director to the Board and it was confirmed that any financial costs would be covered by Spadesbourne Homes Limited.

·             The references in the report to the Land and Building Assets Group and the status of this group.  Members were informed that this was a group of officers that met regularly to discuss potential land that might become available.

·             The process that had been followed to select an external organisation to undertake estate management duties for the company.  Clarification was provided that three potential providers had been contacted and the successful company had been the only organisation that had responded within policy.

·             The level of flexibility in the housing criteria and the extent to which this could create a risk that potential tenants would be offered properties even when these offers fell outside the adopted policy.  Members were informed that it was important to avoid fettering the discretion available to the company.  Further clarification was provided that 82 per cent of residents at Allen Court had a local connection, whilst the remaining tenants had a slightly more distant connection, such as through their grandparents.

·             The potential for the company to provide much needed accommodation in the private rented sector to key workers, such as nurses.

·             The service charges that tenants were required to pay and the purpose of these charges.  The Committee was informed that these service charges covered cleaning costs and also applied to units purchased by BDHT.

·             The proportion of funding allocated to repairs in the first year.

·             The arrangements whereby the management fees for the external company managing the estate were being addressed.

·             The reference to the potential future purchase of smaller sites and what was defined as a smaller site.  Clarification was provided that this related to sites of approximately 20 to 30 units.  Options for potential purchase would be reviewed on a case-by-case basis and the viability of any smaller sites would need to be assessed prior to any decisions being taken.

·             The extent to which there was a risk that Spadesbourne Homes Limited would invoice Bromsgrove District Council for services.  The Committee was advised that the Council was more likely to invoice Spadesbourne Homes Limited for costs, due to the provision of support services to the company.

·             The potential for insurance to be obtained by the company to help cover the risks arising from bad debts.  Confirmation was provided that no such insurance had been obtained to date, however, this was something that the company would aim to address in future.

·             The reasons why the company had not yet obtained insurance to cover bad debts.  Members were advised that this was difficult to arrange at such an early stage because the company lacked any historic data to enable an estimate to be provided in discussions with potential insurers.

·             The combined repairs and cleaning costs estimated in the Business Plan and the extent to which these estimates were relatively high.

·             The charges levied by the estate management company for processing new properties for tenants.  Confirmation was provided that there was an extra charge per property.

·             The reference in the report to gross income and whether this should in fact have referred to net income.

·             The fact that information had not been included in relation to the costs of  Officer time and the need for insurance costs to also be incorporated.

·             The potential need for the company to pay a proportion of revenue to the Government in tax, depending on the level of income generated and the need for this to be incorporated into future planning.

·             The ongoing work to negotiate property insurance for the company.  Members were asked to note that in the meantime there was coverage from the Council’s insurers.

·             The extent to which the locations in which properties owned by Spadesbourne Homes Limited were on adopted highways.  Confirmation was provided that all of the properties owned by the company were situated on adopted highways.

·             The arrangements in place to enable the company to purchase new properties and how this would be funded.  The Committee was informed that it was likely that the company would need to request assistance from the Council at this stage of operation.  Consideration would also need to be given to working in partnership with a social housing provider, such as BDHT.

·             The corporate structure of Spadesbourne Homes Limited and the financial implications arising from this structure.  Confirmation was provided that this was a limited company and therefore subject to corporation tax.

Due to concerns about the lack of insurance for bad debts in place for the company, Members requested that information be provided updating the Committee on the situation with regard to insurance at the following meeting, taking into account current rent arrears and whether this insurance was needed if rental payments were being received.  Members also agreed that a full budget forecast needed to be developed for the company and provided for the Committee’s consideration at the same meeting.  Alongside this information, Members requested sight of the balance sheet for the company.

RESOLVED that the Spadesbourne Homes Limited Business Plan 2025-2026 be approved.