Homes For Life
Orchard and Shipman working with Revenue and Capital, have created the first facility and Property Management structure to offer Local Authorities the option to reduce or eliminate the use of nightly-booked properties and replace them with homes that can be offered under a nomination agreement as permanent housing at affordable rent levels (LHA rent levels).
Why Is This Needed
and Why Now?
In qualifying circumstances, Councils have a statutory obligation to provide accommodation to individuals and families who are homeless or in danger of becoming homeless. In the months and perhaps years post-Covid, the numbers of people turning to their Local Authorities Council for help is almost certainly going to increase. However, Councils do not control access to the housing stock needed to meet their obligations and have very limited control over the cost of housing.
This is evidenced by, the significant number of households, who are currently placed in nightly-booked accommodation, or are accommodated out of area. This accommodation comes at significant cost to the Council and provides no ongoing benefits other than addressing the immediate homelessness obligation and need.
The health, educational and social costs of failing to provide affordable, good quality, long-term accommodation has been demonstrated in numerous studies, as has the consequential, additional financial burden caused by greater demand on other Council, health and educational services.
This proposal provides an option that will guarantee long-term access to good quality accommodation and at a cost that is wholly funded within LHA subsidy levels. In addition, it allows the Council to secure a long-term asset which will provide a benefit in perpetuity.
How our service works
Following an initial meeting and expression of interest from a Local Authority, R&C and O&S will:
1. Carry out a feasibility study of the Council’s target area
- Review Council’s accommodation requirement.
- Agree a target area for properties.
- Compare the LHA rates to property prices in the target area.
- Assess commercial viability of meeting Council’s requirements.
2. In consultation with the Council, make a formal proposal to include:
- Properties that can be purchased.
- Full costs, benefits and risk assessments.
- Outline of services to be provided by each of the parties.
- Contracting procedure and process.
- Secure finance terms from an institutional fund
3. Subject to Council approval.
- Provide full suite of all legal documents and all necessary procedures and processes required to deliver the program.
4. On signing of contracts
- Working closely with the Council’s housing options team, negotiate and purchase properties that meet the Council’s specification.
- Refurbish the properties to a minimum of Decent Homes Standard.
- Manage the nominations of tenants from the Council.
- Manage the properties including asset management and cyclical and reactive repairs.
- Manage the tenancies including rent collection, tenant surveys and providing tenancy management support.
We’ve got you covered…
We’ve got you covered…
You’ll Benefit From…
Advice
Nationwide coverage from locally based property management professionals
Experience
Over 30 years’ experience in managing portfolios large and small
Peace of mind
Long-established, ARLA qualified Registered Provider, regulated by Homes England
Support
End to end service; completion, letting, management and maintenance
Case Study
London Borough Of Bromley
Fund Size – £86 Million
260 permanent homes
Target – 12 months
As with many London Authorities the London Borough of Bromley are experiencing an escalating use of temporary accommodation and significantly increasing costs. Following a proposal from Orchard & Shipman and in conjunction with specialist advisors Revenue & Capital and funders Pension Insurance Corporation, Orchard & Shipman have entered into a joint venture partnership with Bromley Council.
The JV has received funding commitments of an initial £86m with an option to increase the facility further if the Council chooses.
A property acquisition strategy has been agreed with Bromley’s Housing Options team and at the time of writing we have agreed sales on 65 properties to the value of £22,135,525.00 in our first few months of trading. We are ahead of target to purchase all properties within the first 12 months.
In addition to providing good quality homes, the council will save £1,742,000 annually in temporary accommodation costs.
Councillor Peter Morgan, Bromley’s Executive Councillor for Renewal, Recreation and Housing said, “We are excited at the potential to increase our housing supply which will not only provide much needed housing for residents we need to support but is also another example of how careful financial management can go hand in hand with delivering housing. This is positive news for those residents who may find themselves in temporary accommodation for longer than ideal, and for council taxpayers.”
Additional Information Guide
Project Overview
- Fixed rate institutional finance facility, subject to annual CPI indexation
- Initial finance costs are fully funded through current Local Housing Allowance rates, with no additional subsidy required from outset (subject to feasibility)
- All risks associated with owning, managing, and maintaining the properties sit with O&S
- No Capital Programme required by the Council
- All set up costs covered through the structure with R&C covering legal abortive costs.
- No interest or repayment costs in the first two years.
- Council has flexibility to let properties at private rents
- Council has the ability to extract capital appreciation in the future
- Option for the Council to buy properties for £1 at the end of term
The Council’s Obligations
- Enter into a Nominations Agreement with Orchard & Shipman Homes.
- Guarantee repayment of the loan to the lender (fully covered by the lease payments made by OSH to the Council JV)
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