All in the name
Confusion over the status of Local Housing Companies has stopped them from aiding development, says Helen Meyler
Local Housing Companies were promoted in an English Partnerships green paper in 2007 as a means to aid development schemes. The concept is simple. An equal joint venture vehicle between the public and private sector dedicated to increasing the supply of affordable housing but, as a privately incorporated vehicle, freed from the regulatory constraints of operating within the public sector.
Why then, two years on, have no LHCs actually been incorporated? A key issue is whether the vehicles are indeed private and whether their activities should be on or off the balance sheets of local authorities. Classification sits with the Office of National Statistics whose decision will be made on the facts of each case.
This uncertainty raises a whole host of questions: will the use of revenue and capital receipts be subject to Housing Revenue Account rules; what is the impact on public sector borrowing requirements of any debt taken on by the LHC; should development and contractual opportunities created by the LHC be in line with EU and UK procurement requirements?
If Homes and Communities Agency funds are proposed to be directed into the LHC vehicle, these projects will be subject to further approval by Communities and Local Government Department as, under the HCA framework, they are construed as potentially ‘novel, contentious and repercussive’.
There is evidence of enthusiasm for LHCs. However, while all the risks and uncertainty remain - along with the cost and risk for the private sector bidding to be a local authority’s joint venture partner - perhaps this optimism will wane once participants fully understand the obstacles.
Helen Meyler, partner, Davies Arnold Cooper, email@example.com