Council-owned housing firm set to close amid governance concerns and debt

A report by the council’s chief finance officer, Kit Wheeler, flagged that HHC has only two directors instead of the required three. Mr Wheeler said as a result the “current decision-making process” was “not providing good governance and control”.

He also warned there had been “considerable criticism” over delays on acting on recommendations from a value-for-money audit, which meant the council faced “reputational risk”.

HHC was established in 2017 to acquire local homes and generate income for the council through rent. The council funded the firm through a loan after agreeing to borrow from the Public Works Loans Board.

According to Companies House records, HHC’s loan from HBC is nearly £5.5m, while it paid £285,933 interest on the loan in the year to the end of March 2024.

Since it was launched, HHC has acquired 15 properties mostly operated as HMOs, offering 61 units of accommodation, according to the report. HHC also has a pub and four shops in its portfolio.

Speaking separately to HBC’s cabinet last month, Mr Wheeler said HHC’s income from rent had not been enough to pay the loan back.

“We’ve ended up with a situation where the company owes the council substantial amounts of money, and the housing company is owed substantial amounts of money,” he said.

HHC is pursuing that money “through the correct legal channels”, Mr Wheeler told councillors.

The cabinet’s recommendations are set to be discussed at an HBC full-council meeting next Wednesday (14 January). 

Separately, the council’s cabinet was told this week that its housing department is facing an overspend of nearly £1m in the current year, due to more people in temporary accommodation than the council had budgeted for.

In 2023, a Local Government Association report warned HBC’s increasing spending on temporary accommodation was putting it at risk of bankruptcy.

Hastings Borough Council was approached for comment.