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Haringey Council considers JV and bond for refurbishment
Haringey Council is considering establishing a joint venture (JV) for housing acquisition and refurbishment, which could raise £95m on the bond market.
An advertisement posted on the government’s contracts website describes the council’s plan to acquire, manage and repair 400 homes through the JV, both inside and outside the borough.
The council has not voted on the proposals yet and a spokesperson told Inside Housing that they were still in an early stage, adding: “Currently we are simply seeking expressions of interest to explore how we could work with a partner to acquire properties to increase supply and improve the quality of temporary accommodation.
“No decision has been made about whether to proceed with this proposal at this stage.”
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The advertisement, however, states: “The London Borough of Haringey Council intends to select a partner with which to facilitate housing acquisition and refurbishment in Haringey.”
According to the advertisement, the council anticipates that the joint venture will be established next month and begin to purchase housing units in June.
Haringey Council also aims to use the JV to raise £95m on the bond market with a 40-year term. The advertisement will only run for a month, with responses required by 22 January. The contract would start on 1 February, lasting until 28 February 2058.
Inside Housing understands that the proposals are along similar lines to the joint venture pursued by Bromley Council in 2016. Bromley partnered with private contractor Mears to provide temporary accommodation for homeless families.
Under that model, the joint venture bought properties locally and, similarly, borrowed £81m with a 40-year term from the private placement bond market.
Though it was technically a JV, Mears undertook all identification, acquisition and refurbishment work, also carrying out all tenancy and asset management services for the 40 years.
Local authorities are far less active in the bond market than housing associations, which have regularly issued bonds primarily for development finance since the recession.
It is possible the use of a joint venture model could take the borrowing ‘off balance sheet’, meaning it escapes the local authority borrowing cap. The council has said it plans for the partner in the venture, rather than the council, to be liable in the bond market.
