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London borough to transfer 950 homes from HRA to ALMO-owned housing association
A north London council will ask housing secretary Robert Jenrick for permission to transfer up to 950 Housing Revenue Account (HRA) homes to a housing association owned by its ALMO.
Barnet Council intends to “trickle transfer” the homes to Opendoor Homes, a subsidiary of its ALMO Barnet Homes, as they become vacant.
A report to councillors said the move will “provide financial benefits to the council which can be used to support housing services provided to homeless people” and “increase the asset base of the housing association, enabling them to build more affordable homes”.
The authority’s housing and growth committee approved the proposals as part of an update to its HRA business plan on Monday night, having previously agreed to the plan in principle in 2018, with the full council giving its consent yesterday.
Legislation requires the council to seek permission from Mr Jenrick before it can push ahead with the transfer.
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Barnet Council will also seek an agreement with the Greater London Authority to give Opendoor permission to let the transferred homes at London Affordable Rent, which is around 50% of market rent and slightly more expensive than the social rents that the homes are currently being let at.
This higher rent will allow Opendoor to pay the council a £2,000 premium annually for each home transferred – which will total £1.9m once the 950-home target has been hit.
The council will then use this money “to manage the costs associated with homelessness and temporary accommodation”, according to the HRA business plan update.
It is expected to be cost neutral to the HRA as existing debts, management and repair bills will also transfer to Opendoor.
The housing association will use private loans to buy the homes from the council for around £31,000 each – equivalent to the average debt held against homes in the HRA.
However, the officer’s report warns that transferring HRA property below value “is potentially state aid notwithstanding any consent received from the secretary of state” and would be unlawful unless the proposals “fall within a permitted exception” currently being explored by the council’s lawyers.
Tenants of the transferred homes will rent on assured tenancies and have the Right to Buy, while Opendoor will take responsibility for their management and maintenance.
Opendoor became a registered provider of social housing in 2016 and is currently working on a programme to deliver 340 new homes on council-owned land across Barnet.
According to the Regulator of Social Housing’s 2019 statistical data return, it currently owns 37 homes all for affordable rent, but the council intends to boost its stock to more than 2,000 through the trickle transfer, its development and acquisition programmes and a separate proposal to transfer the council’s temporary accommodation portfolio.
Once transferred, the 950 homes are expected to give Opendoor enough capacity to build an extra 40 homes for affordable rent.
Barnet’s updated HRA business plan – the first to reflect the removal of the debt cap – includes building an extra 250 new homes over the next five years on top of the 87 already programmed.
And it provides for new investment of £35.6m over three years in homes on delayed regeneration schemes Grahame Park and Dollis Valley.
The council has recently come under fire for conditions at Marsh Drive, a block which has long been scheduled for demolition as part of the West Hendon Estate regeneration.
It now has plans to spend £185.2m in its 10,000 existing council homes over the next six years including 2019/20 as well as £187.2m on new supply, with projected borrowing of up to £408m.
