INNER MIDDLESBROUGH HOME MOVER SCHEME
EXECUTIVE MEMBER FOR REGENERATION: DAVID BUDD
DIRECTOR OF REGENERATION: TIM WHITE
Date: 10th April 2008
Purpose of Report
1. The purpose of this report is to seek approval for the implementation of the Inner Middlesbrough Home Mover Scheme. The scheme will improve empty terraced homes in inner Middlesbrough and allow them to be used by residents from housing clearance areas.
Background
2. The Home Group Housing Association has approached the Council as part of a stock rationalisation process to discuss the future of the terraced properties it owns in the Gresham area.
3. The Home Group currently owns six properties located in the retained Gresham older housing area. The Home Group wishes to reduce the number of terraced properties it owns. Home has indicated that it would like to work in partnership with the Council in order to make these properties available for sale to residents relocating from the proposed Gresham clearance area, thus contributing to the Older Housing Vision. The properties would currently fail the decent homes standard and would require investment to enable the required repairs/improvements to be undertaken.
Process
4. A scheme has been developed whereby each of Home’s properties could be offered to residents relocating from the Gresham or St Hilda’s clearance area. An initial dwelling would be brought up to decent home standard using the grant aid support currently available from the Council. The improvement resources would be provided from the Council’s existing Major Assistance Scheme. This property would then be promoted to residents by Council officers and used as a show house to illustrate to owner-occupiers who are to be rehoused the standard of work that can be achieved through accessing the Major Assistance grant.
5. After viewing the show house, interested residents can choose one of the remaining five properties in the retained Gresham older housing area to purchase directly from the Home Group. The sale price of the show house property would be agreed between the Home Group and the Council prior to any renovation work and then made available to residents living in the proposed demolition area. The price for the five remaining properties would also be agreed and remain fixed for a period of six months after the show house renovation work has been completed. This will allow some time for properties to be marketed and matched with potential owners.
6. The Council would act as an agent for the five remaining properties. Residents who have agreed to sell their property to the Council would purchase one of the remaining properties from Home Group at the agreed price prior to any work being carried out. Once the resident has purchased the property, the Council would provide the funds through the Major Assistance Policy to carry out the improvement works.
7. This project will help support the advancement of the regeneration of Inner Middlesbrough. The improvement works will ensure that six void properties will become owner occupied homes for households leaving the clearance area. The work will have a positive impact on the area and demonstrate the Council’s continued commitment to investment in the older housing area.
Funding
8. Owner occupiers in the Gresham/Middlehaven area can benefit from the Older Housing Relocation Assistance (OHRAS), which can be up to £15,000, and Statutory Homeloss, which is set at a minimum of £4,400 or 10% of the property value, if they are relocating to a new house and remaining a home owner. Additionally a Major Assistance grant is also available to recipients of OHRAS who wish to remain in the older housing area and who purchase houses below the decent homes standard. The Home Group properties have lacked investment for a number of years and require improvement to bring them up to decent homes standard. However, for these properties to be eligible for a Major Assistance Grant it will require a minor amendment to the existing policy framework to allow residents using the Home Mover scheme to access up to £20,000 to undertake repairs and improvements in addition to the OHRAS and Homeloss payments.
9. The Home Group has produced a schedule of works and cost estimates to bring the six properties up to decent homes standard. A schedule of works will be produced by the Council to verify the level of work required. The Housing Assistance team will then request three quotes from reputable building companies to undertake the improvements. If the Home Group’s estimate falls below those received from the building companies then it will be awarded the work.
10. The Home Group will also provide the funds for minor decorations such as flooring for the show home and the remaining five properties should they be purchased by residents in the clearance area.
11. The six properties will offer an attractive option to owner occupiers who currently live in the proposed clearance area. The Home Group has estimated an average value of £65,000 for these properties. This ensures that the scheme would be affordable to owner occupiers who have accepted an offer from the Council of £45,500 or more. This is below the average price paid by Middlesbrough Council. Example one, below, sets out the total funds available to an owner who has accepted an offer of £45,500.
Example one
Purchase Price £45,500
Homeloss (10% of purchase price) £ 4,550
OHRAS grant (max) £15,000
Major Assistance Grant (max) £20,000
Total available £85,050
12. The value for the property identified as the show home has been verified by the Council’s Valuation and Estates service. The remaining five properties will be valued once the project has been approved. This will ensure that all the valuations provided by the Home Group are realistic.
13. Owners will be advised to obtain an independent valuation of the property by a qualified surveyor. Under these circumstances the Council would pay any reasonable costs as part of the current disturbance reimbursement.
Grant Conditions
14. The Council and the Home Group will enter into a legal agreement stating that the cost of any work to the show property would be protected by a legal charge until it has been purchased by a relocated resident. The charge would be removed and then transferred to the resident for a period of five years, which is consistent with the established principles of the Interim Major Assistance policy.
15. After the six months period for the properties to be made available exclusively to residents from the proposed clearance areas has elapsed, the Home Group would be able to place the properties on the open market and the Council would reclaim any monies invested to renovate the show house. To ensure the properties are only available to owner occupiers, the Home Group will place a covenant on the property, stating the purchaser must occupy it.
OPTION APPRAISAL / RISK ASSESSMENT
16. The introduction of the Home Mover scheme in the older housing area would provide owner occupiers with an extra housing option in terms of relocation. It will be particularly helpful as illustrated in paragraph 12, Example 1, for those who receive less than average valuations for their property.
17. Initially funds will only be committed to improve one property for use as a show house. Further expenditure will only be authorised once the demand for the scheme is established. The scheme is in accordance with state aid rules.
18. Any risk to the Council’s funding would be mitigated by a contractual agreement with the Home Group to recoup any investment on the show house should it not sell within the set timescale.
19. Requesting estimates from reputable contractors plus an additional quote from the Home Group ensures that the Council will achieve value for money.
FINANCIAL, LEGAL AND WARD IMPLICATIONS
Finance
20. The initial cost of renovating the show home is estimated to be a maximum of £20,000 and will be funded via the Interim Major Assistance scheme. The project will be defined in a legal contract agreed by both parties and will be legally binding so there is no risk to the use of the Council’s grant monies. The renovation of the remaining five properties will be carried out once they are purchased by residents from the clearance area in accordance with the current Interim Major Assistance policy. Funds are available to implement the scheme via the award from the Single Housing Investment Pot (SHIP) awarded to the Council from the Regional Housing Board.
Legal
21. No work will be carried out on the Home Group’s properties until a legal agreement is in place. The Home Mover Scheme has been developed in full compliance with the Council’s Standing Orders, with the support of the Procurement team.
Ward
22. The properties in the scheme are situated in the Gresham Ward. Two of the properties have been void for two years and the remaining four have been void for less than a year. Community Protection have reported that there have been no major cases of any anti social behaviour in any of the streets. The introduction of Selective Licensing in the Gresham area will add to the desirability of the properties.
RECOMMENDATIONS
23. It is recommended that the Executive Member for Regeneration approves:
a) the implementation of the Inner Middlesbrough Home Mover Scheme;
b) the amendment of the Interim Major Assistance policy to fund the improvement of the show home; and,
c) that any amendments to the Inner Middlesbrough Home Mover Scheme will be delegated to the Director of Regeneration following consultation with Executive Member for Regeneration.
REASONS
24. The recommendations are supported by the following reasons:
a) working in partnership with the Home Group to provide affordable housing would increase the opportunity of owner occupiers from the clearance area to remain in owner occupation;
b) the scheme could set a precedent and enable partnership working with other local RSLs to provide affordable housing in a similar manner for residents who are in clearance areas;
c) it will allow the Council to purchase properties from residents who would have otherwise been unable to move; and,
d) the implementation of the Inner Middlesbrough Home mover scheme will enable commitments to residents be realised and to assist in achieving delivery targets this financial year.
BACKGROUND PAPERS
The following background papers were used in the preparation of this report:
Executive Report: Building Sustainable Communities in Inner Middlesbrough, the Way Forward, 20 July 2005
AUTHOR: Michael Canavan
TEL NO: 729114
Email:
Website: http://www.middlesbrough.gov.uk
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