Agenda item

Report on i4B Holdings Ltd

This report provides the Audit and Standards Advisory Committee with an update on i4B Holdings Ltd’s (i4B) recent performance, proposed 2019/20 Business Plan, audit arrangements, and risk register.

Minutes:

Peter Gadsdon (Director, i4B Holdings Ltd) introduced the report which provided an update on i4B Holdings Ltd (i4B) recent performance, proposed 2019/20 Business Plan, audit arrangements and risk register. He highlighted that the same Directors sat on the Board of the Council’s other wholly owned company – First Wave Housing Ltd (FWH). Two of them were Council Officers (Gail Tolley, Strategic Director of Children and Young People and Peter Gadsdon, Director of Performance, Policy and Partnerships), one was a backbench Elected Member (Councillor George Crane) and two were independent. The main purpose of the Company had been to assist the Council reduce homelessness by providing affordable, good quality homes, while delivering regeneration and financial benefits to the Council.

 

Business Plan

The Committee heard that the version of the 2019/20 i4B Business Plan that had been included in Appendix 1 to the report (page 89 of the Agenda pack) was identical to the one that would be presented to Cabinet for approval on 11 February 2019. It contained a five-year forecast for the operation of the Company, including a risk analysis and a financial analysis in the context of changing market conditions and Brexit. Mr Gadsdon reported that the acquisition of properties had not been at the pace originally envisaged and the main reason for this was related to the changing market conditions. Nevertheless, the Company had been able to purchase a greater share of in-Borough properties at lower prices than predicted, but the property supply was decreasing. The majority of units were flats and a large proportion of properties were leasehold which meant that additional costs, such as ground rent and service charges, had been added to the Business Plan.[1] 

 

The Board had held discussions with the shareholder about potential ways in which the Company could contribute to meeting housing targets in the Borough. It had been proposed to divert a proportion of the money to buy new build homes on Council ground. Conrad Hall (the Council’s Chief Finance Officer) said that building Council housing had become more feasible after the Housing Revenue Account cap had been removed and changes in the Right to Buy legislation had been made. Furthermore, increasing the share of properties in Brent and the surrounding areas had been considered as it had been difficult to place residents outside of the Borough. It had been envisaged that the current demand for out-of-Borough accommodation could be met by acquiring 10 properties in addition to the 70 that had already been purchased. The total number of units to be acquired would not be changed and that it would not be necessary to amend the financial requirements of the programme over the 30-year period.

 

As the Business Plan proposed using a portion of agreed funding for intermediate rented accommodation to support the purchase of one block of 153 units for the provision of key worker accommodation at 60%-80% market rent, i4B would work with the Council’s housing supply and partnerships team to develop this opportunity. 

 

Members asked questions about the share of mobility-friendly homes in i4B’s portfolio and about the way the Company worked with the Council’s housing and social care services. Mr Gadsdon said approximately 10% of i4B properties would have level access and walk-in showers – they would meet the standard that had been agreed with the Council and adaptations would be agreed with the Housing Needs Service to ensure that they matched the specific needs of customers. This was part of the Company’s wider engagement with housing and social care services aimed at identifying suitable residents for the types of property acquired by i4B. Mr Gadsdon reminded the Committee that the Company had a net yield target of 1.1% which had to be achieved across the portfolio so investments in adapting units put pressure on the Business Plan. 

 

Operation

Mr Gadsdon pointed out that, as of January 2019, 168 families, including 411 children, had been directed to i4B. Responding to a Member’s comment that the number of families re-housed from Women’s Refuge had been low (2), he said that there could be other pathways to allocate residents in i4B properties – for example, sometimes vulnerable women might need to be placed in other boroughs so Brent could have arrangements with other local authorities in relation to this matter.

 

As far as actions taken to promote properties in the Home Counties were concerned, Mr Gadson said that a campaign, aimed at homeless families who had been on the housing register prior to 2012, had been run, but take up had been low. The Board recognised the risk that families who had been added to the register after 2012 could make themselves intentionally homeless should they decide not to accept an offer for accommodation. In fact, there had been 35 cases of discharge of duty based on refused offers. In response to various questions about allocations, Mr Gadsdon stressed that the Company managed properties and did not place people in accommodation directly. However, he advised Members that he would pass their enquiries to the Housing Options Team.

 

It was noted that there were approximately 2,400 families living in temporary accommodation and i4B was only one of the means available to the Council to relieve homelessness. Conrad Hall (the Council’s Chief Finance Officer) commented that if no new families were added to the housing register, by the time the project was completed, i4B would have housed ¼ of the current waiting list.

 

Performance

Delivery on the Key Performance Indicators (KPIs) related to conveyancing and refurbishment had improved significantly over the last year, with the last 50 properties acquired hitting both targets. Refurbishment turnaround time had been satisfactory, there were no delays in letting units in Brent, the issues with the four-bedroom properties located in the Home Counties had been solved and 100% of properties have valid gas safety certificates. The overall number of voids since the Company had begun operating was six, all of them located outside the Borough. The Board was confident that all three housing management providers (Brent Housing Management, Pinnacle Group Housing and Mears Group) were performing well and re-tendering of the contract for services in the Home Counties with the aim to improve performance had been considered at the last Board Meeting on 24 January 2019.

 

Members asked why management and maintenance fees had been predicted to increase sharply to £2.1 million in 2023/24 and Mr Hall advised the Committee that this question would be forwarded and a response provided by the next meeting.

 

Rent collection rates had been increasing on a monthly basis in the last year and the Board expected the target of 98.5% to be achieved in the next six months. However, there had been issues with tenants who received Housing Benefit (HB) as there was a gap between them being allocated the property and starting to receive HB. In addition, there were cases in which families had been entitled to less that they had expected which could lead to rent arrears.

 

Referring to lessons learned, Mr Gadsdon said that operating the Company had been more challenging than expected, especially in relation to the level of detail entailed in developing policies. Mr Hall added that the findings of the internal audit on Private Rented Sector Model Review had been reassuring, especially when the complexity of the arrangements for the Company was taken into account (for details, please see Appendix 3 (page 139 of the Agenda pack). Most of the findings had been around technical points of design and best practice, and also general understanding of areas of methodology. There had been two high level findings related to methodology (the way in which experience analysis was used to calculate average property prices and rental values and the use of house price inflation (HPI) as well as the assumptions used for both HPI and rental growth) and officers would be working to implement recommendations at the start of the 2019/20 financial year.

 

RESOLVED that:

(i)            The contents of the Report on i4B Holdings Ltd, be noted;

 

(ii)          The plans set out in the Company’s draft 2019/20 Business Plan be noted;

 

(iii)         The summary of the financial and non-financial benefits of i4B’s operations; be noted;

 

(iv)         The update to the i4B risk register be noted; and 

 

(v)          The update on recent i4B audits, and progress towards implementing previous audit recommendations be noted.

 



[1] It was noted that the conveyancing of leasehold properties was likely to be more complex.

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