Agenda item

This report provides an update on i4B’s operational performance. The report includes an update on i4B’s delivery of its policy objectives of providing good quality affordable housing and reducing the use of temporary accommodation.

Councillor McLennan (Deputy Leader, Brent Council) introduced the report, explaining that i4B was set up as an organisation to address Brent’s homelessness needs. She explained that between 2010 and 2015 homelessness doubled in Brent, so alternatives were looked at for the community. It was felt that the accommodation being secured at the time was unaffordable and unacceptable and the Council did not want their residents to be living in those conditions, therefore the Council set up a private Company in 2016 to address the issues, support the housing market and ensure people were placed in decent homes and had security. The report highlighted where i4B was, i4B’s performance and its future.

Martin Smith (Chair of i4B) agreed that i4B’s principal purpose was to provide good quality, genuine affordable housing in properties that were managed by a responsible and decent landlord. The mechanism whereby the Company looked to do that for that past 4 years was to buy property on the open market, mainly in Brent, refurbish them to a good standard, and then let to people who may otherwise be placed in temporary accommodation. He advised that all properties i4B let were at rent levels no greater than the local housing allowance for the relevant location and were therefore genuinely affordable. By the end of the last calendar year i4B had purchased 302 properties and provided homes for 297 families with 713 children. He felt certain that without the Council’s initiative to set up i4B all of those people would be in temporary accommodation. He also noted that over the past 12 months i4B had been progressing a purchase on a Quintain block in the Wembley Park development with the specific purpose of providing affordable accommodation for key workers in hard to recruit areas, with properties rented at a discount. I4B expected to start letting those properties in February. He noted that this was a different sort of product to what the Company had been doing but that it contributed to the overall objective of increasing the proportion of Brent housing stock that was genuinely affordable to people in different parts of the market. The Company’s plans for the future were broadly to continue along that route and look for other opportunities that became available. I4B currently had just over 350 properties, with an additional 153 properties from the key worker block, and it was expected that another 180 properties would be added to the portfolio over the next few years, so by 2023 the Company should expect to have around 600 properties.

Peter Gadsdon (Company Director, i4B) added that the Company had been through the Audit and Standards Advisory Committee, with questions about the difference between i4B and Croydon’s Brick by Brick. He clarified that the Companies had very different models with very different risk profiles, and i4B purchased properties on the open market, refurbished them and let them, working around a net yield model over 30 years meaning the Company would not buy properties it could not afford and were not trying to sell properties on the open market to make the business model work.

The Chair thanked Councillor McLennan, Martin Smith and Peter Gadsdon for their introduction and invited members to ask questions, with the following issues raised:

In response to whether the Company had viability to buy large 4-5 bed properties, deal with housing problems for larger families and apply for DFGs when adaptation was needed, Martin Smith explained it was much more difficult for i4B to buy the larger properties particularly in Brent. The initial approach was to buy larger properties in the home counties, but those properties had been the least successful stock and were less popular with tenants than anticipated so the Company stopped buying home county properties around 18 months ago. The Company worked with Laurence Coaker’s team in the homelessness department to ensure they were still buying properties that met the housing need, and increasingly the Company were looking for properties that might suit some of the most difficult to home families including people with disabilities, therefore Martin Smith believed they could apply for DFGs and this was something the Company were looking at currently.

The Committee discussed the new Key Worker Block purchased on the Wembley Park development. A Committee member noted that if Brent was paying the living wage Brent employees should be able to afford to rent on the private market, and asked whether this was a form of jumping the queue. Councillor McLennan emphasised that the allocation of key worker housing was for staff doing day to day vital roles for residents that the Council wanted to ensure remained in Brent. She emphasised that not all Brent workers had the type of income that could afford market rent, and noted that Hakeem Osinaike had stated earlier in the Committee meeting that a lot of residents could not afford social rents, and that included people undertaking key work. She explained that the roles they were looking for to fill the key worker block were those that were difficult to recruit to, many of whom may not have the income to rent on the private market. There was an income limit for those eligible to seek the accommodation as well as a salary threshold. Martin Smith added that the normal i4B policy could not have been applied to the block due to the section 106 agreement with Quintain and it would not have been financially viable to do so, therefore i4B looked at other ways the block could benefit Brent. He also added that the block would improve i4B finances over time, enabling the Company to buy more properties for the housing needs it was trying to supply for. The discounted rent would be at 65% of market rates.

Further discussing the key worker block, Peter Gadsdon advised that Committee members and anyone interested could find the allocation policy on the Brent Council website. The allocation had 2 tiers; the first tier included key worker roles such as social workers, occupational therapists, educational psychologists, planners, surveyors, architects, health visitors, nurses, midwives and speech and language therapists; roles which he advised were critical public sector roles that would be at the lower end of the pay scale and who would find it hard to work and live in the area they provided services for. Tier 2 would bring in a wider range of public sector workers. Those applying for the key worker housing needed to be earning at least £31k for a one bed property due to the financial assessment undertaken to ensure people could afford the rent, and there was a salary cap also. The salary range was linked to the government rules around key worker housing.

The Committee asked what independent executive oversight of the Company took place. Martin Smith advised that Cabinet oversaw i4B through a number of mechanisms, such as the sign off of the Company’s annual business plan. In addition the Audit and Standards Advisory Committee oversaw the risk and financial components of i4B, with directors attending regularly, and there were regular shareholder meetings where the Chief Executive of Brent Council and the Director of Finance at Brent Council represented the Council’s interests and met with the directors of the Company for operational and strategic oversight of the Company.

In response to a query regarding the net yield model, Martin Smith agreed to provide a worked example of the net yield outside of the meeting. He explained that the principal reason for its increase was because the Company worked out midway through the life of i4B that the yield was not sufficient to keep the company financially viable over the medium and long term, therefore they toughened the criteria slightly to get a better yield which was now flowing through into its portfolio.

The paper included performance of the Company, and did not differentiate between providers. It was noted there was not a substantial difference between the different providers, and the most difficult area in performance had been the home counties properties as they were the most difficult to let. Regarding plans for energy performance, Martin Smith confirmed the Company had set goals early in its tenure but now needed to update those to take into account the Council’s recent aspirations which it was planning to do next year.

Regarding what happened with residents if their housing needs changed while they were i4B tenants, Martin Smith advised that they would go into the Brent housing needs system and i4B would try to look favourably on people in their properties whose needs changed either by adapting the property or trying to accommodate them in another.

The Company had no plans to move into HMO management.

During the discussion a number of requests for information were made, which included:

i)              To receive a worked example of the i4B net yield model, or the annual return, on a property owned by i4B, and the yield on all i4B properties.

ii)             To receive information on the value of the portfolio of properties owned by i4B.

iii)           To receive data on when the last 4 or 5 bed property was bought by the Company.

iv)           To receive information on the strategic oversight on the entire housing policy.

The Chair moved on to invite Committee members to make recommendations, with the following recommendations agreed:

i)              To recommend a review of the governance arrangements of i4B to ensure it is robust and challenging and there is accountability and oversight.