Agenda item

Right to Buy Receipt and PHI


The Strategic Lead Finance introduced the report and stated that it outlined how the right to buy receipts process functioned and the relationship that Thurrock Council had with PHI. He stated that in 2012 rules had changed which had allowed Thurrock Council to retain a bigger share of right to buy receipts, if they were reinvested in the borough within three years. He stated that due to the short-term length of this scheme, it had been difficult to reinvest the money and therefore Thurrock had worked with PHI to purchase homes in the area on the open market using HRA money and make use of the scheme. He stated that if the money had not been reinvested within the three year time period, the money would have gone back to central government and Thurrock would have paid compound interest. He explained that central government had then extended the deadline for reinvestment to five years, which had improved lead in times.

The Strategic Lead Finance highlighted table 1, which outlined that in 2021/22 the Council had received £21million from retained receipts. He explained that £9.2million of this had been spent on new properties for the HRA; and a further £4.8million would be spent by the end of the 2021/22 financial year. He explained that this would leave approximately £7million outstanding at the end of the year, and new receipts of £3.6million. He explained that the first stage of the process had been to acquire new homes through this scheme on the open market, and the second stage would be to invest in developments based on their financial viability. He stated that the relationship with PHI was outlined in the report, including the legal background and due diligence. He summarised and stated that at the end of the 2021/22 financial year Thurrock Council would have purchased between 130-140 houses to add to the HRA stock, and this would help alleviate the homeless need in the borough and reduce the allocations list.

The Chair thanked officers for the report and queried why the Council needed PHI to help with the purchasing of the homes. The Strategic Lead Finance replied that the team did not have the resources or logistical time to devote to the short-term project, particularly as buying 130-140 houses on the open market had been challenging. He stated that PHI had acted as a purchasing agent, and some properties had needed adaptations and works that had been included in the lease cost. The Chair queried if this project would continue. The Strategic Lead Finance replied that central government rules would be changing on 1 April 2022 which meant that Councils would only be able to purchase 20 homes on the open market and any more would have to be a percentage of Council investment. He explained that the scheme increased the housing stock for the Council, but did not increase the overall number of dwellings in the borough, so the Council would be encouraged to develop new schemes. The Chair asked how many one bedroom properties had been purchased through the scheme. The Strategic Lead Finance replied that he did not have the exact figures, but Thurrock Council had purchased almost all one bedroom properties within Thurrock that had met the criteria. He stated that the team had therefore had to expand the criteria to larger properties as they had exhausted the market.

RESOLVED: That the Committee:

1. Commented on the retained right to buy receipts position and the partnership agreement with PHI limited.

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