Agenda item

REPORT OF THE SERVICE DIRECTOR – COMMERCIAL AND SERVICE DIRECTOR – RESOURCES

Settle (North Hertfordshire Homes) have approached the Council to seek a variation to the stock transfer agreement (of 2003) to allow for further borrowing against the transferred properties.

Following presentation of the Item and debate, the Part 2 Item was considered. The meeting then returned to Part 1 in order to make the decision.

RESOLVED: That a variation to the mortgagee in possession provisions in the stock transfer agreement as proposed by settle (North Hertfordshire Homes) be agreed.

REASON FOR DECISION: To amend the stock transfer agreement to allow settle to raise funding to increase the housing that it can build, with the expectation that a proportion of this would be in North Hertfordshire.

Audio Recording – Start of Item – Session 1 - 4 minutes 4 seconds

The Executive Member for Finance and IT presented the report entitled Change to the Stock Transfer Settlement Agreement with settle (North Hertfordshire Homes). The following appendix was presented with the report:

·                Appendix A - Existing and proposed wording of clause 5.2 of the Stock Transfer agreement dated 31 March 2003.

The Executive Member for Finance and IT advised that this was a technical change to the agreement, following a change in legislation, that would allow settle to borrow more money against their housing stock and that settle was one of the first stock transfer housing associations to take this action.

This could result in an increase in the number of social housing units provided by settle in North Hertfordshire, although this could not be guaranteed.

In the very unlikely event that settle were to default on the debt, under the EUV definition, the lender would have to maintain the property as social housing in perpetuity. Under the MV-STT definition, the lender would have to honour the existing tenancy but would then be free to dispose of the property on the open market.

The Executive Director of Finance and Resources, settle, advised that, although they could not give firm promises about where they would build future housing stock, 90 percent of their current stock was in North Hertfordshire and they had recently signed the Local Plan agreeing to work with NHDC regarding social housing, which gave some indication of their commitment to the area.

Paragraph 8.4 detailed the risk mitigations around the strength of their financial and internal controls that were already oi place. Also, this was an extremely small risk and  they would work closely with the Regulator to maintain the social housing sector as a no default sector.

The following Members took part in the debate or asked questions:

·                Councillor David Levett;

·                Councillor Tony Hunter.

In response to questions the Executive Director Finance, settle advised:

·                They were committed to providing affordable housing;

·                The aim was to provide 90 percent affordable housing of which 50 percent would be affordable rent and the rest shared ownership.

·                10 percent would be for market sale;

·                The term Social Rent referred to tenants that were referred by Councils and the levels of rent charged were regulated by Central Government;

·                Most affordable rent products were also regulated;

·                The profit from market sales would be reinvested into properties.

Following presentation of the Item and debate, the Part 2 Item was considered. The meeting then returned to Part 1 in order to make the decision.

Audio Recording – Start of Item – Session 2 – 8 seconds

RESOLVED: That a variation to the mortgagee in possession provisions in the stock transfer agreement as proposed by settle (North Hertfordshire Homes) be agreed.

REASON FOR DECISION: To amend the stock transfer agreement to allow settle to raise funding to increase the housing that it can build, with the expectation that a proportion of this would be in North Hertfordshire.