Agenda item

Rushmoor Housing Ltd, the Council's wholly owned housing company, is required to submit a six monthly report (copy attached) to the Council's Shareholder representative who is the Chief Executive. The Chief Executive is responsible for considering the report and where appropriate referring it to the Overview and Scrutiny Committee or the Corporate Governance, Audit and Standards Committee. On this occasion, the Chief Executive has referred it to the Overview and Scrutiny Committee for consideration. Tim Mills as Chief Operating Officer and Steve Ward as Chief Financial Officer for Rushmoor Housing Ltd. will be in attendance. A presentation on the background and content of the Shareholder report will be made.

The Committee welcomed Rushmoor Housing Limited’s Chief Operating Officer, Tim Mills and Chief Financial Officer, Steve Ward, who were in attendance at the meeting to give a presentation on the background and content of the latest Shareholder Report.

The Committee noted that Rushmoor Housing Limited (RHL) had been set up in April 2020 to provide quality homes for rent in the Borough. The Council was the company’s only shareholder and the Council’s Chief Executive had been appointed as the shareholder representative. Governance arrangements required a shareholders report, which monitored the company’s progress against its business plan, to be submitted to the Chief Executive every six months. The Report could then be referred to the Overview and Scrutiny Committee or the Corporate Governance, Audit and Standards Committee for consideration.

It was noted that between April 2020 – September 2021 a number of milestones had been reached. These included the purchase of RHL’s first property, it’s first tenant taking up residency and it’s first planning permission granted on two properties. In addition, the company had drawn down its first funding tranche to start the important role of income generation. The first audit had also been undertaken, which had established that the company had a reasonable level of assurance. As part of the audit, a number of actions had been identified to further strengthen the company’s position moving forward.

The Committee reviewed the balance sheet and profit and loss account. It was noted that RHL borrowed funds from the Council at a commercial rate of 5.5%, (the Council borrowed at a rate of around 1.5% equalling an average 4% profit) to fund property development and the acquisition programme. It was expected that the company would be in loss whilst undertaking the development and purchase programmes but this loss would, in time, be recovered through rental income. In response to a query regarding future profits, it was noted that, initially, any outstanding debt would be paid off. Any further profit could then be used to either investment in more properties, discount rents and/or make dividend payments to shareholders.

It was noted that professional expertise was in place to support RHL. External architects, solicitors and employment agents had been engaged to support the work and a procurement process was underway to set up a panel of valuation surveyors. It was also noted that a contract was in place with Romans Estate Agents to manage the properties on behalf of RHL. However, as the property portfolio increased consideration could be given to bringing the management in house.

It was reported that the business plan estimated that property delivery would be in the region of 60 properties by 2023/24. However, it was noted that the Council had approached RHL to purchase 80 properties in Union Yard and the revised business plan, to be presented to the Council at its meeting in February, 2022, would reflect this increase. The revised business plan would also reflect revised timings of the programme to take account of a better understanding of resources required to deliver the programme, delays in transferring sites to RHL and subsequent delays in rental income. These would be reflected in budget planning.

The Committee noted issues the shareholder had been asked note as part of the Report, in particular:

·         To achieve best consideration on lower profit rented properties

·         To reduce development risk by preparation of sites, obtaining planning permission and dealing with issues of title in advance of transferring properties to RHL

·         Provision of a new financial model – jointly developed to help assess viability of schemes

·         Consideration being given to changing the Articles of Association to allow leasehold property purchases moving forward

With regard to staffing, the Committee noted that RHL had been operated by Council staff on a charged basis. Costs for October 2020 - March 2021 had been £27,500 and this would increase as the workload increased over the next two years as the company developed. In response to a query, it was noted that the additional workload had been added to existing staff contracts to ensure no time would be taken away from their existing roles. In respect of conflicts of interest, especially in relation to planning applications, it was advised that the internal audit report had stated that no conflicts had been found and that the Head of Economy, Planning and Strategic Housing had no input to planning applications made by RHL.

The Committee discussed the option of becoming a Registered Provider, however it was noted that becoming a Registered Provider would not be worthwhile at the present time. In respect of affordable rents it was noted that a subsidy would be required to make it work economically, therefore this would not be an option at the present time.

The Committee ENDORSED the report on Rushmoor Housing Limited and the Chairman thanked Mr Mills and Mr Ward for their presentation.

NOTE:  Cllr K. Dibble declared a personal but non prejudicial interest in this item in respect of his involvement as a Member on the Board of Rushmoor Housing Limited and, in accordance with the Members’ Code of Conduct, remained in the meeting during the discussion. Cllr M.S. Choudhary also declared an interest in that he is an Estate Agent by profession and, in accordance with the Members’ Code of Conduct, remained in the meeting during the discussion.