A representative from AmicusHorizon has been invited to attend.

The Chairman welcomed Eileen Martin (Regional Director) and Neill Tickle (Development Director) from AmicusHorizon (AH) to the meeting.

The Regional Director and Development Director described their roles in the organisation and explained that AH owned 28,000 homes in the south east; 7,383 homes in Swale, 343 of which were shared or leasehold.  It was explained that 520 new homes had been built by AH from 2011-2015, and should the proposed merger with Viridian, a housing association primarily based in London, go ahead, the merged organisation would own 44,000 homes.

The Chairman referred to the topics and questions already provided to AH prior to the meeting and the Development Director outlined the following issues faced by AH in providing more social housing provision:

·         3-5% rise in build costs

·         Rise in annual inflation (12-18% in last two years)

·         Reduction in Government subsidies and grants

·         Changes to Government Legislation and Policies

·         Costs of building housing in deprived areas is roughly equal to non-deprived areas but rent charged is less

·         Possible introduction of Right to Buy scheme for all social housing tenants and its implications

·         Classification of affordable housing being extended to starter homes

·         Introduction of cost to value being considered as a measure for rental homes to monitor spend

·         Borrowing against asset base – merger with Viridian could enable increased borrowing

In answer to questions from Members regarding the proposed merger with Viridian, the Development Director and Regional Director of AH advised that Viridian had similar focus and principles to AH; were based in and owned property mostly in London; owned 16,000 properties; were considered to be a good partner for AH; could facilitate savings; could facilitate higher borrowing against higher value London-based properties; and the name of the organisation could change if they merged.

The Development Director further clarified that due to the Government’s proposed reduction in funding social rents by 1%, a £40million loss in income was expected up to 2020, but the actual total was likely to be £60million loss due to a lower base line rent.

In response to a question from a Member regarding residents from outside Swale moving into properties within Swale, the Regional Director advised that tenants were housed directly from Swale’s Housing Register and must meet the criteria which included a five-year residential qualification, although a very small proportion of residents had mutually exchanged from out of the area.  The Chairman encouraged Members to share this information as public perception was sometimes incorrect.

The Development Director spoke of the cost implications in building larger homes and the knock-on effect of unaffordable higher rents, and advised that in order to house tenants in larger, more expensive properties, AH’s policy had changed to include tenants with their own income.

A Member asked what plans there were to build more housing in rural areas and what difficulties there were in obtaining planning permission for housing in rural areas?  The Development Director advised that land for housing was continually sought, AH had a 71% success rate of securing land they required, and they projected to double the number of houses in Swale post-merger.

A Member asked how the current 75 homeless families in Swale could be reduced, and sought clarification on the proposed introduction of the Right to Buy scheme for social housing tenants.  The Regional Director and Development Director advised that AH had assisted the Council in housing 36 homeless families in AH housing being used as temporary accommodation, and were open to ideas to assist in the future.  Further detail on the Right to Buy scheme was expected but it was likely the scheme would be phased to avoid loss of housing, and replacement homes were likely to be shared ownership due to cost implications.

In response to a question from a Member concerning funding from private developers and savings on buildings costs, and the differing housing issues in London where Viridian were based, the Development Director advised that there was provision in  Section 106 Agreements to provide a proportion of social housing in new developments. The typical cost was 60-70% of market value and to keep costs down the design of, for example, types of kitchen were regularly reviewed.  There were housing needs in all geographical areas, and post-merger there would be £300million in total to spend; however, the proportion of the split may change and AH may receive a smaller proportion of a bigger number. Up to 2,000 homes per annum were projected to be built within the merged organisation.

The Regional Director spoke of efficiency savings and of the disposal programme to offload unaffordable housing, and a Member raised concerns that shared ownership schemes would affect poorer tenants, pushing them into expensive private rented accommodation.  The Development Director agreed that this was a risk, but AH would work with Government initiatives and proposed Rent Policy Changes.

A Member asked how developing specialist care housing was calculated and whether the ‘pay to stay’ scheme was advantageous to AH?  The Development Director advised there was a mixed programme of homes, and gave the recent Development at Regis Gate as an example of an extra care scheme.  He advised that costs were scrutinised; it was more expensive to deliver specialist care housing and AH worked with local authorities to assist in their biggest needs, such as tenants with learning disabilities and victims of domestic violence.  He further explained that as part of the Spending Review, grant funding could provide supported homes.  The Regional Director added that AH was actively pursing Health funding, and the ‘pay to stay’ scheme was advantageous to AH as more money could be collected, but further details were required on the scheme.

A Member suggested a proactive policy for families living in especially adapted properties, or larger properties for larger families where families should vacate a property when the need was no longer required, and highlighted the shortage of those types of properties. She further suggested a proactive management policy for residents to downsize, and felt that properties should be better managed in this regard.  The Regional Director advised that most families living in adapted properties moved on when the property was no longer required, and advised that lifetime tenancies no longer existed;  tenancies were fixed for five years then reviewed.  Specialist properties were expensive to build, and AH were waiting for clarification on whether these properties would be exempt in the right to buy scheme.

In response to further questions about the proposed merger, the Regional Director and Development Director advised that AmicusHorizon had learned from the previous merger, the regulatory rating for Viridian was very positive, and the merger issue was going back to the Board in January 2016 following further due diligence.

A Member suggested AH could consider Residential Home Parks like Beckenham Park in Upchurch for housing, and was advised by the Development Director that whilst not currently under consideration, this option would not be dismissed.  The same Member referred to no provision of affordable homes on Sheppey in the Local Plan. He was advised by the Regional Director that the next four years had to be financially viable; affordable homes were currently being built on Sheppey, and the merger may bring more capacity to build more homes.  The Regional Director added that AH were currently building on land they own and generally they bought larger sites.

A Member sought clarification on how the proposed merger would impact on residents and how the operation would be managed.  The Regional Director advised that the current strategic plan would end in March 2016 and was on track to achieve its targets, and there would be a budget set for 2016/17.  She further advised that residents’ satisfaction was very high, so service quality could be reduced but would still be high, and customers had been asked what service levels  they would expect.  The Regional Director advised there would be a one year strategic plan in future with Viridian, efficiency savings were being unlocked, and whilst she did not know where the housing association would be based in the future, it would be cheaper to be based in Kent.  She further advised that the merged housing association would take the best practices from each other.

The Chairman asked what the alternative would be if the merger did not take place, and was advised by the Regional Director and the Development Manager that the housing association would be moving to open market sales; continuing with efficiency savings; and responding and acting on residents’ requests.  A Member supported that approach and asked whether there were any other funding opportunities AH could explore?  The Development Manager advised that funding opportunities could be explored as accounting rules were changing, but AH would not commit to large scale debt as investors wanted.  He further advised that Kent County Council (KCC) had bridged funding, there had been joint ventures with Swale Borough Council (SBC) and, although there were limited land holdings, AH welcomed more joint ventures with SBC.

When asked whether the planning process was a barrier to AH, the Development Director advised that AH worked proactively with planners for a positive outcome, and he was not aware of any issues with SBC in this regard.

A Member congratulated and noted the good relationship AH had with their tenants. The Chief Executive spoke of the benefits of SBC relinquishing the housing stock since under the current legislative plans, local authorities would have to pay extra money back to the Treasury under the ‘pay to stay’ scheme, and pay further money in advance to the Treasury from high value right to buy properties.  He also highlighted the decrease in levels of home ownership and the legal challenges of changes in regulations.

The Chairman thanked the representatives from AmicusHorizon for their contributions.