Council-owned landlord evicts tenants to repay £18m council debt

Tenants of NCH Enterprises, a council-owned company, are facing eviction as the firm tries to sell 44 properties to repay a £18m debt to Nottingham City Council, the Local Government Chronicle (LGC) reveals.

The news comes just days after it was revealed that the council had failed to ringfence its selective licensing fees.

The company, a subsidiary of Nottingham City Homes (NCH), which manages the council’s housing stock, owes the money to the council for illegally using funds from the housing revenue account (HRA) over six years.

The Chartered Institute of Public Finance and Accountancy (CIPFA) found in 2022 that NCH had breached the law by not ringfencing the HRA funds, and the company admitted in its latest accounts that it has an ‘obligation’ to return the money to the council.

Took back the management of its housing stock

The council, which issued a section 114 notice – a legal warning of impending bankruptcy – last year, took back the management of its housing stock in March 2023, along with all NCH staff.

However, a service level agreement between the council and the company means the same staff still provide services to the properties owned by the company.

The company’s accounts for 2022-23, filed in January, show that it still owns 187 properties, which it lets at market rent.

The accounts also reveal that it has ‘commenced the process of asset sales’ as part of the solution to the £18m debt.

LGC has obtained one of the letters sent to the affected tenants, which shows that the company is issuing section 21 notices, also known as no fault evictions, to them.

The letter gives the tenants a ‘move out date’ and asks them to ‘let us know asap if you have any queries’.

‘We’re having to take difficult decisions’

A spokesperson for the Nottingham City Homes Group board, speaking on behalf of the council, told LGC: “These are difficult times and we’re having to take difficult decisions.

“Our for-profit subsidiary is not making a profit, which is putting the group as a whole at risk.”

They added: “The controlled approach we’re taking to winding up NCH is working well, and we will continue to work closely with affected tenants to support them in every way we can to find new homes.”

Pledged to end section 21 ‘no-fault’ evictions

The government has pledged to end section 21 ‘no-fault’ evictions, which allow landlords to evict tenants without giving a reason, with two months’ notice under the Renters (Reform) Bill.

However, one tenant accused NCH of acting like a ‘rogue landlord’ and said the letter did not inform them of their rights as tenants.

They said they could stay in their property beyond the date on the section 21 notice and require the landlord to seek a court order, which could take up to five months.

The tenant told LGC: “They are panicking and causing unnecessary stress during these difficult times by informing their tenants that they ‘must be’ out on a particular date rather than explaining their tenants’ rights.”

Staff had visited every tenant in person

The NCH spokesperson said staff had visited every tenant in person to explain the situation and their rights and had given affected tenants ‘first refusal’ to buy the property.

They said: “We appreciate that this is difficult for our tenants, and it was a difficult decision for us to take, but we believe we’re acting in the best interests of the group as a whole and the wider tenant population we serve.

“We have been careful to offer affected tenants flexibility as regards timing of the end date of their tenancy and have assured them they can come to us to discuss their concerns at any time.”

Share This Article