Council to buy homes with a REIT to tackle homelessness

Buying existing homes won’t tackle homelessness. It doesn’t increase the number of homes.

Building homes will tackle homelessness but there will always be more people wanting to move to the U.K. that the U.K. can accommodate.

A bunch of councillors running a REIT funded via taxpayers' money. What could possibly go wrong?
Well, here's my £100 that says it'll crash and burn at huge cost and Hackney will join the list of bankrupt councils. The "property consultancy" will have disappeared into the distance but will have trousered vast sums of taxpayers' cash in "consultancy fees" in the process.
Nottingham - Robin Hood Energy
Woking - a string of disastrous investments
Ditto over the rest of the country including the idiots in my town

The article mentions Home REIT. I am one of the unfortunate shareholders who bought the story of housing the homeless, not realising that their advisors were simply buying poor quality properties to rent to poor quality corporate tenants, while trousering their fees.
Right now, the new managers are still trying to understand the condition of the properties and the tenants. With only 9% of rent collected, several hundred properties auctioned well below cost and the FCA involved, this should be a cautionary tale for Hackney or any other council planning to go down this route.
The risks should be slightly lower for the councils as they are effectively giving tenants the money, so it can be paid back to them as rent.

Reply to the comment left by Grumpy Doug at 11/03/2024 - 13:03
Diane Abbott has run the numbers for them, and they guarantee a large profit!

hahaha - this made me laugh..along with the other article just released in 'Inside Housing' saying Redbridge council were looking at the same thing... see below.

1. There are no houses actually built yet or dates of when they will be.
3. Buying of existing houses in their boundary - where exactly and who from????
3. Investment companies are ONLY going to be interested in a return - and this is NOT the model unless it is seriously in their favour...so it will be a case of buckets and buckets of tax payers money being thrown at the issue now just to be seen to do something 'positive' about getting the temp accom bill down. Throw cash now - worry about paying the bill and the problems later...

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Councillors in east London have backed plans to purchase properties for temporary accommodation across the borough in a bid to ease a shortage and reduce costs.
Redbridge Council backs plans to buy homes to ease temporary accommodation shortage .
The London borough of Redbridge’s cabinet agreed proposals put forward by deputy leader Kam Rai for council officials to be given power to buy homes and acquire others on long-term leases.

A separate report to cabinet, published last year, showed that almost 3% of households in the borough were in temporary accommodation.

“The council is becoming increasingly reliant on nightly charged rates for bed and breakfast and serviced apartments for a growing proportion of households, which is not only financially unsustainable but non-compliant with our responsibilities,” the document said.

London council to set up REIT and lease back 300 properties in bid to boost temporary accommodation as Monthly spending on temporary accommodation reached £90m in London last year

It follows a similar report last week by Hackney Council, which is looking to lease 300 properties from a newly established real estate investment trust (REIT) to boost its portfolio of temporary accommodation.

In Redbridge, the council pointed out that it had been “outbid” on local properties by the Home Office, which was placing refugees arriving in the UK in the borough.

In its report, the council said it had “several options available and will need to exercise all of these options to move at sufficient pace to tackle the issue in supply and ultimately bring the cost of temporary accommodation down”.

This will include acquiring existing stock and new developments – and in a similar move to Hackney, Redbridge has been “presented with several land and development opportunities across the borough involving developers partnering with household name institutional pension funds and high street banks”.

The council report added: “The leasing model has now become a vitally important option for many local landowners in the Redbridge market.”

Redbridge Council did not respond to a request for further comment, and has not yet set aside a figure for funding the plans.

London boroughs are having to take these decisions as spending on temporary accommodation grew by almost 40% last year, to reach £90m a month, the latest data has revealed.

In June last year, a High Court judge has ruled that Redbridge had acted unlawfully in its handling of a housing needs assessment and its failure to offer a mother of three accommodation in the borough.

The judicial review brought against the council by the mother, named only as UO, succeeded on all four grounds after hearings in March and April 2023.

Redbridge Council in part blamed “chronic government underinvestment in social housing” for the multiple failures.

Reply to the comment left by Rod at 11/03/2024 - 13:20
It could be argued the councils have no choice as there is no other option. They can't even maintain the properties they own themselves properly and with the way they are treating landlords, they can kiss goodbye to help from the PRS!

Banks/investors will ALWAYS invest when there's an opportunity or should I say smells of desperation in the air. This is being already set up to be a project that is destined to fail - like you say look at what's already happening now...

I expect the council will still go for the deal - what's the worse that can happen? Section 14 and the government steps in and then lends you more money. Look at Birmingham. Up to their eyes in a debt spiral yet the government have lent them another 1.3BN to 'help' them get over the bill of 600M they still owe....

They could reduce the temporary accommodation bill by allowing landlords to evict non-paying or antisocial tenants. This would release homes for those in temporary accommodation to move in to.

Of course, they do the exact opposite - with a somewhat predictable outcome.

Reply to the comment left by Cider Drinker at 11/03/2024 - 17:55
the way the law stands as it is, I can't see ANY LL taking in anyone from a temp housing list even if they were able to evict existing non paying /ASB tenants.

Anyone on the temp housing list is now more than ever going to be viewed with suspicion because you NEVER know the real reason why they are in this circumstance.

Does anyone believe what the council say to you - model tenant - unfortunate circumstances etc...they never tell you the real reason and neither does the person themselves. No referencing, no guarantor and the council willing to offer you money to take them on?

Roll forward to when S21 is gone and S8 lists every reason and this is only going to make the situation worse....I for one will be asking the question 'have you even been evicted from a property ' as part of my application and asking for copies of the S8.....

Reply to the comment left by NewYorkie at 11/03/2024 - 14:41No, they would never use an "evil capitalist" word like "profit", and most haven't a clue what alternative measures like ROCE means. In social value la-la-land, it's always just a (whisper it) "surplus" and always "reinvested in the community". Of course they never mention the surplus is tiny, because of all the quietly accumulated operating costs such as consultancy fees, team-building days in 5-star hotels, the perma-sick, WFH or minimal productivity staff who can't be fired (for the usual PR and virtue-statistical reasons), the awful, often fraudulent procurement managers, etc etc
Most commercial profits are reinvested too, and yes there is private sector wastage, but at least there is a legal framework for private companies that obliges them to test their financial performance against the dividend expectations of shareholders.

I agree with the comments that this looks like an accident waiting to happen. Most REITs with a social remit have run into financial and/or governance troubles.

And I'd love to know where this Haringey REIT's capital is coming from!

Love reading how these councils mainly socialist liebor saying what they are doing facing the homelessness face on , they make every excuse blame game politics, what they fail to say is how they increase homelessness with their policies, encourage tenants to break two laws that are in place don't tell tenants that they are responsible for the reasonable costs of the landlord to use legal people to get their property, if anyone wishes to correct me l will furnish them with the relevant legal status no problem.l also know that a previous home sec wrote to every council interested country to stop this practice and councils choose to ignore it ie breaking the law.