Greenwich Council’s cabinet has agreed to spend up to £65m to buy homes on the open market for temporary accommodation to meet “unprecedented demand”.

The council believes the measure – which is being part-funded by receipts from right-to-buy sales of existing council homes – will save money when compared with paying private landlords for temporary housing.

There are nearly 700 households in temporary accommodation – while the council sells 250 homes under right to buy each year.

Regeneration director Pippa Hack told councillors that the move was part of a “flexible” approach which would reduce the risk of the council having to pay back to the government money it has made from right-to-buy sales.

The council has agreed with central government that it can fund 30% of the cost of housing projects with additional right-to-buy funds – on the condition that the money is spent within three years, or the cash has to be returned with interest on top.

This means only £19.5m is coming from right-to-buy money – the remaining £45.5m is coming from council borrowing.

Council ‘could save £6.8million’

Greenwich says it should be able to buy 173 homes with the money – which, when repairs and maintenance to bring them up to standard is included, would save nearly half a million pounds a year when compared with paying private landlords. Over 10 years, the council believes it could save £6.85million.

79 homes have already been bought under the programme, which began in December 2016 – Wednesday night’s meeting was about agreeing an extension to the scheme to March 2020.

Some of the £65m could be spent on buying general council homes – as opposed to temporary housing – but council officers say they are close to government-set borrowing limits (“the Housing Revenue Account (HRA) borrowing cap”) on this kind of housing.

After Conservative councillor Spencer Drury, who has criticised the policy, asked just what “temporary” housing meant in this situation, Hack said that it was envisaged there would be a “fairly high turnover” of people in thse properties.

Housing cabinet member Averil Lekau said: “When we went into the market to buy these properties, one of the things we were mindful of was that people shouldn’t feel so comfortable that they want to use that as a permanent option, because it’s clearly down as temporary accommodation.

“So we’re mindful of how we achieve that without destabilising people who are already waiting to move into properties.”

Questions over Meridian Home Start

The meeting also approved an extra £5 million for homes to be funded through “registered providers”, such as housing associations, and Meridian Home Start, an independent landlord set up by the council. This is on top of £24.8 million already agreed, and lasts through to March 2020.

These homes would be at up to 80% market rent for one and two-bedroom properties, and “target rent” (about 50% market rent) for properties with more than three bedrooms. Council rents are usually 40-50% of market rent. Meridian Home Start properties, which are being built on land handed over by the council, are set at a target of 65% market rent.

Asked by Cllr Drury about how much control the council had over Meridian Home Start, Hack said company representatives attended council scrutiny panels, so could be quizzed by councillors there.

Council leader Denise Hyland said that the council had an observer on Meridian Home Start’s board – councillor Steve Offord – and there was “room for backbench influence because we all want the same thing, we all want truly affordable housing delivered”.

Deputy leader Danny Thorpe added: “There would be no need for this if the government just lifted the HRA borrowing cap so that we could build the homes that we need.”

He said the council had written to the Secretary of State for Housing, Communities and Local Government for a meeting “imminently” because “actually, we have a case to make in terms of lifting that cap so we can get on and do these things ourselves”.

“We have to have evenings like this discussing Meridian because that’s how you have to get something done.”

‘High quality affordable homes’

The policy on buying up homes on the market has been criticised on From The Murky Depths, which has branded it “the least cost-effective option”.

A Greenwich Council spokesperson told 853: “Retained Right to Buy receipts provide time limited funding to the council which, if unspent within the 3 year deadline, are required to be returned to the Ministry of Housing, Communities and Local Government, with the potential for interest charges to be added.

“The use of this funding to provide new high quality affordable homes provides significant benefit to the borough’s residents and the council’s service users, while also assisting the council to manage its homelessness budget pressures in a way that is more cost-effective than paying for temporary accommodation externally.

“The council regularly engages with and encourages Registered Providers to take up receipts, subject to a funding agreement with us.

“We have recently taken a decision to work with Meridian Home Start (MHS) on a first phase of sites to develop affordable housing in the borough, which will be able to use RTB receipts. The council is continuing discussions with MHS on potential future sites, with any future decisions subject to the council’s governance processes.”

853 understands that at a line in the agenda paper reading “there is no particular requirement for this decision to be communicated more generally to residents” refers to legal issues, rather than whether the council should publicise the decision through its PR channels.