Meeting documents

APPENDIX 4

The Executive Members of B&NES Council,

By E - mail

1^st May 2006.

Re: Council Executive Meeting, Wednesday, May 3^rd. Paper no.14

Dear Executive Member,

I wish it were unnecessary to write this. It is the reiteration of an argument already made to our democratic representatives, and - we had supposed - already won. Won, we assumed, because it is the statement of an unassailably strong, just, and - above all - intelligent and practical, case.

We - Bath Housing Co-operative - have been housing ordinary working people in Bath for nearly 30 years; in that time we have housed, at no cost to the locality, almost 400 people - affordably. To do so, we have frequently utilised council owned properties which for reasons of dilapidation or otherwise were unusable by the Housing Department. We have cared for and improved these properties, and in all cases handed them back to the council on demand, and in a far better state than they were. This alone has saved the council tax payer, I would estimate, hundreds of thousands of pounds over the years. I should add that we are a non-profit organisation, and that we do this work in our spare time.

The house in question is Mount Beacon Lodge. We began managing the house for its then owner, Avon County Council, in the early 1980s. As Avon ceased to exist in the early 90s, they offered to sell the house to us: we agreed. The sale was interrupted by a technicality: the house is semi-detached with another, which contained (and still contains) council tenants: there was no clarity in the deeds about the access to both properties, which was and is shared, nor about the extent or boundaries of the shared land encircling both properties. Avon handed the house to Bath City Council instead; we continued to manage it. Over these many years we have, of course, maintained the house, at considerable cost to ourselves. The contiguous house, still with shared grounds and access, is managed by Somer Housing Trust; the inhabitants pay approximately£60 per week in rent.

We asked B&NES councillors to lease the house to us, affordably; we plan to improve the building according to principles of ecological and environmental sustainability, doing much of the work ourselves. We asked for a lease of at least 15 years' duration to enable this. Your officers suggested that a "market rent" for the property would be £1200.00 pcm. We replied, using the Government's own figures and those of the Association of Residential Letting Agents to prove that - at that time - a market rent for the house would be £821.80 pcm (For precise figures see footnote*) - assuming improvements to the property including central heating, double glazing, &c., and assuming private access and settlement of the boundary issue. As the house stands at the moment - "unimproved", sharing access, land, and a common garage wall with council tenants - there probably is no verifiable "market rent". Your officers have never explained their £1200.00 figure, nor have they seen fit to debate it. I wrote to them (8^th October 2004: attached) seeking clarity and attempting to begin a negotiation process - there was no further mention of the £1200.00: but neither has there been any real attempt to negotiate with us. Now, confusingly, the sum appears again - in section 3: "Financial Implications" of the report on paper 14, as though it were true. It is a meaningless figure, apparently plucked from the air by someone unable or unwilling to defend it, and irrelevant to the current issue.

The Co-op does not see itself as asking favours: it sees itself as having been in fruitful partnership with local councils for over 25 years, and it seeks to continue. We are currently - and without noticeable reluctance on the part of the council - negotiating a lease on a similar "hard to let or sell" property in South Gloucestershire. Bristol City Council, recognising the sense in this kind of arrangement, has leased about 50 houses to the small housing associations which have been managing them: Somewhere Housing Co-op. have just signed leases of 29 years' duration on two Bristol properties at £500.00 per property, per annum. It can be done! Elsewhere, it is being done!

When we were offered a lease of just 3 years on Mount Beacon Lodge, we of course assumed that the terms of the lease - which, we were told, were to be arrived at in negotiation between ourselves and your officers - would necessarily include an automatic extension of the lease when, after three years, we had demonstrated our fitness to continue and complete the project. Why, otherwise, should we bother to contribute our own monies and spare time labour? We wish to demonstrate our practical commitment to co-operative principles, and to persuade our Council of the value of applying these principles to hard - to - use properties in our area to house affordably people who are now being squeezed out. We have no wish to grow to an enormous size, being limited by our rules to housing just 50 members; our rules also forbid us to make a profit. We would be very happy to help and advise other groups to form housing co-ops within B&NES - we have a wealth of experience in the field, of course. You all know of unused basements, attics over shops, derelict properties and those difficult of access: we could be helping ordinary people to live in them, generating revenue, halting and reversing dilapidation, at scant initial cost to local taxpayers and very much to their eventual profit socially and financially.

All talk of a "shortfall" in potential income to the Council is as meaningless as the above - mentioned figure of £1200.00. It equates the idea of "Best value" with instant profit rather than with long term benefit - misguidedly, I suggest - but, crucially, it also wrongly assumes that the current market value of the house is realisable. Until the issues of access and boundaries can be settled the house cannot be let or sold commercially and is of debatable market value. References to the sale of the house for £350,000 are notional.

We are bewildered that Housing Services are so unwilling to support what the document is pleased to call "the concession" of a lower than market rent. Leaving aside that we consider the lease to be an investment by the council - and a remarkably safe one at that - not a grant, not a favour, emphatically not a "concession", it is surely an example of what the Office of the Deputy Prime Minister called for when it tasked local authorities, with regard to the provision of housing, with trying "new, innovative approaches to service delivery, new partnerships with other providers and new relationships with tenants and residents" and "on housing services including new, innovative approaches to delivery": an example, indeed, of B&NES' stated goal (in "Towards 2013") of "actions to ensure... affordable housing for the future". In the mid 90s, the Conservative government commissioned a report: "Tenants in Control: an evaluation of tenant-led (housing) management organisations" from Price Waterhouse. The three year study compared the performance of housing co-ops with that of other social landlords; one of the main conclusions was that "housing co-ops performed as well as or better than the very best mainstream providers, delivering quantifiable financial benefits as well as unquantifiable but very real social and community benefits".

Bath Housing Co-op has served B&NES well for many years. How can the officers of Housing Services refuse to even consider what advantages might accrue from the arrangement we propose? And by what arcane process of voodoo accountancy did the author of the "Financial Implications" arrive at his tendentious figures - a travesty, implying that your hands are virtually tied, that your decision is all but impossible, or doomed.

I beg your forgiveness for writing at such length. Two of you - Councillors Pritchard and Darracott - have heard most of this before, and were persuaded of the sense of our argument. This note is an attempt to condense the careful assemblage of our case over a period of two years or more into a single, clear, document for you who have not previously had to consider this matter; it is, too, an attempt to rebut the more contentious elements in the remarkably biased document describing the issue of Paper 14, and it is, finally, a plea for sense and justice. Thank you for reading it.

I hope to remain

Co-operatively Yours,

Ric Jerrom

Hon. Sec., Bath Housing Co-op.

*The Association of Residential Letting Agents gives approximately 3% as a net yield figure for the South West Region: a top figure for receipts after all non-recoverable costs have been deducted. In other words, a commercial lessor would expect a 3% profit on his/her investment. When we had Mount Beacon Lodge valued in 1994 (you'll recall we had been offered its purchase by Avon Council, the then owner) Messrs. Debenham Thorpe valued the property at £112,000. The Office of the Deputy Prime Minister gives an index for the South West for Mount Beacon Lodge's category for 1994 - 1996 of 6.7%: the value in '96, then, would have been £119,504. The Inland Revenue's post coded data for Bath & N.E. Somerset states that, for this category of property, inflation from the 2^nd.quarter 1996 - 2^nd.quarter 2004 has been 175%. This would take the current value of the property to £328,720. We estimate, therefore, that the absolute ceiling for a commercial rent would be £821.80 per month. None of this, of course, addresses the vexed question (for commercial landlords) of vague boundaries and shared access.