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£2m invested in building affordable housing
By Victoria SmithFebruary 07, 2012
Nearly £2 million of taxpayers’ cash is to be invested in building more affordable housing in the borough.
The move is the latest investment in companies owned wholly by Wokingham Borough Council as part of a change in direction in the way the authority works to be more commercially-minded with its services and projects.
The cash will be invested in Wokingham Housing Limited so it can move on with plans to build 10 one-bedroom flats for people with learning disabilities and two bungalows for older people at Hillside Park in Shinfield Rise.
Wokingham Housing Limited is one of three companies set up by the council in the last two years.
The council started with Wokingham Enterprises Limited in 2010, which was used to buy land in Wokingham town centre at a cost of £10 million to take control of the regeneration project.
Optalis Limited was launched last year to offer services to elderly and disabled people that were previously run by the council’s social care team.
The launch of Wokingham’s own housing company ties in with plans bringing an end to the existing funding system when the council must pay 50 per cent of the rents it collects from tenants back to the Government.
This accounts for around £5 million a year and the loss of the cash has meant the council has been unable to maintain its properties to a high standard.
In order to stop paying the cash to the Government, the council, along with other authorities across the country, must pay a lump sum to buy itself out of the system.
This was calculated to be around £100 million, however it is believed this could be around £5 million less as the council is demolishing its properties in Eustace Crescent this year.
This is because the flats required millions of pounds of work to bring them up to standard and most tenants have agreed the properties should be demolished.
Plans on what to do with the site in the future are being prepared, but could include new council housing.
A final figure on what the council must pay will be announced soon.
By building its own affordable housing through Wokingham Housing Limited, the council is hoping to generate more funds to refurbish existing housing stock.
Councillor David Lee, leader of the council, said following the Hillside Park project, the council has several other sites, such as disused garages, that could be used for new housing.
The council aims to build 75 new homes through Wokingham Housing Limited in its first five years.
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Most recent user comments 3 of 3
I'm very pleased to hear that profits from these private-but-not-private 'companies' does indeed go back into the council's budget, but I maintain that I am uneasy at these sorts of relationships. If it's only beneficial to go through the hassle and confusion of creating a new company because rules exist that put councils at a disadvantage, why not remove those rules? And doesn't the creation of these companies and the offer of work to them open them up to private competition? I am ideologically opposed to privatisation; I cannot see that it can ever be more cost-effective than a WELL-RUN nationalised service.
08/02/2012 at 09:46 Offensive or Inappropriate?
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As you have intimate knowledge of the workings in this area then you should be fully aware of the several advantages to setting up the company. First of all you will know that there are many sources of external funding (government grants etc.) that a Council cannot apply for but an external company can.
You will also be aware that in the past there has been literally hundreds of affordable houses which have been handed over by developers which then lie outside the control of the council. This means that the residents on the housing list cannot easily access these new houses. WHL will be able to "pitch" for these affordable houses which will mean they will efffectively be available.
Finally, and I am sure you are aware of this, any company like this belongs to the shareholders. So the proceeds also belong to the shareholders. In this case there is only one shareholder which is the Council so they will benefit from any financial gains which would be ploughed back intothe public purse.
08/02/2012 at 08:59 Offensive or Inappropriate?
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"By building its own affordable housing through Wokingham Housing Limited, the council is hoping to generate more funds to refurbish existing housing stock." - in what regard? Will WHL then sell it's housing stock to WBC (itself) for a profit, or does this sentence refer to the generation of rent from the new buildings?
"Optalis Limited was launched last year to offer services to elderly and disabled people that were previously run by the council’s social care team." - I worked in that office at the time. It's the same staff doing the same job at the same desks... is everyone aware of that? it's a change in name (and upper-management, stationery, and confusion) only.
Lastly - "The council aims to build 75 new homes through Wokingham Housing Limited in its first five years."; I don't claim to be an expert in housebuilding, but what is the cost to set-up a company (WHL), and employ the staff at this company for FIVE YEARS, all to oversee 75 houses being built? That sounds like a massively extravagant overhead.
07/02/2012 at 15:34 Offensive or Inappropriate?
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