The cabinet meeting on January, 2 will see members tasked with deciding whether to establish a new housing company wholly-owned by HBC.
The report recommends the proposal for a new company is approved, with the council to provide equity and a working capital loan of up to £750k to get the business started.
It is also recommended that councillors agree for council to provide temporary loans of up to £1m as necessary in the future – with council to act essentially as an “overdraft” facility.
As it stands, all dwellings currently owned by the council are listed in the Housing Revenue Account, with legislation restricting the type of activity they can undertake – such as the type of tenures the council can offer.
The establishment of a company would allow the authority to operate as a private sector landlord and issue assured short-hold tenancies – which local authorities cannot do with social housing.
The report states that the company would become a new income stream for the council, both directly through on-lending, rental/sale income and indirectly through New Homes Bonus grants and additional council tax receipts.
It’s also hoped that increased housing supply would help lower costs of temporary accommodation in the region, helping to support both the retention of young people and economic growth within the authority.
The report confirms that the council has already explored the setting up of various subsidiary companies in an attempt to “ring-fence” risk, such as the establishment of a letting agency.
It is proposed that council’s chief executive officer, director of corporate affairs and director of community services as the three directors of the company.
The council initially approved template documents for a company in December 2015.
Among the details set out are that the company would have its own legal identity and have the benefit of limited liability.
The business plan for the company would see it up and running in 2020-2021.
Lachlan Leeming , Local Democracy Reporting Service