Newham's move will ensure less housing benefit is poured into the private sector
Newham council is to set up a registered social landlord in an attempt to cut the £13m of housing benefit it spends every year leasing private homes.

The east London authority presently leases 2500 properties from private sector landlords for temporary accommodation.

It will transfer 500 homes to the new association, which will be called Local Space.

Local Space will also be able to borrow against rental income to buy 1300 more homes and will ultimately have £50m of property assets. However, it will initially require about £10,000 per property – a total of £15m – in ODPM subsidy to cover running costs.

Newham hopes to register Local Space with the Housing Corporation by September and to have it operational by February 2005.

The problem of councils leasing properties from the private sector to meet demand for temporary accommodation is growing.

It has become particularly acute as councils, especially those in the capital, transfer families from B&Bs into temporary accommodation as required by the 2002 Homelessness Act.

The aim among London housing directors is to ensure that the millions in housing benefit the Department for Work and Pensions spends on this kind of temporary accommodation remains in the public sector rather than the private sector.

The number of properties leased from the private sector in England rose to 93,000 last year – 62% of these are in London and this figure for the capital is rising by 5000 each year.

The DWP spent £204m on leasing from the private sector in 2002/3 – up from £143m the previous year and £91m in 2000/1.

Chris Wood, director of housing at Newham, said: "Temporary leased accommodation isn't much better than B&B and we are pouring millions from the private purse into private sector leasing without any legacy to show for it.

"The attraction of our model is that there would be a legacy of 1800 homes in five or six years' time at below-market rents. It is ultimately all about transforming temporary accommodation into permanent. The homes we transfer will ultimately be settled homes."

The 500 transferred homes will be either vacant properties or ones used as temporary accommodation. There will be no requirement for a ballot as the homes do not have any secure tenants.

Source

Housing Today