Staffordshire council set to buy six new flats using right-to-buy funding

A Staffordshire council looks set to buy six new flats using right-to-buy funding. Tamworth Borough Council has identified homes at a new development on Watling Street as part of plans to increase its housing stock.

Councillors next week will be asked to support the proposals which are set to cost £1.75m. This is set to be made up from £880,000 already budgeted in the regeneration and affordable housing capital programme which is from right-to-buy receipts, £275,000 from an underspend last year and a further £607,000 in new right-to-buy money.

The council is looking to offset the cost by applying for a grant from Homes England. The grant would reduce reliance on right-to-buy receipts and leave more funding available for future housing schemes.

The anticipated grant will be in the region of 30 to 40 per cent of the overall scheme, however, the final details won’t be known until the application has been processed and approved. This will take the number of council owned properties to more than 4,300.

These properties would be in addition to the flats acquired in March this year. Earlier this year the council announced that they had taken ownership of four new one-bedroomed flats and two new two-bedroomed flats for housing singles/couples and families at the former Twomlows site in Wilnecote.

Three options have been considered, do nothing, acquire existing properties or proceed with the Watling Street development. Councillors are warned that doing nothing could lead to the loss of right-to-buy money as it could fall outside the legal time limit and that alternative properties might not be as efficient and reduce value for money.

It has been forecasted that the weekly rent of the properties will be £122.83, increasing by three per cent a year. There are also costs associated with the flats at £2,300 a year, which will increase by three per cent a year.

This means that despite a positive operating surplus from year one, the project will have a long pay back period. Based on current projections, and assuming full occupancy throughout, it would take around 39 years for the council to fully recuperate costs.

The report states: “The Council has access to pooled right-to-buy receipts which must be used within defined timelines to support affordable housing delivery. The proposed scheme involves the construction of six flats at a total cost of £1.75m, supported by a financial model that projects rental income growth and operating costs over time.

The financial model assumes full occupancy and standard rent and cost indexation, generating a steady annual operating surplus and long-term financial return.”