The council has agreed to lend a housing group £385,000 towards the cost of building low-cost homes in Brighton and Hove.
The loan was agreed in principle by Brighton and Hove City Council’s Housing Committee at Hove Town Hall on Wednesday evening (16 November).
The loan will help the Bunker Housing Co-operative fund the building of two “affordable” homes on the site of old garages in Dunster Close, Hollingdean.
The project has been valued at about £630,000 – and a report to councillors said that the loan would be secured against the homes and would be repaid over 30 to 50 years.
The report said that the council had “a history of working with Bunker” and that the housing co-op had built two houses on another former garage site in Plumpton Close, in Brighton.
The loan “is anticipated to be at more advantageous rates than Bunker would be able to obtain from a commercial lender”, the report said.
The site was deemed too small for the council to develop but suitable for a community provider such as Bunker.
The report also said: “Community-led housing can provide an alternative, more affordable housing solution for those who are priced out of the private housing market.
“(It) also offers an opportunity for the development of more co-operative and/or co-housing living, with an emphasis on community.”
Conservative councillor Anne Meadows asked why Bunker could not obtain a mortgage from the Ecology Building Society, having used it before.
Councillor Meadows said that Bunker had already benefited from design and planning subsidies and had obtained the land cheaply from the council.
She said: “It says in the report that a loan from the council would be more advantageous. I’m sure a lot of us who have mortgages would like a cheap loan as well.
“It could end up a bit like the i360. But if we continue to lend money, I wonder what’s the next step.
“Will we be allowed to lend money to council tenants to buy their homes? That’s something that used to happen. I wouldn’t want to see it happen again because I do not believe in losing our council homes.”
Councillor Meadows and fellow Conservative councillor Dawn Barnett voted against the loan.
The council’s housing strategy and enabling manager Diane Hughes said that Bunker was looking at different funding options but that increasing interest rates were affecting its business plan for affordable homes.
She said that the scheme was a pilot project and would be kept under review. As part of the deal, Bunker would become a “registered provider” or housing association and give the council “nomination rights”. This meant that tenants would be selected from those on the council’s housing waiting list.
Green councillor David Gibson, who co-chairs the council’s Housing Committee, said: “I’ve been very keen on the idea of using our ability to borrow at relatively low rates and lend (the money) on to social value providers who may be a bit cash-strapped.
“I’m positive about it because it’s a pilot of a new approach and this is a fairly low-risk thing. Housing is a good asset.”
He said that he hoped that lower rents for people on low incomes would be possible because of the council loan.
Labour councillor Gill Williams asked what “affordable” rents meant. She was told that the upper limit would be guided by the “local housing allowance” which helps those on housing benefit.
But Bunker, which took a 125-year lease on the land from the council in 2019, is keen to ensure that rents are lower.
In March, the council’s Planning Committee granted permission to build two two-bedroom semi-detached houses on the site of the old garages.
£385,000? Where did that come from? Thought the council were strapped for cash .. hence the disgusting state of the streets, sea front, parks and other public spaces. People are going to freeze or starve (or both) this year. It’s an absolute farce!
I wonder what the loan rate being charged is?
Joke. The council is not a bank. This company that owns the land and want to profit from it should go to a finance company.
Well that says it all they first houses they built is lived in by the bunker members. It is also there registered head office. The founding member of the coop is also the director of brighton and hove community land trust. Another example of looking after there own interests from the green council.