Our 'Public-Private Partnerships: Driving Growth, Building Resilience' good practice guide supports councils to establish more effective public-private partnerships, with case studies of partnerships which have delivered high impact outcomes. One example is a joint venture between the London Borough of Waltham Forest and Mears Limited, to secure properties for use as temporary accommodation.
Project overview
London Borough of Waltham Forest entered a joint venture (JV) with Mears Limited to secure homes for 40 years and give households in need a sense of long-term safety and security. The JV expects to purchase 400 homes to house people in temporary accommodation and those for whom the council has accepted homelessness duty. At the end of the 40-year period, the homes will revert to the ownership of Waltham Forest.
The JV partnership will raise the £88 million needed to purchase the properties by issuing bonds to private investors and use the funds to acquire homes to be held and let. Funding was provided by BAE Systems Pension Fund. The council will lease homes from the JV paying a rent (Local Housing Allowance and top up) which will enable the JV to pay a return to investors and still represent good value for money to the General Fund.
All the properties will be brought up to the Decent Homes Standard, the UK Government’s standard for social housing, which will ensure these properties are high quality. Mears will manage and maintain the homes.
The properties will be a mixture of one, two and three bed properties. Besides giving households a safe roof over their head and the opportunity to enjoy full healthy lives, it will mean that money from the General Fund budget which was used to provide temporary accommodation can be re-directed to fund the construction of new homes. It currently costs the council an average of £47 per week for each household in temporary accommodation
Key points of learning
Waltham Forest has successfully partnered with the private sector to provide management and maintenance services. The borough leveraged their financial covenant to raise funding from institutional investors to fund upfront capital acquisitions and works.
This case study demonstrates an innovative model that enables local authorities to reduce their temporary accommodation costs and provide residents with better, longer-term homes. It is more innovative than more traditional investor models which risk leaving local authorities with significant risk exposure.