South Cambridgeshire Council Ventures Into The Housing Market

mark_howell17:42 Thursday 28th November 2013
BBC Radio Cambridgeshire

[C]HRIS MANN: A £7 million housing project in South Cambridgeshire has been given the thumbs up this afternoon. The District Council approved a project which they say will produce an annual income to pump back into supporting other Council services. Mark Howell is the Cabinet Member for South Cambridgshire District Council in charge of Housing and he joins me now. Hello Mark.
MARK HOWELL: Good evening Chris.
CHRIS MANN: So this was approved today. What is this scheme? Explain how it would work.

MARK HOWELL: Well what will happen is that the Council will go to the Public Works Loan Board, which is like the Government bank, and ask them for the £7 million. Now the rate of interest on that is quite low.
CHRIS MANN: What is it, percentage-wise?
MARK HOWELL: Well it varies on a day to day basis basically, but it’s quite low. What we then do is loan that money, the South Cambs will, to a company. And the company is owned by South Cambs District Council. That company goes out and we buy houses which will be owned by the Council, but they’re not, shall we call them council houses. But we’ll be renting those out at market value. And we’ll be buying houses right across the district.
CHRIS MANN: From whom?
MARK HOWELL: Well from normal run of the mill people who will be wanting to sell their houses to us. Estate agents will be acting as the agents, and we’ll be buying.
CHRIS MANN: If you’re buying some houses in South Cambs, they’ve just gone up, haven’t they? With you buying so many houses, suddenly the prices are all going to go up.
MARK HOWELL: We’ll be taking our time. We’re not going to make this now so that we affect the market. That’s one of the things we’re not going to try and do. So let me just .. if I can continue for one moment.
MARK HOWELL: So what it is, the actual South Cambs will lend the money to the company at market rate. So the difference between the rate that we borrow the money from the Government and the rate that the money is then lent to the company, that then will be the profit margin. Now obviously South Cambs Council will want to actually make sure that the money is secure, so it will be secured on the houses that we’ll be purchasing.
CHRIS MANN: You see there’s not a good history of councils running housing things, is there Mark? I thought you were getting out of housing.
MARK HOWELL: No. We’ve been running housing now for, well South Cambs has been running it since 1973, and we are absolutely excellent at it. We are very very good. And what we’re trying to do with this, the whole purpose of this is to make money. This is a company.
CHRIS MANN: But more houses in public ownership. I thought Mrs Thatcher your icon wanted to sell off council houses. You want to create more of them.
MARK HOWELL: Well people have the right to buy them. But what we’re trying to do by doing this is allow people to rent all different types of houses. But at the same time we are there to make money, so that money then can be used with regards to relieve your council tax.
CHRIS MANN: Private housing takes care of that. Why is the Council getting involved in this?
MARK HOWELL: We’re already involved in business. We’re involved in business with regards to many different aspects.
CHRIS MANN: South Cambs is one of the richest areas in the country. People always say this is one of the best places to live. Why do you need to be buying, spending £7 million quid on buying 40 homes?
MARK HOWELL: Because what we want to do is not rely upon the Government grant to give the people of South Cambs the freedom not to have to rely upon the Government grant and to stand alone and say we are there actually for the people and not just for the Government’s ..
CHRIS MANN: First of all, what you’re going to do is inflate the market, aren’t you?
CHRIS MANN: You’ll go and buy 40 houses. How many houses for sale in the South Cambs area at the moment?
MARK HOWELL: Many thousands.
CHRIS MANN: Thousands?
CHRIS MANN: Up for sale right now.
CHRIS MANN: So you won’t make any difference to the market.
MARK HOWELL: We’ll make a minimal difference. I can’t see it because we’re going to be doing this over a period of time.
CHRIS MANN: What kind of houses are you going to buy?
MARK HOWELL: Three and four bedroom. Which is not what we’re building. South Cambs council houses that we are building will be one and two bedroom. We’re looking at buying three and four. Maybe smaller, if that is good value for money. We shall look at them. But this will not be on the Council houses as we technically would say.
CHRIS MANN: Who is going to run this company?
MARK HOWELL: The company has got two directors, which are two officers.
CHRIS MANN: This is jobs for the boys, is it?
MARK HOWELL: No, we’re not earning more. We will be employing people to actually run this. The person will be a highly specialised individual.
CHRIS MANN: So another big salary for another Council employee is it?
MARK HOWELL: No. No, not at all. They will be market levels. They will not be on massive salaries. And therefore they will be running a company, a very very good company. And that’s what we do. With regards to the employers it will be run by the councillors. There’s an advisory group that will be there as well.
CHRIS MANN: Do other councils do this?
MARK HOWELL: There’s two other councils that currently do it. And this is why we are now getting involved in this. And they again can see that in the future the Government grant will lessen, and therefore we’ll be able to do it.
CHRIS MANN: But you’re going to become a unitary authority. You’re going to join with other councils around you. What’s the point of you doing this, setting this up in South Cambs?
MARK HOWELL: I am smiling as you say that. I would love to be a unitary authority, but there’s certain councils I don’t want to be a unitary authority with.
CHRIS MANN: But South Cambs isn’t going to exist soon, is it? It’s going to be a unitary authority. You’re going to be joining with Cambridge City. What’s the point in doing this?
MARK HOWELL: That’s what Cambridge City want, but not necessarily what South Cambridgeshire wants.
CHRIS MANN: How long before you’re starting to buy the houses, so people can know when to put their houses on the market?
MARK HOWELL: (LAUGHS) We’ll be looking at the middle of next year. We should be starting to purchase houses.
CHRIS MANN: Mark Howell, Cabinet Member for South Cambridgeshire District Council, thank you very much indeed for joining us..
MARK HOWELL: Thank you very much indeed Chris.