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Council to become a private landlord

Multi-million-pound plans that will see the Royal Borough become a private property manager and developer were approved on Tuesday.

The Cabinet Regeneration Sub Committee approved the initial five-year business plan for the RBWM Property Company Ltd, formerly known as Two 5 Nine.

According to a report, the company will have built an asset base of more than £46.5million and generate pre-tax profits of more than £670,000 per year by the end of this initial period, becoming profitable in year two.

The report says profit from the company ‘can be used to invest in services for residents’.

The council claims one of its main objectives is to increase the supply of affordable housing for key workers and make sure it provides ‘a borough for everyone’.

The plan envisages the company developing at least 138 properties to let at affordable rents over the next five years, set at 80 per cent of market rents, and to manage a portfolio of at least 1,000 homes – affordable and private rental – within a 10-year time frame.

The firm’s business plan describes the future beyond five years as ‘truly exciting’ with potential to boost turnover to £8-10m with a pre-tax profit of £5m a year.

The report identifies Maidenhead Golf Course as a site which will ‘generate a significant number of properties to be let through RBWM Property Company Ltd’.

Council leader Cllr Simon Dudley said: “We’re setting up a private business but with the intention of creating an environment where more quality houses are being built.

“We recognise it’s not going to be affordable at that rate for everyone, but that is something that we will be looking to research and address.”

Initial funding for the company has come from a short-term loan and income from the rental of flats in York Road, Maidenhead. To fund the next refurbishment the company needs £600,000 to redevelop 16 and 18-20 Ray Mill Road East, which was approved at Tuesday’s meeting.

The council will also transfer properties to the company at an agreed value that have been developed using S106 money from developers or homes provided by developers through regeneration sites.

In the business plan is the provision of a further loan of about £5million, subject to the necessary approvals, for possible future development opportunities.

Cllr Jack Rankin, cabinet member for economic development and prosperity, said: “There are assurances in the plan that will make any investment cost neutral for the council. Any loans will have to go to council for approval.”

However, the loan interest rate charged by the council needs to ensure it is a commercial rate to avoid triggering any potential state aid provisions.

Empty homes will also be purchased and brought back into use, but only if there is a sufficient return.

“No less than 30 per cent of all new developments will have affordable housing,” added Cllr Dudley.

He said he saw no contradiction between the company’s need for future profits and the housing needs of residents.

Cllr Rankin added: “It’s going to be a trade off between rental income and what support we can offer, but we’re looking to be generous.”

When pressed about how the prospect of stagnant wages and rising property prices would affect the sustainability of the plan, and whether it was over reliant on rising property prices, Cllr Dudley said: “It’s a high yield investment, there’s no risk whatsoever. The equity holdings will be substantial.”

The council will be the sole shareholder in the company and will appoint its directors.

MULTI-million-pound plans that will see the Royal Borough

become a private property

manager and developer were

approved on Tuesday.

The Cabinet Regeneration Sub Committee approved the initial five-year business plan for the RBWM Property Company Ltd, formerly known as Two 5 Nine.

According to a report, the company will have built an asset base of more than £46.5million and generate pre-tax profits of more than £670,000 per year by the end of this initial period, becoming profitable in year two.

The report says profit from the company ‘can be used to invest in services for residents’.

The council claims one of its main objectives is to increase the supply of affordable housing for key workers and make sure it provides ‘a borough for everyone’.

The plan envisages the company developing at least 138 properties to let at affordable rents over the next five years, set at 80 per cent of market rents, and to manage a portfolio of at least 1,000 homes – affordable and private rental – within a 10-year time frame.

The firm’s business plan describes the future beyond five years as ‘truly exciting’ with potential to boost turnover to £8-10m with a pre-tax profit of £5m a year.

The report identifies Maidenhead Golf Course as a site which will ‘generate a significant number of properties to be let through RBWM Property Company Ltd’.

Council leader Cllr Simon Dudley said: “We’re setting up a private business but with the intention of creating an environment where more quality houses are being built.

“We recognise it’s not going to be affordable at that rate for everyone, but that is something that we will be looking to research and address.”

Initial funding for the company has come from a short-term loan and income from the rental of flats in York Road, Maidenhead. To fund the next refurbishment the company needs £600,000 to redevelop 16 and 18-20 Ray Mill Road East, which was approved at Tuesday’s meeting.

The council will also transfer properties to the company at an agreed value that have been developed using S106 money from developers or homes provided by developers through regeneration sites.

In the business plan is the provision of a further loan of about £5million, subject to the necessary approvals, for possible future development opportunities.

Cllr Jack Rankin, cabinet member for economic development and prosperity, said: “There are assurances in the plan that will make any investment cost neutral for the council. Any loans will have to go to council for approval.”

However, the loan interest rate charged by the council needs to ensure it is a commercial rate to avoid triggering any potential state aid provisions.

Empty homes will also be purchased and brought back into use, but only if there is a sufficient return.

“No less than 30 per cent of all new developments will have

affordable housing,” added Cllr Dudley.

He said he saw no contradiction between the company’s need for future profits and the housing needs of residents.

Cllr Rankin added: “It’s going to be a trade off between rental income and what support we can offer, but we’re looking to be

generous.”

When pressed about how the prospect of stagnant wages and rising property prices would affect the sustainability of the plan, and whether it was over reliant on rising property prices, Cllr Dudley said: “It’s a high yield investment, there’s no risk whatsoever. The equity holdings will be substantial.”

The council will be the sole shareholder in the company and will appoint its directors.

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  • Pursuer

    18:06, 15 December 2016

    Let us hope that the Council of elected Councillors does not seek to provide Directors from the Council, as that would appear to be a conflict of interest. Similarly it must be hoped that 'mega' salaries are not offered to Directors. Many of the assets of the new company must it appears be estate that was purchased with Rate Payers money and on that basis it is reasonable for Rate Payers to see return on their money for the benefit of local residents.

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