A financially-strapped Derbyshire council is set to borrow a quarter of its entire annual budget to buy and build more than 40 affordable homes.
Amber Valley Borough Council is looking to build and buy 44 affordable homes, some from developers and others on land it owns.
This will cost the authority, which has an annual budget this year of £14 million, a total of £8.96 million over the next three years.
It hopes to get grant funding for £3.58 million of this cost but also intends to borrow £2.68 million – almost entirely in the financial year 2025 to 2026 – to fund the projects.
The council wants to build four homes for affordable rent – 80 per cent of the local market rate – in Lower Gladstone Street in Heanor, and is currently out to tender for a company to carry out the design and construction works.
This contract is out to tender until June 30, with no advertised value, with works to start from September 18 and finish on March 29, 2024.
The council hopes to buy seven to 10 homes on an under-construction housing site in the borough; to buy a house on the open market and further homes on a “future development” – the latter appearing to account for up to 29 homes, the lion’s share of the overall project.
A brief section of the report on the issue says the details of each site cannot be detailed due to being financially confidential.
However, it lists the three sites (minus Lower Gladstone Street) as Moor Lane in Kirk Langley and Sleetmoor Lane in Swanwick; along with the individual property at 2 Briar Close in Alfreton.
The three-bed house for sale in 2 Briar Close Alfreton has an estimated value of £152,000 to £168,000 on property website Zoopla, currently for sale with offers over £150,000 with estate agent Hall & Benson.
Borough councillors approved plans from Clarendon Land and Development Ltd for 35 homes off Moor Lane in Kirk Langley in April 2021, with residents up in arms about the scheme, combined with other developments “effectively doubling the size of the village”.
Residents said, if approved, the homes would be built in an area without any local services to support them such as regular bus routes or shops.
The Moor Lane site includes 10 affordable homes, with the council appearing to be seeking to take on most or all of these properties.
Meanwhile, the Sleetmoor Lane site in Swanwick is a plot currently being touted for inclusion in the borough council’s Local Plan, with 25 homes potentially earmarked for the site.
These homes would not be built by the council but would be on a potentially earmarked site and would still need a planning application to be filed by a developer and decided by councillors.
It could contribute to the Local Plan, a blueprint for future housing development in the borough up to 2039, which the council hopes to “adopt” by June 2024 at the earliest, with its current plan having lapsed in 2011 and the authority spending 12 years to date without one.
Sleetmoor Lane is also home to a 43-home development of “prestigious, executive four and five-bedroom properties”, built by Fairgrove, dubbed “Swanwick fields”.
The council says that due to the current small scale of homes being taken on, it would be responsible for managing the properties itself, but says final decisions will be made before they are occupied.
A borough council report says that one of the “greatest risks” to the council financing the projects is that in the third year of a tenant occupying one of the properties they will be able to purchase the home at 35 per cent discount, with a maximum reduction of £96,000.
This would leave the council with no repeat return either through rent or sale for all the money it will have been spent.
At the council’s budget setting meeting in March talk turned to the financial plight of the authority, which is still in the grips of a mandatory budget recovery plan, due to last several years, in order to maintain financial viability and avoid a freeze on all but essential spending.
Former council leader Kevin Buttery, who stepped down in the May local elections, said the authority’s reserves had been due to hit as low as £555,000 but were now due to sit at £6.4 million in March 2024.
Before the pandemic, the council had faced a budget deficit for the 2021 to 2022 financial year of £2.3 million.
