Council-owned landlord evicts tenants to repay £18m council debt

Council-owned landlord evicts tenants to repay £18m council debt

9:59 AM, 9th February 2024, About 3 weeks ago 46

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Tenants of NCH Enterprises, a council-owned company, are facing eviction as the firm tries to sell 44 properties to repay a £18m debt to Nottingham City Council, the Local Government Chronicle (LGC) reveals.

The news comes just days after it was revealed that the council had failed to ringfence its selective licensing fees.

The company, a subsidiary of Nottingham City Homes (NCH), which manages the council’s housing stock, owes the money to the council for illegally using funds from the housing revenue account (HRA) over six years.

The Chartered Institute of Public Finance and Accountancy (CIPFA) found in 2022 that NCH had breached the law by not ringfencing the HRA funds, and the company admitted in its latest accounts that it has an ‘obligation’ to return the money to the council.

Took back the management of its housing stock

The council, which issued a section 114 notice – a legal warning of impending bankruptcy – last year, took back the management of its housing stock in March 2023, along with all NCH staff.

However, a service level agreement between the council and the company means the same staff still provide services to the properties owned by the company.

The company’s accounts for 2022-23, filed in January, show that it still owns 187 properties, which it lets at market rent.

The accounts also reveal that it has ‘commenced the process of asset sales’ as part of the solution to the £18m debt.

LGC has obtained one of the letters sent to the affected tenants, which shows that the company is issuing section 21 notices, also known as no fault evictions, to them.

The letter gives the tenants a ‘move out date’ and asks them to ‘let us know asap if you have any queries’.

‘We’re having to take difficult decisions’

A spokesperson for the Nottingham City Homes Group board, speaking on behalf of the council, told LGC: “These are difficult times and we’re having to take difficult decisions.

“Our for-profit subsidiary is not making a profit, which is putting the group as a whole at risk.”

They added: “The controlled approach we’re taking to winding up NCH is working well, and we will continue to work closely with affected tenants to support them in every way we can to find new homes.”

Pledged to end section 21 ‘no-fault’ evictions

The government has pledged to end section 21 ‘no-fault’ evictions, which allow landlords to evict tenants without giving a reason, with two months’ notice under the Renters (Reform) Bill.

However, one tenant accused NCH of acting like a ‘rogue landlord’ and said the letter did not inform them of their rights as tenants.

They said they could stay in their property beyond the date on the section 21 notice and require the landlord to seek a court order, which could take up to five months.

The tenant told LGC: “They are panicking and causing unnecessary stress during these difficult times by informing their tenants that they ‘must be’ out on a particular date rather than explaining their tenants’ rights.”

Staff had visited every tenant in person

The NCH spokesperson said staff had visited every tenant in person to explain the situation and their rights and had given affected tenants ‘first refusal’ to buy the property.

They said: “We appreciate that this is difficult for our tenants, and it was a difficult decision for us to take, but we believe we’re acting in the best interests of the group as a whole and the wider tenant population we serve.

“We have been careful to offer affected tenants flexibility as regards timing of the end date of their tenancy and have assured them they can come to us to discuss their concerns at any time.”


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Comments

SimonP

1:49 AM, 9th February 2024, About 3 weeks ago

How ironic. So the council can evict tenants just like that but private landlords . . . ? ? ?
Is the council telling its tenants to stay put, similar to the advice it gives to tenants in the private sector?
What right does the council have to tell private sector landlords what to do when it is incapable of being a proper (and legal) landlord itself?

Reluctant Landlord

9:16 AM, 9th February 2024, About 3 weeks ago

so let me get this straight. A for profit housing company owned by the council has not used its income correctly as it should have been ringfenced. It therefore is now evicting tenants to sell the properties in order to pay the bill essentially back to itself.
And this is the very same council who themselves have failed to ringfenced money raised from SL....

So what happens to the tenants who are being evicted? The council themselves are telling them to say put until the bailiffs come!

Inevitably some of these wont find private accommodation and cannot be deemed as making themselves 'voluntarily homeless' - so the assumption is they go back to the very same council who is evicting them to ask for accommodation (they haven't got). So the council has more on their on housing list and spend more on temp accommodation. A bill which they can't afford....

The staff meanwhile which probably includes the muppets in charge of NCH, retain all their jobs as they are switched back to being council employees. So the council increases its direct staff (and pension costs) all funded by the taxpayer.

I seriously cannot get my head round this. You could not make this up.

Cider Drinker

10:04 AM, 9th February 2024, About 3 weeks ago

Sounds like these tenants would benefit from a Selective Licensing Scheme.
NRLA should be targeting some Social Media advertising to advise the tenants to stay put until bailiffs arrive.

Not making a profit? Imagine how much worse it would be if the company had the same tax rules and housing regulations as pricaye landlords.

John MacAlevey

10:19 AM, 9th February 2024, About 3 weeks ago

“Our for-profit subsidiary is not making a profit, which is putting the group as a whole at risk.”

They added: “The controlled approach we’re taking to winding up NCH is working well, and we will continue to work closely with affected tenants to support them in every way we can to find new homes.”

..because we know nothing about commerce..never had to..incompetance is in our DNA.

What do you think Mick Roberts?

Old Mrs Landlord

10:28 AM, 9th February 2024, About 3 weeks ago

Reply to the comment left by Cider Drinker at 09/02/2024 - 10:04
Don't worry, I'm sure Mick Roberts will be delighted to take on these evicted market rent tenants. Only problem is, he'll have to evict all his benefits tenants first. What a farce!

Chris @ Possession Friend

10:57 AM, 9th February 2024, About 3 weeks ago

One 'arm' of the council ( who shouldn't be allowed to forage off some of its responsibilities to a 'private company' ) hasn't been making a profit.

Welcome to the world of renting.

So the Council's company have illegally used money from fees the Govt have allowed them to set, to offset their losses.
Senior management need to be held to account by the government and heads should roll.

Mick Roberts

11:12 AM, 9th February 2024, About 3 weeks ago

Reply to the comment left by John MacAlevey at 09/02/2024 - 10:19
Yes, this Council & the arms it tries to set up never surprise me when they fail.
Like Reluctant says, tenants have to approach the same Council who then put them in hotels at £2400pm which is far more expensive than trying to keep the tenants in the same houses in the first place.

The Council is toxic top to bottom. So Anti Landlord & this rubs off on the new staff member who carries the tradition on. I have 71 year old disabled tenant who can't use the phone to ring out & the Council won't let me ask the Council for help for her as the Council cannot stand me cause I'm always pulling em on their misdemeanours.

Reluctant Landlord

11:28 AM, 9th February 2024, About 3 weeks ago

Reply to the comment left by Mick Roberts at 09/02/2024 - 11:12
I have EXACLY the same situation with a council for 2 tenants who are both vulnerable.

The council wont accept that I am only helping them to navigate the council own procedures SPECIFICALLY designed to help those who are deemed vulnerable BY THE COUNCIL themselves in the first place, so they don't go into rent arrears (and ultimately secure their tenancy)

I'm going to have to resort in getting a Labour councillor involved *shudders* as I know they will love the PR attention pre GE to show they really care about tenants....*eye roll*

Monty Bodkin

11:39 AM, 9th February 2024, About 3 weeks ago

Nottingham city council guidance for landlords wanting to sell;

https://www.nottinghamcity.gov.uk/information-for-residents/housing/homelessness-prevention-and-advice/preventing-eviction-help-for-landlords/

I want to sell my property;

You could sell your property to another landlord with your tenant in situ. Ask your estate agent about this, as they may be able to put you in touch with landlords who are purchasing properties.

Mick Roberts

11:47 AM, 9th February 2024, About 3 weeks ago

Reply to the comment left by Reluctant Landlord at 09/02/2024 - 11:28
Wow so this is more common than I think.

Here's an extract from my 300 emails to the Council:

I'll always include this though.
As again, if u say Elaine has to ring u, please note the Council gave me Elaine 25 years ago & said Mick, Elaine cannot use the phone to ring for help, but don't worry, we will always be there for u.
Elaine has no family to help her to do anything. All the carers do is cook & shower her & take her shopping.
Elaine has asked to do this video, enclosed on this link.
https://photos.app.goo.gl/a4S8Xax3cP9qHMdw5
to tell u all that she cannot use the phone cause I tell Elaine the Council keeps telling me Elaine has to ring in.
Also enclosed which I will keep reminding u, letter from MoneyCare showing that the Council was going to get Elaine evicted & had debts building up & bailiff's on their way until yours truly got involved, as the Council deserted Elaine.
And letter from Council Sep 2021 saying they closing her case now, but Elaine can ring them if she needs any support-Are we banging our head against a wall here-Elaine CANNOT use the phone to dial out. If you took 5 seconds to meet her, you would realise that.

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