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9:59 AM, 9th February 2024, About 3 months 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.
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’.
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.”
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.”
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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Martin Roberts
15:43 PM, 9th February 2024, About 3 months ago
There is an expression about a drinking session in a brewery.
Mick Roberts
15:50 PM, 9th February 2024, About 3 months ago
Reply to the comment left by Reluctant Landlord at 09/02/2024 - 14:04
Ooh I've done all that. Fell on deaf ears.
Even reported myself for Category One trip hazard at the property as the Council now control her money to cut garden & weeds off path. Again nothing been done.
Paul Essex
18:16 PM, 9th February 2024, About 3 months ago
This should be held up as an example to show that making money from property requires sound management and is not a short cut to riches.
I assume they believed the left wing rhetoric when they set up a 'for profit' organization and just waited for the cash to roll in.
NewYorkie
18:44 PM, 9th February 2024, About 3 months ago
Reply to the comment left by Paul Essex at 09/02/2024 - 18:16
Like so many left wing councils who think they can be entrepreneurs.
Matthew Jude
20:50 PM, 9th February 2024, About 3 months ago
Reply to the comment left by Mick Roberts at 09/02/2024 - 11:51
Hi I've been a landlord in Nottingham for 25 years. Always housing those who were struggling to find places. When the section 24 tax changes were coming in, (originally an anti-landlord idea from generation rent, I believe) I called the housing departments of Nottingham City and Gedling Borough to explain how I believed this would undermine the private rented sector, and lead to hundreds of families needing housing by the council. They didn't care about the tenants, they were just happy with any anti-landlord measures. Our local authorities are playing politics with people's lives, and continue to spout their propaganda.The saddest thing about this, is that the people of Nottingham will still vote for this incompetent bunch. I believe the housing crisis in Nottingham will get worse for tenants for some years yet. These council are allowing their hatred of landlords to drive policies which are actively hurting the tenants they claim to be helping.
Mick Roberts
7:37 AM, 10th February 2024, About 3 months ago
Reply to the comment left by Matthew Jude at 09/02/2024 - 20:50
Yes, why would they jump for joy when Section 24 came in. They all worse off now.
Like on BBC1 news again thinking banning Section 21 is the answer. Come ask us & we'll tell u
Are u telling me I cannot get my house back if I'm not getting on with that tenant, if she's not paying, if I get old & had enough of Council & Govt legislation? If u telling me I cannot issue a notice that still takes a year to get my house back, then I'm sorry, I'm not giving u a house in the first place. And that's why we got supply dwindling.
Yes Council's aren't bothered are they. They all individual human beings (like us) that hide behind the Council & move department next year so don't care.
Peter Lassman
9:28 AM, 10th February 2024, About 3 months ago
So the council will force 44 family units out, forcing the council to take those at high risk or who meet their emergency requirements into their own housing stock ( if available) or pay for hotels to house them, then keep the proceeds, but what about the rest of the £18m as 44 homes are not worth the £18m !! Will they force more tenants out? To me as a small landlord with no Qualifications it seems more practical to just take (legally of course) £18m of housing stock keeping everyone housed and giving the council some much needed income, and if all the other properties were bought with the Council's own, so called income, take legal Action to claim them all 😊
NewYorkie
14:28 PM, 10th February 2024, About 3 months ago
Reply to the comment left by Peter Lassman at 10/02/2024 - 09:28
The 'for profit' business will no doubt be providing much higher quality housing for those who can pay higher rents. But as you say, did they use the £18m to fund them?
Regardless, your answer is simple. Take the housing to the value of £18m, plus the tenants. The council will then have a higher rental income than those in social housing.
Meanwhile, prosecute the management and never let them near social housing again.
AnthonyJames
15:16 PM, 10th February 2024, About 3 months ago
Disastrous council investments in commercial property (Woking etc), and here in rental property too. What next: fraud, inefficiency and incompetence in the numerous property development companies that have been set up by local authorities "to solve the housing crisis"?
See this article in The Guardian about Southwark Council closing play parks and then running into disabling cost overruns and financing problems on their for-profit developments, which are meant to be subsidising new social housing: https://amp.theguardian.com/environment/2024/feb/09/london-council-rips-out-playgrounds-then-runs-out-of-cash-southwark
There's a lot of this going on in housing associations too.
Part of me feels Schadenfreude - it's not so easy, is it Shelter and the other finger-waggers, when you actually try to make a profit out of housebuilding and renting yourselves? Your sanctimonious attacks on "evil, profiteering" private developers and landlords don't look so well-informed and righteous now, do they?
But part of me also feels sad and regretful: building new and renovating affordable social housing ought to be possible within mixed-tenure developments, and, yes, public investment to encourage more building and de-risk private projects is not automatically a bad idea. However what all these examples of malpractice and incompetence show is that councils should probably just stick to what they're familiar with: planning, building control, and other regulation. They can be co-investors and junior partners on the financing side, but really they should just leave the actual construction work and subsequent property management to the professionals, and learn to be a little more humble.
NewYorkie
17:43 PM, 10th February 2024, About 3 months ago
Reply to the comment left by AnthonyJames at 10/02/2024 - 15:16
If the prices they are charged for their social housing work are anything to go by, they will be paying way over the odds for new developments. Why? Because they are used to spending taxpayers' money without having to be profitable.