To seek approvals for the acquisitions at Barton Park from OCH(I)L and from the developer under the Development agreement as urgent key decisions and an urgent decision outside of the policy and budget framework.

1.    Approve, as an urgent decision outside of the policy and budget framework, that the Council:

1.    takes a transfer of the 168 Barton Park residential units from Oxford City Housing (Investment) Limited (“OCH(I)L”);

2.    acquires the remaining 184 units at Barton Park directly from the relevant phase developers for Phases 2, 3 and Phase 4 (“the developer”) at Barton Park as required under the overarching development agreement with Barton (Oxford) LLP;

all properties to be purchased by the Housing Revenue Account (HRA) and from within the HRA capital budget.

3.    Agree that charging of the purchases approved at recommendation 1 (at the value shown in Appendix 2) is to the allocated HRA Capital budget for ‘Purchases of Properties from OX Place’, until such time as full Council may allocate a special budget for the purpose of acquiring the Social Rent homes at Barton Park into the HRA.

4.    Approve and agree to the purchase of and authorise the entering of the relevant contract and transfer documentation, ancillary deeds of covenant and agreement for the acquisition of 5 new affordable homes at Barton Park (Phase 3) from the Developer directly into the Housing Revenue Account (HRA), as listed in Appendix 1. 

5.    Approve and agree to the purchase of and authorise the entering of the relevant contract and transfer documentation, ancillary deeds of covenant and agreement for the acquisition of the 168 residential freehold and leasehold units held by OCH(I)L at Barton Park and any associated land at a total purchase price of up to £33,125,324 plus up to £250,000 of associated costs. 

6.    Delegate authority to the Executive Director - Development, in consultation with the Cabinet Member for Housing and Communities; the Head of Financial Services/Section 151 Officer; and the Council’s Monitoring Officer, to enter into all agreements necessary, for which powers are not already delegated under the scheme of delegation, to facilitate the transfer of the properties at 1.2  above, to the extent that such authority has not already been delegated to officers within the Constitution.

Relevant to this decision is the report to the Cabinet on the 16 October 2024, which is set out at this report as Appendix 3. That report sets out:

The background to the reasons the Council is seeking to acquire the properties at Barton Park from both OCH(I)L and, moving forward, directly from the developer as they are delivered. The reason stems from the need to improve the financial position within OCH(I)L. Legacy costs, together with adverse economic conditions, primarily associated with rising borrowing costs in recent years, which are higher for OCH(I)L than for the HRA, have been the main contributing factors that have led to a review of the arrangements with the Council and housing company.

The proposal that the properties are acquired by the Council into the HRA, due to the agreement the Council has concerning the development at Barton Park and the need for the properties to be held as Social Rented homes.  

To secure the financial position of OHC(I)L, remove the potential impact on the OCHL group of companies and to safeguard the dividends due to the Council as shareholder it is not in the best interests of the Council for the properties to remain in the ownership of OCH(I)L. The financial implications set out in the report at Appendix 3 at paragraphs 20 to 32 inclusive detail the financial considerations.

There is a timeline set for the transfer based on the audit of OCH(I)L’s accounts and the company group’s accounts. To satisfy the auditor action is being taken in advance of the audit conclusion and the intention is that on the 29 November 2024 168 properties transfer from OCH(I)L ownership to the Council and that all future completions at Barton Park come directly into the HRA. The financial modelling for the transaction for both the Council and the company were based on this transfer date and work has been progressing with a view to completion.

The work includes having engaged with tenants over the change of landlord, becoming Council tenants, arranging for tenancy agreements to be in place from the 29November 2024 and for the payment arrangements for tenants to be in place so rent is payable to the Council directly.

To not enact the decision to acquire the properties as planned from OCH(I)L and directly from the developers would lead to the following consequences:

The financial risk to the Group is set out below in the Financial Implications section. the company has agreed with its external auditors, Mazars, additional commentary within the 2023/24 accounts confirming the transfer of the Barton properties as this is a material post balance sheet event. If delays are experienced, then this may in turn put back the planned sign-off that is expected to take place this week on 29 November 2024

Delay would create a reputational risk, all tenancies in the name of OCH(I)L have been terminated and new agreements are being issued in the name of the Council. Communications have been issued to all of the affected tenants setting out that the expected transfer date is to be 29 November. Direct debit mandates have also been amended to reflect the anticipated change. When the properties transfer to the Council tenants will benefit from secure tenancies with additional benefits (Right To Buy etc).

A requirement to adhere to the terms of the development agreement which requires us to accept transfer at a specific point in time. That point has been formally reached and the Council is now required to accept transfer with no ability to delay.

There would be a delay in respect of properties now complete and able to be let (as currently owned by the developer) being transferred to the Council and therefore they would remain vacant for an extended period when demand for council housing is significant.

Additional costs and a significant capacity/resource impact for both the Council and OCH(I)L would result if there was a need to repeat work already done in preparation for a later transfer date in terms of undertaking new financial assessments, legal advice and updates to that and an impact on capacity of officers in the housing service in terms of delaying and undoing the work done to ensure that the transfer of tenants in to the Council is possible, effective and properly done.

The cost of buying the homes from OCH(I)L will inflate monthly, as further interest charges on the debt will have been incurred by OCH(I)L.

As set out in the report and the appendices.