Havering Council's Overview and Scrutiny Board has decided not to uphold a call-in regarding a Build to Rent
scheme with Inspired Solutions, allowing the council to proceed with a 40-year nomination agreement for up to 600 properties. The decision, made after a 5-5 tie broken by the chair's casting vote, means the Cabinet's original decision can be implemented immediately.
The scheme aims to address the council's significant pressures with temporary accommodation and hotel costs, which have led to substantial budget overspends. Inspired Solutions will identify and purchase land with existing planning permission in Havering, fund the development of new properties, and then enter into a 40-year nomination agreement with the council. The council will have 100% nomination rights, with rents capped at Local Housing Allowance (LHA) 2024 rates.
During the meeting, councillors raised questions about the developer's track record, as Inspired Solutions was formed in 2020. Simon Smith, Managing Director of Inspired Solutions, stated that prior to the company's formation in 2020, they had approached JP Morgan Bank. Peter was the head person at JP Morgan Bank at the time to put a funding facility in place to allow us to deliver social housing. We then embarked on speaking to various local authorities, and we've got cabinet approval in another local authority, and we're at the final stages of contracts.
He further elaborated that for a different local authority, they have three locations in that local authority. We selected the locations with the local authority. We then amended the existing consented planning under a Section 73 amendment to vary the appropriate accommodation that they required, and the total number of homes is 229. We will start to complete on those sites within this quarter, quarter two of this year, and we'll commence construction quarter three of this year.
Inspired Solutions will identify and purchase land with existing planning permission in Havering
. They have identified 22 sites within the borough, all that fit the criteria from a financial perspective.
The process involves taking these sites, sitting down with the council to determine priority and required amendments to the number and types of bedrooms, going through a Section 73 amendment process, buying the sites, and then bringing them forward. They stated, We can only buy sites with full consented planning. We couldn't buy a site without knowing the outcome. It wouldn't work for the financiers.
Concerns were also voiced regarding the lack of a formal procurement exercise. Officers explained that a procurement process was not required as Inspired Solutions brought the site and development proposal to the council. They argued the scheme represented best value by comparing its costs and risks to those of temporary accommodation and other affordable housing development options.
Councillors also questioned the financial risks, the reliance on projected savings, and the potential for costs to outweigh benefits if demand for temporary accommodation decreases. Officers assured the board that the council's financial commitment is only triggered upon practical completion of the properties and that the costs are significantly less than continuing to use expensive nightly-charged accommodation. The report states, The modelling is based on current trend information and demand forecasts. While the assumptions are reasonable and grounded in the sustained increase in Temporary Accommodation numbers, there remains a risk that cost avoidance benefits may not fully materialise if demand reduces in future years.
It also notes, The modelling indicates that beyond the initial 71 units, supply would exceed projected Temporary Accommodation demand, meaning additional units would instead meet wider housing needs and therefore would not generate further cost avoidance savings.
Councillor Patel asked, Based on your own modeling. At what exact point does the scheme stop generating savings and become a net cost to the council?
The response was, It doesn't. No, it will always develop, be a saving to the council.
The estimated £56.6 million saving for the first 71 units is based on the average nightly rate currently paid for Temporary Accommodation, less the Housing Benefit contribution that would ordinarily be received by the Council, and assumes that 25% of the units will be allocated to households on the housing waiting list rather than Temporary Accommodation.
The report notes, There is a risk that inflation may be higher than forecast in the modelling, which could reduce the scale of cost reductions achieved.
The board also discussed the potential for concentrations of high-needs households without a tenure mix, with the council outlining a resettlement period and selection process to ensure residents were known and supported. The management of the properties would be undertaken by a company appointed by Inspired Solutions, with the council having oversight and contractual safeguards. The report states, Inspired Solutions will appoint a Management Company to manage the properties and to collect rent and service charges from tenants. The Management Company will be responsible for maintaining the properties in a lettable condition and in accordance with standards prescribed by the Regulator of Social Housing at all times.
It also mentions that the terms of that arrangement will be very tightly negotiated and we are, and you can see that, the significant detail within the nominations arrangement in terms of the liabilities for both Inspired Solutions or the management company and the council.
The council's liability for uncollected rent would be capped, and they would not want an open-ended liability for rent arrears.
The report mentions, To further mitigate the risk of voids, the Council will retain flexibility over use of the homes, including prioritising Housing Register nominations and, where appropriate, supporting alternative uses such as key worker accommodation or Local Housing Allowance‑level private rented homes for Havering residents.
It also states, Where households are suitably housed or demand is exceeded, the properties may also be used to support alternative priorities, including the provision of key worker accommodation or Local Housing Allowance‑level private rented homes for Havering residents.
The potential for the council's guarantees to constitute a subsidy
under the Subsidy Control Act 2022 was acknowledged, requiring a formal assessment to ensure compliance. The report states, A formal subsidy control assessment will be required before entering into the agreement to document the rationale, proportionality and compliance route.
It also notes, The provision of a guarantee of voids and unpaid rent may constitute a 'subsidy' under the Subsidy Control Act 2022 (SCA 2022), as may any contribution to Inspired Solutions' costs or insurance. This means that the Council will need to conduct an assessment of whether there is a subsidy (in which case assess the subsidy against the subsidy principles contained in Schedule 1 to the SCA 2022) or whether a commercial market operator would enter into the transaction given the costs avoidance.
The scheme is projected to deliver significant cost avoidance, with an estimated £56.6 million saving over 40 years for the first 71 units, and a potential £579 million saving if all 600 units are delivered. Cabinet Paper - Build to Rent at the Local Housing Allowance and Inspired Solutions High Level Financial Model provide further details on the financial projections.
Public reports pack for the Overview Scrutiny Board meeting on 25 March 2026 contains additional information on this matter.
