Sutton Council is set to establish a new not-for-profit social housing provider as part of its strategy to increase the supply of affordable homes in the borough.
The Sutton Shareholdings Board has approved the creation of a Community Benefit Society (CBS) as a subsidiary of Sutton Living Limited (SLL). This new entity will be registered with the Regulator of Social Housing (RSH) and recognised as an exempt charity by HM Revenue & Customs (HMRC).
The CBS will focus on providing and managing housing, including Social Housing, and assisting in housing people. While it will not necessarily be social rent, there is a requirement and intention to keep rents affordable, meaning there will be affordable rents. The CBS's charitable objects include the business of providing and managing housing, including Social Housing, and providing assistance to help house people and associated facilities, amenities and services for poor or homeless people
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The primary aim of the CBS is to enable SLL to access greater funding streams from bodies such as the Greater London Authority (GLA) and the Ministry of Housing, Communities and Local Government (MHCLG). To access grant funding successfully, the CBS must first become a Registered Provider (RP). The council anticipates that this structure will improve the chances of securing more funding, including from the GLA for grants.
Councillor Sunita Gordon, Lead Member for Resources, chaired the meeting where the proposal was discussed. Therese, who presented the proposal, explained that while SLL was initially set up as a developer, its focus has shifted to acquiring homes for affordable housing.
The CBS is projected to be formally registered and entered on the Register of Providers of Social Housing approximately 10 to 15 months from the meeting date, estimated to be between June and November 2027. This timeline encompasses stages for legal formation, HMRC charitable recognition, and RSH registration (Stage 1 and Stage 2).
During the meeting, concerns were raised regarding potential financial commitments for Sutton taxpayers. Rob, a legal advisor, clarified that while a ring-fencing agreement ensures the CBS can seek support from SLL or the council, there is no legal obligation for the council to provide financial support. Decisions on future financial support would be subject to rigorous financial appraisal.
A stressed business plan, detailing potential financial risks such as interest rate changes, increased costs, repairs, voids, and arrears, will be produced and presented to the Board before the second stage of the RSH registration. The plan will be stringently stressed and scenario tested
to address these and other potential risks.
The CBS will have its own board, with a majority of independent members required upon registration with the RSH. The CBS Board will consist of between three and seven Board Members, including any co-opted members. From the point of registration with the RSH, a majority of Board Members must be Independent Board Members, and at least two of any quorum of three must be Independent. The Chair must be an Independent Board Member. While the NHF Code recommends a minimum of five Board Members, the initial adoption of three reflects the CBS's early stage, with the aim to reach five as quickly as practically possible. The Parent (SLL) retains the right to appoint and remove Board Members. Board Members not appointed by the Parent will be appointed by the CBS Board itself. Criteria for selecting independent members are not explicitly detailed beyond requiring relevant housing expertise and meeting the RSH's regulatory expectations for independence.
The Shareholder Agreement outlines control mechanisms, with the Council retaining direct control over the CBS's borrowing and the approval of its business plan. Four specific matters require Council consent: material correspondence with the RSH, changes to shareholder status, any borrowing by the CBS, and the adoption or material variation of the CBS's Business Plan.
The Board approved several recommendations, including the establishment of the CBS, its registration with the Financial Conduct Authority (FCA), the group and governance structures, the CBS Rules, the Shareholder Agreement, the Ringfence Agreement, and the Governance Policy. Minor consequential amendments to the documents to ensure the registration process is completed were also noted. Further details can be found in the Public reports pack for the meeting.
