Greenwich Council’s cabinet will next week look to agree spending of £65 million buying homes off the market up to 2020. I’d previously covered spending of £46.5 million.

This is despite their own figures showing it is the most expensive way to provide additional affordable housing – by a substantial amount.

In relation to informing the public of this large spend, this is contained in the report:

Building new homes using their own Meridian Homes venture would be 56% cheaper per additional property at £223,000 instead of an average cost of £394,550 buying an existing home off the market.

And building alongside Housing Associations costs even less to the council for each property procured at a cost of £106,591; just over a quarter of the cost of each market purchase:

That is for a 30% stake of each new build admittedly when working with Housing Associations funding the rest, but ultimately it does mean more homes would be built.

Right to Buy income can only fund 30% spending on securing more affordable homes due to central government restrictions.

The £65 million in market purchases would be funded through a mix of 30% Right to Buy income and 70% Council reserves and borrowing.

If they partnered with Housing Associations the other 70% funding would be external.

If they used Meridian Homes the 70% would come from bank borrowing at low interest rates.

The latter two would provide more homes and avoid local residents footing the cost of the other 70%.

Despite this they are only spending £5 million on providing homes by partnering with Housing Associations, aka Registered Providers:

The vast bulk of money is going towards the least cost-effective option.

Greenwich Council argue Right to Buy income must be spent soon or it returns to Government. True enough, but the agreement to spend within a set period of time was known about back in 2013.

Meridian Homes has existed since 2011 but only now is it being used to build, and at low levels.

The authority claim market purchases will be cheaper than renting off private landlords for homeless families.

Well, true perhaps (for now) but many more homes could be provided for many more struggling residents using better value measures.

And secondly, the value argument assumes no reduction in house prices when many property experts now claim London is at a market peak and prices are falling in much of London. Spending £65 million could mean big losses.

RICS Residential Survey 18 January: House prices expected to fall nationally in the next 3 months due to falls in London, South East, the North East & Midlands.#London #ukhousing #housinghttps://t.co/SNAtuvk6YL pic.twitter.com/TQwavseZlC — Noble Francis (@NobleFrancis) January 18, 2018

Southwark has fallen 21% according to Bloomberg.

Southwark: the London borough where house prices have crashed by 21% – Bloomberg https://t.co/MFunDoWoa1 — London SE1 Community Website (@se1) January 16, 2018

Is now the time to spend £65 million buying homes instead of building them using measures that circumvent central governments restrictions on local authorities?

What homes are they buying?

This move also raises a whole bunch of questions over accountability and transparency. What homes are they buying, where are they and from whom?

What about the impact of house prices locally?

It will help push them up with effects for other residents struggling with affordability.

Who is purchasing the homes? There have been reports of staff at Kensington and Chelsea being sent out with no expertise to purchase property using a £200 million budget and being walked over by agents. Yes, that is the same council where Grenfell Tower stood.

The failure to use Meridian Homes

Since covering previous Greenwich spending of £46.5m on buying homes off the market a bit of PR has been noticeable when it comes to homes being built by Meridian Homes.

Yet the numbers built using that tool are still very small – far less than many other councils. Meridian can use Greenwich funds to leverage additional borrowing from banks to avoid government caps on building.

For all the fuss over things like a £20k sign in Eltham, this £65 million is waste on a whole different scale with big dangers to future funds. Taxpayers are paying more to get less due to a failure to plan ahead with Meridian Homes and partnering with Housing Associations.

Once again, I’ll leave this with you:

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