Issue details

Proposed decision:

Continuation of No Use Empty funding and delegation of authority to Director of Growth and Communities to take appropriate actions to deliver the initiative to 2027-28 and a further update given at that time.

Reason for Decision:

 A decision is required such that:

(a)       Kent County Council (KCC) shall agree to continue the countywide No Use Empty initiative; and

(b)       KCC shall agree how No Use Empty is funded and seek the agreement of the Section 151 officer or the Cabinet Member for Finance as appropriate for approval to spend: and

(c)        KCC shall agree that authority be delegated to the Director of Growth and Communities to take appropriate actions, including but not limited to, entering into legal agreements (loan agreements, equity loans, joint ventures, additional funding opportunities), consider and approve requests which may require consent and discharge of legal charges, as necessary to implement this decision.

Background:

Kent County Council (KCC) launched the No Use Empty (NUE) initiative in 2005 as part of its second round PSA2 commitments to examine better ways of delivering services, and particularly at working more effectively with district councils. The primary aim of the Initiative is to improve the physical urban environment in Kent by bringing long-term empty properties back into use as quality housing accommodation.

Initial focus was on the Urban coastal areas of East Kent (Districts: Dover, Thanet, Folkestone & Hythe, and Swale). Following the success of NUE in East Kent, the initiative was rolled out across Kent in 2008/09.

In October 2021, the unitary authority of Medway Council joined the initiative giving blanket coverage across Kent and Medway. In February 2022 Southend on Sea City Council entered into an agreement with NUE to assist with the delivery of a NUE loan scheme which operates in South Essex to provide administration and legal services. To confirm that Medway Council and Southend on Sea City Council fund these schemes and NUE are paid on a per application arrangement.

Options considered:

(a)       Do Nothing – to proceed as planned which means that the main No Use Empty initiative is phased out after 23/24 and no longer funded under the Capital Programme.

(b)       Do minimum – to proceed as planned with reduced funding coming out of the initiative (£4.7m in 24/25) but look to defer later withdrawals to keep £7m in the initiative.

(c)        Do switch funding – to proceed as planned with reduced funding coming out of the initiative (£4.7m in 24/25 and in later years) but increase the call on Treasury Investment Funds from 24/25 onwards, which would require more of the £40m currently available for investment being allocated to NUE.

(d)       Do defer- to rephase all the repayments under the Capital Programme by 3 years.

(e)       Do optimal – to proceed as planned with reduced funding from the Capital programme but increase the Treasury Investment funding for NUE to £40m over the coming years or increasing the limit for investment opportunities to allow the NUE initiative to be fully funded.

(f)        Do maximum – to increase Treasury Investment funding by £4.7m in 24/25 and in later years to entirely offset the reduced funding from the Capital programme.

Preferred options:

(e) followed by (c)

A reduction in funding for NUE would further impact on the number of empty properties being brought back into use. Districts are already reporting vacancies across their respective housing teams which are not being recruited to due to funding, which limits their capacity to tackle empty properties. use.

NUE supports Framing Kent’s Future by working with a range of partners including the Kent Districts and Medway taking a co-ordinated approach when it comes to tacking empty properties making a valid contribution to two of the four priorities, namely:

Priority 1: Levelling up Kent.

Priority 2: Infrastructure for communities.

Financial Implications:

Revenue - Breakdown of 23/24 expected.

There is no revenue budget allocated for NUE operational costs (staff, legal, web). An administration fee based on the value of the loan is collected and under the main empty property initiative a policy for ‘repeat customers’ was introduced whereby the first loan is interest free and then the next loan is offered on interest bearing terms. This together with the administration fee and interest being collected on the loans provided with Treasury investment funds has allowed NUE to become self-financing.

Capital

£11.5m Capital for recycled loans

Reference: Draft Budget Report 2023-24 (due for approval 9 February 2023, Page 6 &10, Row 19 Appendix B – Capital Investment Summary 2023-24 to 2032-33)

In 2024-25, there is a requirement to commence repayment of the original sum provided to NUE (-£4.7m) followed by a further repayment in 2025-26 (-£2.1m). NUE are seeking to defer this to later years or to switch funding so that Treasury Investment funds are used to substitute loss of funding from the Capital Programme.