Content

Salford City Council - Record of Decision
 
Title: Transfer Of Affordable
Homes Developed By The Council At The Former
St. Luke’s Site,
Kerrera Drive, Salford To
DériveRp
And Dérive Group
 
I, Councillor Kelly, Deputy
City Mayor, in exercise of the powers contained within the City
Council’s constitution do hereby;
 

Approve the disposal of 56 properties at
the St. Luke’s site to Dérive RP by way of the
grant of a long lease for a term of 1000 years, for social and
affordable rent.
Approve the disposal of 12 properties at the St. Luke’s
site to Dérive Group by way of
the grant of a long lease for a term of 1000 years, for shared
ownership sale.
Approve the
lending of £6,479,691 to Dérive RP to fund the acquisition and associated costs of
56 units.
Approve the lending of £2,004,259 to
Dérive Group
to fund the acquisition and associated costs of 12 units, subject
to Dérive Group securing
Investment Partner status and Homes England grant
funding.
Note the current position on the Memorandum of
Understanding between the Council and Inspiring Housing Community
Land Trust (IHCLT) and the potential on-transfer of up to 24
properties at the St. Luke’s site from Dérive RP to IHCLT, subject to further
approval of terms and funding arrangements between the
parties.  
Delegate authority to
the Executive Director Place in consultation with the S151 officer
to: negotiate, agree, and finalise the detailed terms of the
transaction.
Authorise the Shared
Legal Service to prepare all necessary documentation and to take
all steps which are required to give effect to the above
recommendations.

 
 
The Reasons:
                             
 
New affordable housing
delivery.
 
Assessment of Risk is
Medium 
 
The
source of funding: Housing Capital Programme, with loan to be
repaid by Derive RP over 40 year term.
 
Legal
Advice obtained:  Kate Bouchier and Kathryn Saldana, Shared Legal
Service.
The Council has the power to
provide funding to Dérive RP and
Group under a range of powers including s.1 Localism Act 2011 and
s.24 Local Government Act and s.25 Local Government Act 1988 (1988
Act), the latter providing the power to provide financial
assistance for privately let housing. S.25 1988 Act requires that
s.24 1988 Act (or any similar power) is not exercised without the
consent of Secretary of State. Consent C of the 2010 General
Consents provides a broad consent for financial assistance which
would cover the proposed Council loan and grant funding agreement
with Dérive RP and
Group.
 
The tax treatment of the
proposed Council disposals to Derive RP and Derive Group
respectively needs to be considered and specialist tax advice is
required. The transactions will potentially create tax liabilities
within the Derive company group and any available reliefs need to
be explored. If none are available, the implications for the
financing of the disposals will need to be reviewed.
 
In addition, specialist legal
advice is being sought with respect to the structuring of the
transaction to assist with the shared ownership sales.
 
The disposals should also be
structured in a way which secures legally binding estate management
obligations and service charge contributions to be created as
between Derive RP and Derive Group.   
 
Derive Group has sought
Investment Partner Status from Homes England to enable drawdown of
grant funding to help deliver the shared ownership element of the
scheme.  If Derive Group is not
successful in obtaining this grant funding from Homes England, the
Council will need to reconsider the options for the disposal of the
12 shared ownership units.
 
Financial Advice obtained:  Alison Woods,
Commercial Finance Manager.
The St
Lukes housing delivery scheme forms
part of the Council’s approved housing capital
programme.
Both
DériveRP Limited and
Dérive (Salford) Group Limited
have fully viable business plans to support the transfer of the 68
properties, which includes the full repayment of the aforementioned
loans to Salford City Council, over a 40-year period at an interest
rate of 4% on an annuity basis.
Dérive RP Limited and Dérive
(Salford) Group Limited have a number of golden rules that ensures
that all schemes it takes on are fully viable without the need for
working capital; this gives the Council assurance that it will be
able to meet its debts in fulfilment of this loan.
It
should be noted that the lending of £2,004,259 to
Dérive (Salford) Group Limited
is dependent on Dérive (Salford)
Group Limited achieving Investment Partner Status from Homes
England, to allow for drawdown of grant funding, which will support
delivery of the shared ownership element of the scheme. If this
application is unsuccessful or the funding award is lower than bid
for, alternative funding sources or an increased loan facility from
the Council will be required to make up the funding shortfall. This
will be subject to a further report where necessary, or otherwise
authorised under the scheme of delegation by the Executive Director
Place.
 
 
Procurement Implications: N/A
HR
Implications/Advice: N/A
Climate
Change Advice Obtained: In Consultation With: Mike Hemingway -
Principal Officer - Climate Change

 
 
The
following documents have been used to assist the decision
process:
Public/briefing report submitted to the Property/Regen Briefing
on 27 November 2023

Contact Officer: John Nugent
(Property Services)        
Tel No
0161 779 6072

 

 

 

This
decision is not subject to consideration by another Lead
Member/Director

The
appropriate Scrutiny Panel to call-in the decision is
the
Growth and Prosperity Scrutiny
Panel.

 

 

Signed:
Councillor Tracy
Kelly
Deputy City Mayor
Date 27 November 2023
 

 

*          
This decision was published on Monday 27 November 2023.

*          
This decision will come in force at 4.00 pm on Monday 4 December
2023   unless it is called-in in
accordance with the Decision Making Process Rules.