Councillors set to vote this week after recommendation to bring business in-house
Hastings Borough Council (HBC) will vote on the future of its wholly owned housing business this Wednesday, following a recommendation from the cabinet that the company should be wound up.
Councillors raised concerns about Hastings Housing Company’s (HHC) poor management and substantial debts.
The vote would mean that HHC’s assets will officially be transferred to the Council by the end of March 2026, before the company officially ceases trading in April. All outstanding loans and interest would also be terminated.
In a report to HBC’s cabinet last month, chief finance officer Kit Wheeler noted that HHC’s assets have been operated by the Council since June 2024. Although this was only intended to be temporary, Wheeler noted it had been a “lengthy process” and needed to be resolved with expediency.
He also flagged management issues with the company. HHC also only has two directors, even though the articles require at least three to be in place at any one time. The report warned the current decision making was “not providing good governance and control process”.
The company has faced criticism for the delays in implementing recommendations to an external auditor’s value for money audit, which Wheeler said posed a “reputational risk” to HBC.
HBC’s head of housing said that void and arrears rates were high when it assumed management of the properties, but the team has “significantly improved performance”.
HHC was established on 1 September 2017 to support the council financially in meeting increased demand for its services. It would acquire local properties, funded by loans from the HBC through the Public Loans Work Board.
Between February 2018 and June 2019, HHC acquired a portfolio of 61 lettable units under a purchase and leaseback arrangement, predominantly from one vendor.
However, the lessee struggled to make the rental payments due under the leaseback agreement during the pandemic, or to invest in the homes. This has meant HHC has been unable to fulfil its own obligations to the Council.
At 31 March 2024, the company had outstanding loans with HBC of £5,489,398 and overdue interest costs and recharges of £563,439. HHC, meanwhile, is owed £407,000 in unpaid rent by the managing agent, as of March last year. The report noted the debt is being “actively pursued through legal proceedings”.
“We’ve ended up with a situation where the company owes the council substantial amounts of money, and the housing company is owed substantial amounts of money,” Wheeler said in a cabinet meeting last month.
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