Did you know that Sefton Labour Council in October 2018 created a private company, called Sandway Homes Limited to build high quality houses for sale in various parts of the borough?
Did you know that the company is run from the Council’s offices in Magdalen House in Bootle?
Did you know that 3 members of Council staff have been seconded from the Council to run the company?
But surely, you would imagine 3 seconded Council staff couldn’t have the time or capability to find and buy housing sites, design the layouts and the individual houses, carry out the building work and market the completed houses.
You would be right.
Sandway Homes lists several private sector partners who they need to employ to help achieve their goal, including Architects from Blackburn, Engineers from Stockport and from Stoke-on-Trent, Interior Designers from Whitchurch. In addition they employ Planners, Project Managers and Transportation Engineers from various officers across the north-west.
They also utilise a building contractor who is based in Nelson, Lancashire so aren’t even generating work for local contractors.
What’s the benefit for the Council?
Sandway’s website states that:
“Sandway Homes Limited directly contributes to Sefton’s Housing Strategy in delivering good quality, distinctive homes to the Borough of Sefton.”
In other words, they are replicating the work of countless existing private housebuilders by building new homes for sale.
How is this company contributing to the Council’s Housing Strategy?
Curiously several private sector planning applications have recently been brought before the Council’s Planning Committee but have been recommended for refusal as the Council has achieved its 5 year housing target. A scheme with 107 properties by a Bootle-based community group has been dismissed as being a modest scheme.
If the Council’s housing targets have been met then what’s the future for Sandway Homes Limited?
But surely, as a Council-run housing company Sandway must be committed to providing affordable housing to meet the needs of residents who want to rent from the council, rather than from a private landlord?
Unfortunately, this is not the case.
Sandway Homes Limited have to date begun 2 schemes, comprising 47 houses for sale in Meadow Lane, Ainsdale on the site of the former St John Stone RC Primary School. They have also begun to build 30 homes for sale in Hey Farm Gardens, Crossens. Sandway Homes Ltd do not quote sales prices on their website so it is impossible to tell how “affordable” the properties will be when they are completed.
Design work has also begun for a Council-owned site at Buckley Hill, Netherton which Sandway has re-named Sefton Grange. When completed this site will comprise 70 homes, of which 9 apartments will be bought by Sefton Council for the social rented sector.
Again, the Council has no in-house capacity to manage council housing, having outsourced its housing stock to One Vision Housing several years ago. A proportion of the rent will therefore have to be spent engaging commercial estate agents and managers to collect the rent and handle tenant enquiries.
If social housing is such a small part of Sandway’s objective then presumably the Council must have seen the profits being generated by established housebuilders?
Using that logic, Sandway could make a profit on every house they sell and that profit could be ploughed back into the Council to support the likes of social care, education or public health.
I think we heard a similar argument when the Council bought Bootle Strand.
If this is such an attractive model then why haven’t other councils set up their own housing companies?
Liverpool City Council had a similar idea in 2018 and set up Liverpool Foundation Homes Ltd. (It has been suggested that Sefton decided to copy Liverpool when setting up Sandway Homes Ltd).
Liverpool’s plan was for Liverpool Foundation Homes Ltd to be an “ethical housing company” to build over 10,000 homes, supporting foster families, the elderly, people with disabilities and the homeless. However, Liverpool ‘s housing company has managed in 2 years to build only 18 houses and is now being closed-down.
In March 2020, accounts lodged with Companies House showed Liverpool Foundation Homes Ltd holding net assets totalling + £438,555, despite the small number of houses built.
Just how profitable is Sefton Labour Council’s Sandway Homes Limited?
Accounts lodged with Companies House shows Sandway Homes Limited on 31st March 2020 having total net liabilities of £1.333m.
On 31st March 2019 Sandway’s net liabilities were £528k.
In other words, far from being a revenue generator, Sandway has shown its liabilities, (i.e. its debts), more than doubling in 12 months. And that was before the effects of covid started to bite.
What then is the benefit of Sefton Council spending its energies on trying to run a housebuilding company?
• It employs 3 Council staff,
• It uses up space in a Council office (although we don’t know whether it pays rent to the Council),
• It creates new houses in areas where existing conventional housebuilders could provide similar homes,
• It provides a job-creation scheme for private sector consultants and an east Lancashire contractor,
• It demonstrably runs at a loss (much like many other of the Council’s so-called commercial projects such as Bootle Strand, Crosby Lakeside, Southport Market…)