East London’s Newham council will transfer about 450 homes to Local Space next April

A new association designed to tackle the shortage of temporary housing in an east London borough is set to approach banks for £200m next month.

Local Space, set up by Newham council, is also looking for about £25m of pump-priming funds from government departments and agencies. The ODPM has already helped to cover some of the project’s development costs.

The council will give the association about 450 homes worth approximately £50m in time for its launch on 1 April. The transferred homes will be council-owned temporary housing and vacant properties.

It has already had informal discussions with five funders about the deal. It is putting together a final prospectus and is set to formally approach the banks in December with the aim of completing a deal in January.

The association will buy up other properties and is likely to own about 2500 in total. Some – 1300 under one option – could become social rented housing but the final number and the proportion of social housing could change.

The association is likely to register with the Housing Corporation early next year.

Chris Wood, Newham council’s executive director responsible for housing, said Local Space would provide an alternative to temporary housing. He said: “It’s about the saving to the public purse. In London, temporary accommodation is funded by housing benefit. It’s public money going into private pockets. This scheme means that the subsidy continues for a limited period but assumes a return to the social housing sector [when the homes become social housing].”

He continued: “This is about providing stable, quality housing. We came into housing to provide decent homes for people whose needs weren’t served in the private market. This is an alternative to temporary accommodation that provides greater stability and it’s something we are in control of.”

Wood said the idea could be replicated by other councils.

There has been a big rise in the use of temporary accommodation as councils stop using bed-and-breakfast accommodation for families to meet their duties under the Homelessness Act. Newham spends about £13m of housing benefit a year on private sector temporary accommodation. It has 5221 families in temporary accommodation – more than any other London borough.

Much of this accommodation, paid for by housing benefit, has been rented from private landlords at market prices and many councils are looking for cheaper alternatives.

Newham spends around £13m on private sector temporary accommodation. It has the largest number of families in temporary accommodation of any London borough, according to figures published in June, although some of these are in council owned temporary homes. (HT 10 September, page)