Liverpool Council’s house building company – which once promised to build 10,000 new homes across the city – is to be liquidated after developing just 18 properties.
A Case Study – Owl
Liam Thorp www.liverpoolecho.co.uk
In early 2018, Liverpool Council announced the launch of a flagship new housing company that it said would ‘radically reshape Liverpool’s housing market.’
In a major launch, then Mayor Joe Anderson said the new ‘ Foundations’ company would deliver 10,000 properties across the city, fuelled by an estimated £500m investment programme. There would be a focus on building homes for foster families, the elderly, people with disabilities and the homeless as part of an ‘ethical’ housing company.
Since that point, Foundations has built and taken ownership of just 18 properties – none of them at social rent – and will now be wound down.
The launch of Foundations was a big deal for the council. Mayor Anderson described it at the time as the most exciting policy of his time in office. The announcement garnered national headlines and was seen as a radical and forward thinking approach to tackling the housing crisis in the city.
An impressive team was put in place to lead the company, with former Liverpool Councillor and Housing cabinet member Frank Hont as Chairman.
Other board members included Andrea Titterington former chief executive of Regenda and chartered surveyors boss Maggi Howard.
Mark Kitts, the council’s Assistant Director for Regeneration was installed as Chief Executive while company records show that his boss, the now suspended Nick Kavanagh, was also a director of the company for a short period.
Other experienced staff were recruited for areas like business development and finance. Following its inception, the first big announcement regarding new homes came in March 2018.
The council announced that the first phase of Foundations would see £50m spent on building 500 houses within an 18 month time period. But around a year later another major council announcement would change the direction that the local authority’s housing plans would go in.
In May 2019, the city council announced that it was to start building council homes for the first time in 30 years. Mayor Anderson said this had become possible after weeks of negotiations with central government had ended with an agreement to wipe off hundreds of millions of pounds of debt that had kept the city’s Housing Revenue Account locked for many years.
So Foundations was no longer the big story for the council as it could now start looking at building its own homes directly – rather than through a separate company.
In July 2020 the council announced a new strategic housing delivery team that would bring forward a viable portfolio of sites for development in a bid to contribute to the city’s need to develop 30,000 new homes. It was around this time that four staff members from Foundations left their employment on the basis of a settlement agreement.
In a press announcement in July 2020, the council said Foundations would continue to operate as a stock holding company owned by the city council and would retain its existing responsibilities as an operational landlord for properties it had already built.
The release also stated that Frank Hont would remain as the chairman of Foundations – although company records show that he resigned just two months later on September 30. He wasn’t the only one.
Board members Andrea Titterington and Margaret Gilkes resigned on the same day, while Darrell Mercer left his position at the end of December and Angela Forshaw resigned from her role on the board on January 31. Former senior council officers Nick Kavanagh and Mark Kitts have also previously resigned from the company.
Currently, the only director of foundations remaining is Andrew Buck. But that won’t be for long.
A report to next week’s council cabinet is recommending the closure of the council’s wholly owned housing company, Liverpool Foundation Homes Limited, with councillors set to agree that it is placed into voluntary liquidation.
If agreed by the cabinet next week, Foundations will market and dispose of its assets to all registered providers of social housing on their current tenure as rent to buy products.
Over the past 18 months, Foundations’ operations have been wound down with all employees leaving or returning to the City Council in April 2021. Following a review, Foundations will now look to dispose of the properties in its portfolio to a registered provider of social housing. Current tenants will be able to remain in the properties with their existing arrangements safeguarded.
Once assets have been transferred, Foundations will enter into voluntary liquidation. The cabinet report states: “Closing the company will reduce the burden it places on the city council in terms of costs and administration, allowing officers to dedicate their time towards delivering a housing strategy which enables housing development in the city.”
“Once this has been done, the company will need to be closed. This will need to be undertaken by way of liquidation which is the formal manner in which Foundations’ affairs are wound down and the company is ultimately dissolved.”
Once a liquidator is appointed, they will take over the management of the company with the aim of winding down the business and dissolving the company.
The report states that council officers have started a “detailed lessons learnt exercise” to assess whether the Foundations venture “represented value for money alongside other options the council could have pursed in respect of the building and managing of housing.”
As far as the council’s opposition leader is concerned, it was a waste of time and money. Cllr Richard Kemp said: “The news that the Labour Cabinet in Liverpool has finally drawn the line on Joe Anderson’s house building ambitions comes as no surprise. Labour’s dream of changing the housing market in the city by building 10,000 new homes has finally been laid to rest with the final tally being 18 new homes which are owned by its Foundations Company. Each of those houses cost us £45,000 in administrative costs alone.”
Councillor Sarah Doyle, Liverpool Council’s Cabinet Member for Development and Housing, said: “Liverpool City Council has been reviewing all of the companies it has established over the years to examine their role and function and to consider whether they are delivering best value for the taxpayer. Foundations was established to deliver thousands of new homes across the city, but it has become apparent that this is no longer a viable proposition.
“A small number of properties are currently under the management of Foundations and these tenancies and properties will now be transferred following a tender exercise.
“The city council has recently endorsed the Local Plan which sets out a new vision to attract investment for new housing and provide the guidelines to ensure developers build quality, sustainable homes.
“Various workstreams are underway to unlock priority housing sites and ensure delivery of decent, affordable homes in partnership with our local housing associations. As Cabinet member I regularly chair a meeting whereby council officers meet with Registered Providers to work through key issues such, homelessness, neighbourhood investment and priority sites.
“These meetings are proving to be really productive. Registered Providers are also supporting our community-led housing programme and have collectively set aside funding to support Breaking Ground, a community led housing hub.
“Officers and members are currently engaged in drafting a new housing strategy to help underpin that ambition. And we are assembling a housing team to implement our plans.”