A representative from The Ethical Housing Company (EHC) will be in attendance to provide information in relation to its business model and work with Middlesbrough Council to bring empty properties back into use.
Recommendation: that the Panel
determines what further information will be required for this scrutiny
investigation.
Minutes:
The Chief Executive Officer (CEO) from the Ethical Housing Company (EHC) was in attendance at the meeting and gave a presentation in relation the Company’s business model and partnership work with Middlesbrough Council to bring empty properties back into use.
The Ethical Housing Company (EHC) provided homes for people in housing need across the Teesside private rental market. The EHC’s unique business model combined financial and social outcomes and had a long-term approach, ensuring rents were kept at affordable levels and providing a stable option for those in housing need. This unique business model combined commercial and social outcomes in the growing world of impact investment. The company was based in Redcar but covered the whole of the Tees Valley area and had two arms of operation: lettings and housing.
The Company aimed to the gap in the private sector but with a social purpose. EHC was funded through private equity by a range of investors who had different portfolios from retail to housing.
Customers of the EHC were among the most vulnerable in society, often unable to access safe, high-quality, and affordable housing due to complex needs or issues related to drug, alcohol, or mental health. The EHC filled a crucial gap in the private rented sector (PRS), effectively serving as the equivalent of the social housing sector within the PRS. Customers not only chose the EHC because they provided good quality, affordable housing, but also because they received comprehensive support throughout their tenancy. This support included assistance with employment and training, help with benefit claims, and access to financial support services.
The EHC’s business model was based on the following key factors:
Property Acquisition: EHC purchased properties in Teesside, often directly from social housing providers, local authorities, homeowners and landlords. The EHC aimed to acquire properties off-market, thus avoiding traditional estate agency listings and fees.
Affordable Housing: EHC focused on providing high-quality, affordable housing to people who were often excluded from the housing market due to issues like financial constraints or complex needs (for example, mental health or substance abuse).
Social Impact: EHC mission was to address housing shortages and homelessness. The company refurbished derelict homes, which not only provided housing, but also helped revitalise communities.
Comprehensive Support: Tenants received extensive support services. This included help with finding employment, training opportunities, assistance with benefit claims, and access to financial support. This wrap-around support ensured tenants were able to maintain their housing and improve their overall quality of life.
Sustainable Practices: EHC was committed to ethical and sustainable practices. EHC aimed to operate in a way that benefited both the community and the environment, ensuring long-term positive impact.
In essence, EHC combined housing services with a strong social mission, providing affordable housing and comprehensive support to those in need, while also contributing to community development and sustainability.
The EHC was currently working closely in partnership with Middlesbrough Council to bring empty homes back into use and provide good quality affordable housing and reduce the need for temporary accommodation. Nine houses in the TS1 area of the town had been refurbished as part of this pilot scheme and the Panel were shown some photographs of refurbished properties. The plan was to scale up the pilot into a long-term project, offering fully refurbished properties at affordable rent levels. Currently, empty properties often became eyesores, attracted anti-social behaviour, and caused general blight to areas.
The refurbishment usually involved stripping properties back to brick and fitting new kitchen, bathroom, heating system, windows and/or roofs. There was no restriction on the type or size of property that would be considered. In particular there was a shortage of level access ground floor properties suitable to accommodate families. Local contractors were employed to carry out the refurbishments.
The EHC wanted to ensure that those who were unable to access social housing had a suitable alternative within the Private Rented Sector (PRS) which mirrored the offer ordinarily received from Social Housing providers including cyclical maintenance plans, affordable rent levels, a dedicated housing officer per approximately 150 properties, and opportunities for support with employment amongst other services. The EHC currently owned and managed 98 properties across Teesside.
The EHC’s aims were summarised as follows:
• Deliver good quality, affordable homes within Middlesbrough.
• Actively work with good landlords within the PRS and to encourage a better, fairer rental experience and to discourage and differentiate from rogue landlords.
• Create communities where people want to live.
A Member queried whether buying properties at auction price or through landlord negotiation made economic sense. The CEO confirmed that it was a long-term investment and not about making money quickly.
It was noted that 78% of tenants had remained in properties for 2 years and this was due to the wrap around support provided by the EHC. Tenants had predominantly previously been in the private sector but without referrals into employability or foodbanks as well as active engagement with housing officers. More enquiries were now being received and more properties were required.
The EHC met fortnightly with the Council, working together on issues such as permits for skips, selective landlord licensing and legislation. The projected number of properties for purchase and refurbishment within the Middlesbrough Council partnership for years 1 to 3 was 66 per year. However, the EHC was also open to other avenues for property purchase.
A Member asked how the EHC could ensure that the social commitment from private investors continued. The CEO confirmed that there were Key Performance Indicators in place and if the business was sold it would be to like-minded buyers. It was also confirmed that properties would not be sold as the EHC’s intention was to grow its portfolio. This also gave comfort to tenants that they would not be served notice.
The EHC carried out an annual satisfaction survey with tenants and would be reaching out to communities to work with them and engage in the future.
On behalf of the Panel, the Chair thanked the CEO for attending the meeting.
AGREED as follows that:
1. The information provided was received and noted.
2. A copy of a Social Impact Report and KPIs produced by the EHC and the presentation slides would be circulated to the Members of the Scrutiny Panel.