Council mulls shutting down wholly-owned company that cannot service debts

Reading Borough Council is poised to close its wholly-owned company, Homes for Reading, over issues around loan repayments.

The company was established in 2016 as a private residential landlord wholly owned by the council, with the goal of offering a proportion of its homes at a sub-market value.

The business first appeared to face financial issues in 2019 when it stopped buying new properties "following a number of changes to the financial context in which the company operates."

Three years later, councillors took the provisional view that the company should be closed.

Following this, the council launched a consultation of Homes for Reading tenants and of the company's board concerning the company's closure.

The consultation closed on 31 March, but councillors have yet to confirm the fate of the company. 

According to the council, Homes for Reading has been funded by loans from the council that the company is currently unable to pay back within a reasonable time.

In response to a resident petitioning against shutting down the company, Cllr Ellie Emberson, Lead Councillor for Housing, said the revenue currently earned from the properties is insufficient for the company to service its debt to the council.

She added that Reading intends to transfer the company's properties to the local authority's Housing Revenue Account (HRA).

"The transfer of the properties in the HRA will locate them in a different financial environment, where charging 'sub-market' rents can be sustained as part of the wide budget arrangements for the HRA," Cllr Emberson said.

The council aims to house key workers in the properties once they have been transferred to the HRA, meaning the current tenants — around 90 people — will lose their homes. 

Cllr Emberson said Reading "will engage pro-actively with all those affected to assist them in finding alternative housing".

She added: "It is, of course, regrettable that the original vision for Homes for Reading, of offering long-term stable homes, is in our view no longer viable for the long term. 

"We are committed to helping all tenants find suitable alternative homes if the decision to end their current tenancies is taken."

Adam Carey