The first Harlow residents are set to move into the 172-apartment Burnt Mills development shortly. Harlow Council acquired the development last year when news broke that Newham Council were close to buying the block for temporary accommodation for families from Newham.
In order to buy the site, the council was supported by market-leading financial, legal and property specialists. The apartments are now being advertised to rent with many local residents already having viewed the apartments and expressed their interest.
The council says that the deal was struck without incurring debt to the council which saw the council acquire the entire development for £56.6 million – below the market value of the development which was determined by a strict valuation.
The acquisition has been financed through which a pension fund pays the long-term cost of the acquisition, recouping their money through a portion of the rents. The strict financial modelling of the acquisition sees the council making a profit nearly every year of the next 50 years, even once the pension fund has taken their portion of the rent and all other costs such as maintenance have been met.
Therefore, the council could not have used the finance for any other purpose as it had been secured against the property. In short, this means that the funding for the development did not come from the council, but the council will benefit from the revenue of the property.
All 172 apartments are available for Harlow people with 52 of the apartments about to be advertised directly to people on the council’s waiting list and the remaining 120 apartments already being advertised on the market for local residents.
Since buying the development, the council has been working through the requirements to occupy the building, including the completion of construction work and registration with the Building Safety Regulator. During this time, the council has not lost any money against the long-term financing as the requirements do not commence until occupation.
Commenting on the news the Leader of Harlow Council, Councillor Dan Swords, said:
“Last year, Newham Council were set to buy this cutting-edge development to use for temporary accommodation for families from Newham. We worked around the clock to not only block that deal but in fact turned it completely around to ensure that every single one of the 172 apartments is available for Harlow people. However, it is more than that – we did so without incurring debt to the council and below the market value of the development.
“That is a significant achievement, and this development will create a huge revenue for the council, just as the Harvey Centre has. It would not have been possible to use the finance required for the development for anything else as the deal is very carefully structured meaning the council has not incurred any debt.
“With the first residents set to move in shortly, this is a fantastic news story for our town and one that everyone can be proud of. I know that no resident would underestimate just how challenging it has been to turn this around from a position of Newham Council about to sign the deal to Harlow residents moving in.”