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Croydon Council set to borrow £40million to buy properties to ease homeless crisis

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A RADICAL attempt to ease the borough's housing crisis will see the council borrow £40 million to buy hundreds of homes, the Advertiser can reveal.

The council plans to spend an initial £20 million to buy properties, initially in South and Upper Norwood, in the hope of reducing the number of homeless families living in bed and breakfast accommodation.

If the acquisitions, likely to be made in the coming year, prove a success then it is understood the council will borrow more money to purchase further homes.

Housing chief Dudley Mead refused to comment when asked about the policy, which was agreed behind closed doors at this week's cabinet meeting.

The Advertiser understands the purchases will be funded by borrowing from the Public Works Loan Board – which could rise to as much as £40 million – on the basis that operating costs and interest will be covered by income from rents.

Simon Hall, Labour's shadow cabinet member for finance and change, would not be drawn on whether the plan existed but said: "If the council is going down this route then I see why because it makes some financial sense.

"However, to purchase houses in this way is a drastic step and proof that this council has mismanaged a problem it once downplayed and now says is a crisis.

"We already have serious questions about areas of the report which were public, such as the lack of detail over the use of former children's homes and the conversion of sheltered housing.

"I'm glad the council has recognised the magnitude of the problem but it needs to get the solutions right."

Action on homelessness, some of which was discussed in private, was approved at Monday night's cabinet meeting.

A report, which predicts the number of families accepted by the council as homeless will exceed 1,000 by 2013/14, was published a fortnight after chief executive Jon Rouse admitted the borough faced a housing "crisis".

Croydon's relatively small stock of council housing is full and the number of private rental properties it has secured dropped from 393 in 2011 to just 31 the following year.

The council has already admitted it will have to step up its policy of asking homeless families to move out of the borough, with some households currently placed in Essex and Luton.

But buying properties would, given the current financial climate, be its most radical move yet.

It is both a direct response to the spiralling cost of temporary accommodation, which is £1.9m over budget this year and requires an extra £2 million in 2013/14, and the impending benefit cap in April which will affect 900 families.

There were 441 families placed in emergency accommodation as of the end of December, 180 of whom have been in shared B&Bs for longer than the Government guidelines of six weeks.

The council has dropped its opposition to being one of just four authorities to trial the Government's benefits cap – with its housing boss proclaiming 'you don't get gain without pain'. Changes to the welfare system will see overall benefits capped at £500 per household, per week. Croydon found out a few days before Christmas that, without any consultation, it had been chosen to trial the changes from April, with the cap rolled out across the rest of the country in the summer. Chief executive Jon Rouse said the cap itself would 'clearly' increase homelessness, and housing chief Dudley Mead fumed that the pilot put Croydon at a disadvantage when attempting to securing temporary accommodation. But last Wednesday it decided to drop any plan to challenge the decision following a meeting with two Government officials, Mark Prisk, the Minister of State for Housing and Local Government and Lord Freud, Parliamentary Under Secretary of State for Work and Pensions. They were joined at the discussions by MP Gavin Barwell and council leader Mike Fisher. Labour leader Tony Newman accused the delegation of 'selling Croydon down the river'. But Cllr Mead said: "I was cheesed off we weren't consulted but we have been offered serious support and money."

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