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Feb 2022

Last Updated: 01/02/2022

Environment

Harrogate council housing company Bracewell Homes won’t pay any dividends this year

by Calvin Robinson

| 01 Feb, 2022

The council set up Bracewell Homes two years ago to make a profit and to deliver much-needed rental and shared ownership homes at affordable prices in the Harrogate district. The council budgeted to receive £267,000 in dividends this financial year but won't receive any.

Harrogate Borough Council has insisted its housing company is performing well despite it not paying any dividends this year.

Bracewell Homes launched two years ago with the aims of turning the council a profit and intervening in Harrogate’s pricey property market to deliver much-needed rental and shared ownership homes at affordable prices.

Its developments are Horsa Way, Dishforth and The Willows on Whinney Lane in Harrogate.

It was set up with the backing of a £10 million loan from taxpayers and the council had budgeted to receive £267,000 in dividends this financial year.

However, the council has now said it won’t receive any of this money in a revelation which sparked questions over whether Bracewell Homes is underperforming.

Speaking at a meeting on Monday, Cllr Pat Marsh, leader of the opposition Liberal Democrat group, questioned if the dividend shortfall was being addressed as she said the company should be a benefit to the council and not a “drain” on its finances.

'Extremely profitable'

But Paul Foster, head of finance at the council, responded to say the company was still “extremely profitable” and that it had continued to sell properties, although at a smaller percentage of shares than expected.

He said:

“The company isn’t able to pay a dividend this year and the reason for that is a proportion of the shared home properties it has sold have been at shares of 25% and 30%.

“It would need to have sold shares of up to 50% for them to have enough cash to provide a dividend.

“In December, four or five properties were sold at a lower share than the company was forecasting and as a result there is less cash in the company.

“The company is not underperforming in particular. It is just not selling the larger shares which make it more cash rich.”

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According to documents filed with Companies House, Bracewell Homes had £459,565 in the bank as of March 2021.

Mr Foster also told Monday’s meeting that the council does not only benefit from the company through dividends, but also through cash coming from other areas.

He said:

“There are three elements that the council benefits from Bracewell Homes – there is a recharge of staff salaries, interest charges on the loan that the council made to the company, and a payment of a dividend if the company is able to.

“The first two continue and we are still making money out of the company in that regard.”

40 properties by 2024

Since it was set up Bracewell Homes has so far acquired 26 homes and sold 22, which means it is on target to meet its initial aim of delivering 40 properties by 2024.

But with house prices continuing to soar and around 1,700 households on the council’s housing waiting list, there have been calls for the company to set much higher ambitions.

Cllr Marsh previously told the Local Democracy Reporting Service that the company should be aiming to deliver “hundreds” of homes to ensure low-income earners can afford to live in Harrogate where average house prices paid rose to £395,526 in 2021.

Cllr Marsh previously said:

“Forty homes in three years will barely make a dent in the need for the 1,700 on the waiting list, some living in very difficult circumstances.

“We need Bracewell homes to set targets to achieve hundreds of houses per year otherwise this crisis will never come to an end.”

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Harrogate council housing company Bracewell Homes won’t pay any dividends this year

'Extremely profitable'

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40 properties by 2024