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09
Sept
Council to loan another £2 million to its housing company
North Yorkshire Council looks set to increase its loan facility for its own housing company by £2 million.
Brierley Homes, which was founded in 2017, is part of the Brierley Group of 12 companies owned by the council.
The company oversees housing developments across the county, including in the Harrogate district.
The firm reported a £3.2 million loss for the last financial year and has faced issues over cashflow and payment to suppliers.
In a report, Vicki Dixon, assistant director for resources and environment at the council, has recommended providing an additional loan facility to company.
The move would be in addition to the £25 million loan facility already available to Brierley Homes — of which the firm has already used £24.5 million.
The new loan would be £2 million and be subject to a market rate of interest of 6% above base rate. However, any amount drawn down on the facility would have to be approved by Gary Fielding, corporate director for resources, in consultation with the council leader, deputy leader and chief executive of the council.
Ms Dixon said the purposes of the increased loan facility, which will take the company’s overall commercial borrowing from the council to £27 million, was required to help it “continue to make all payments due to suppliers in the event of some delayed sales”.
She added:
Some uncertainty on timing of sales income has effectively constrained cashflow making short term planning difficult as expenditure is relatively linear and predictable but income from property sales is uneven and not controllable within short time scales.
There is therefore an ongoing risk when Brierley Homes is at the ceiling of its loan facility that if delays to sales happen, many of which are outside of the company’s control, there could be an adverse impact on the company’s ability to pay its supply chain and other invoices due in the short term, hence the requirement for additional loan headroom.
Senior councillors on the council's Conservative-run executive will consider the additional loan facility at a meeting on September 16.
The move comes amid concern among councillors over the additional financing of Brierley Homes.
Brierley Homes' Yew Tree Farm development at Marton-cum-Grafton.
Last month, the council granted a £1.4 million loan to the housing company to assist it with cashflow while it delivered affordable housing and to "allow the company time for sales to be received”.
The council said the loan will be repaid with base rate interest instead of on commercial terms.
But, the move was criticised by Cllr Kevin Foster, leader of the Green and Independents group on North Yorkshire Council, who questioned how the council could justify further money for the company.
However, senior councillors on the authority’s Conservative-run executive said the decision was the “right thing to do”.
The council also approved an extension to a maximum loan facility Brierley Homes to £25 million in April.
The loan facility was first introduced in March 2018 as a means of funding the firm to construct and sell homes.
In February 2020, the company exercised its ability to draw upon the loan facility and was approved £22.9 million to construct and sell homes.
Five years later, the council made a decision to extend the facility to £25 million.
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