A contractor has begun legal proceedings against Liverpool Council amid a disagreement over vacant homes the local authority is selling in the south of the city.
Dozens of properties were acquired by Liverpool Council on Tunstall Street, L7, between 2018 and 2020 as part of the Housing Market Renewal Initiative (HMRI). Following the cancellation of that project, the local authority decided to refurbish the houses and dispose of them for around £3m.
It had been hoped that the purchase of 25 properties would bring one of the city's most deprived areas back to life. A £4.4m investment was made by the council in 2020.
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However, after identifying a “number of defects and outstanding work”, Liverpool Council has not released funds to its appointed contractor for work undertaken, prompting the unnamed business to engage in legal action. According to a local authority audit report, the council does not have the financial or organisational capacity to hold and manage the houses and established that it would be preferred to dispose of them to a registered housing provider with the use restricted to rent to buy to encourage home ownership.
A cabinet meeting in September approved the sale of properties to Pine Court for £3.2m, with three houses to be leased back for use by children’s social care. The recommendation to go with rent to buy provided the best financial offer (based on the bids received, according to the report).
It said that in pursuing this option the council “avoided the potential risk of the houses being sold privately and being used for private rent, which there was an over-provision in the area.” To minimise the risk of overprovision of this type of accommodation it was agreed to reduce the number of houses to be used by children’s social care from four to three and to spread the houses across the terrace blocks.
The report detailed how it was further agreed internally and with Pine Court that the council would sell and lease back the houses, with Pine Court responsible for the management and maintenance of the properties. This approach was described as providing the benefit of maximising the capital receipt from the sale enabling children’s social services to focus on service provision and delivery rather than management and upkeep of the properties.
As revealed earlier this year, security arrangements were set up when the houses were handed over using the contractor for the council’s void housing. The report said that when the houses were handed over following completion, “a number of defects and outstanding work have been identified during the defects liability period.”
As these have not been rectified by the appointed contractor, Liverpool Council has not released the retention monies it is holding and the contractor has instigated proceedings against the local authority as a result. Following the withdrawal of HMRI funding, the properties have stood vacant off Smithdown Road for a number of years.
Quotes are being sought from third party contractors to undertake the works, the cost of which will be deducted from the retention monies. The heads of terms for the sale now includes provision for the council to enter into the houses and address the defects in the event that the works have not been completed before the disposal to avoid any delay to the overall sale.
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