Exeter council property business loses £10 million

It's follows similar issues in Mid Devon and Torbay

A property business set up by Exeter City Council to create affordable housing is to be wound down after making huge losses.

Exeter City Living (ECL) owes the local authority more than £10 million, and is the latest in a succession of council-owned housing companies to hit trouble.

All but a handful of its assets will now be sold, but that could still leave the city millions of pounds out of pocket.

Leader Phil Bialyk (Labour, Exwick) urged the council to ‘hold its nerve’ and find other ways to build the homes people in the city need.

Elsewhere, Mid Devon’s 3Rivers Development is being wound up after racking up debts of £21 million and Torbay Council has cut back the activities of its TorVista Homes after that hit trouble too.

Soaring costs and rising inflation are blamed for the demise of the companies.

Members of the city council were told that ECL was ‘no longer viable.’

They voted across party lines to keep ECL going, but only in a scaled-down form to manage and hold the properties it already has, including six flats in the Guildhall Shopping Centre.

ECL was set up in 2018 as a wholly-owned company of the council to provide  affordable housing.

However, Brexit, inflation, the covid pandemic and the war in Ukraine have pushed up costs massively.

Councillors heard that ECL had made ‘significant achievements’ including 22 new energy-efificient ‘Passivhaus’ homes, 56 new social-housing home and the granting of planning permission for 41 new properties at Clifton Hill.

Plans for another 92 homes were ready to be submitted for planning permission.

But the financial problems were mounting, and a review was called for after ECL was unable to secure a contract to develop the key Clifton Hill site. Another key site at Northbrook Golf Course remains unfinished.

ECL had only managed to repay £800,000 of the £10.9 million it borrowed from the council, leaving a debt of £10.1 million.

Members voted to acquire all of ECL’s assets apart from the Guildhall flats, but heard that selling those assets was unlikely to cover the debt, which would then have to be written off.

Progressive group co-leader Cllr Diana Moore (Green, St David’s) said it was a “massive decision” and called for close scrutiny. Cllr Matthew Vizard (Labour, Newtown and St Leonards) added: “Setting up ECL was done with the right intentions. This is not a decision any of us wanted to be making.”

Cllr Martin Pearce (Labour, Duryard and St James) commented: “It’s a sad day for everybody, and we all have to shoulder the burden of what has gone on.

“We want to build homes for people to live in – the right homes in the right places – and that’s what is going to happen at the end of all this. Homes will be built.”

Cllr Bialyk said the council needs to “hold its nerve” to deliver houses for local people in places such as Clifton Hill.

“We will bring the sites forward for disposal,” he said. “This is about providing homes in Exeter, and that ambition is still there.

“We’ve got so much work to do now to make sure we can bring those homes forward for our people.”

“I am sorry that we had the temerity to think we could do something different here in Exeter.”