Council to continue leasing temporary homes in Peterborough ahead of £13m purchase

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A short term lease for 72 properties in a Peterborough estate which are used for the city’s homeless has been agreed by the council.

The council is paying £13.38 million to buy and repair the homes in St Michael’s Gate, Parnwell, from Paul Simon Magic Homes so they can continue to be used as temporary accommodation.

Residents of St Michael's Gate and nearby estates protest against the evictions

Residents of St Michael's Gate and nearby estates protest against the evictions

The authority currently pays more than £960,000 a year to lease the properties, but with the contract having ended on November 1 it is now set to sign a short term deal to continue the arrangement.

The council said: “Our lawyers have advised documenting a short term lease to cover the period between now and the completion of the acquisition.

“This is likely to be at least three months due to the complex ownership structure of the property.”

RELATED: Council ‘overspending by £4.5m’ to purchase Peterborough homes, analysis reveals, as formal challenge is rejected

Under the arrangement the council will continue to lease the properties “to a value up to and including £499,999” until it has completed their purchase.

It has also approved “the payment of any related professional fees of £1,950 + VAT.”

The Peterborough Telegraph revealed last week than an independent analysis showed the council was paying up to £4.5 million above the market rate for the homes.

The analysis from commercial property firm Barker Storey Matthews, which was only released after opposition councillors challenged the price being paid by the Conservative-run council, revealed that a fairer price for the 72 homes would be between £8.79 million and £9.49 million.

However, cabinet members have previously insisted that the deal was worth doing as it was fearful of another purchaser swooping in to buy the homes which would have forced the council to put homeless families in costly B&B-type accommodation.

It will cost the council £197,000 a year over 50 years in borrowing costs to purchase the homes.

The authority had originally signed a three year lease for the properties with Stef & Philips, which manages them for Paul Simon Magic Homes

Stef & Philips had evicted the families at the 72 homes before signing the lease with the council for it to use the homes as temporary accommodation.

The deal was widely criticised at the time, with the council repeatedly insisting that if it had not agreed the lease Stef & Philips would have partnered up with another authority which would have moved its homeless families into Peterborough.

Despite its argument the council faced heavy criticism for not turning its back on Stef & Philips, while national and international media followed up the PT’s revelation at how an entire community could be torn apart in such a way.

Stef & Philips has criticised media coverage around St Michael’s Gate while insisting “the suggestion that this is all about money could not be further from the truth”.

Cabinet member for housing Cllr Steve Allen, who was not in the administration when the deal with Stef & Philips was agreed, previously told the PT it was worth overpaying for the St Michael’s Gate homes as owning the properties would be cheaper than leasing them when borrowing costs are taken into account.

Describing the deal as a “no-brainer”, he said: “I think we are paying too much, but sometimes in life you have to pay a bit more.

“For instance, if a house you want to buy is a bit more than it’s worth, or as a business, so you have control over a situation.”

“The houses are now available and we are fulfilling our obligations to the homeless.”