Peterborough council pulls out of £13m deal to buy St Michael’s Gate temporary accommodation

A £13 million deal to buy up the St Michael’s Gate estate in Peterborough has been torn up by the city council.

Friday, 3rd April 2020, 2:00 pm

The authority had planned to pay over the odds on 72 properties at the estate in Parnwell which it currently leases from housing firm Stef & Philips to use as temporary accommodation for homeless households.

However, it said it has resolved its homelessness crisis and no longer needs to purchase the homes, although it has instead agreed a further two year lease to give itself time to “properly plan the exit of all households currently at St Michael’s Gate with minimum disruption”.

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St Michael's Gate in Parnwell

The council had previously stated that borrowing to buy the homes made more financial sense than extending the original three year lease, with Cllr Steve Allen, council cabinet member for housing, telling the Peterborough Telegraph in September: “The purchase of St Michael’s Gate really is a no-brainer - it would be £600,000 cheaper for us to own the properties rather than lease them, it secures them for the long-term use of city residents in housing need and, crucially, if we don’t choose to buy them someone else will, perhaps another council.

“If we don’t act now we could potentially lose one of the largest sites used for temporary accommodation in the city, forcing families to move into costly and unsuitable bed and breakfast accommodation.”

However, on Wednesday he said: “The council has made good progress with reducing the number of those in temporary accommodation and therefore the purchase of St Michael’s Gate is no longer needed.

“St Michael’s Gate is an expensive form of temporary accommodation but provided us a good service to date when we urgently needed extra homes.

“We will now embark on a two year lease which will give us time to properly plan the exit of households with the minimum disruption.

“Thanks to this, we are now in a strong position and have extra capacity to deal with increased demands on the service that could be caused by Covid-19 over the coming weeks.”

The council had agreed a deal to buy the 72 homes for £13.38 million, which would include carrying out works on the windows which it said at the time “need replacing” in the near future.

This was despite the properties being independently valued at between £8.79 million and £9.49 million.

The council said in 2019 it had 100 households living in B&B accommodation, but due to a strategy of homelessness prevention, partnership working and house building that number is now said to be zero.

The figure marks a huge transformation for the council which was previously criticised for moving families to Travelodges and hostels in places as far away as Manchester, although this has not been the case since 2018.

The St Michael’s Gate saga began in 2016 when the Peterborough Telegraph exclusively revealed that housing firm Paul Simon Magic Homes was evicting the 72 households through Stef & Philips.

The latter then signed a three year lease worth nearly £1 million a year with the council for it to move homeless families into the properties.

The deal sparked outrage in the city, with senior members of the ruling Conservative administration arguing that if it had not agreed the lease, Stef & Philips would have instead rented the homes to another local authority for its homeless families, costing local taxpayers millions of pounds.

The controversy sparked widespread national coverage and even caught the attention of international broadcasters.