Agenda Document Pack - Housing and Social Wellbeing Committee - 25/03/2026
Perth and Kinross Council · 25 March 2026
Back to Housing and Social Wellbeing Committee — 25 March 2026 and its agenda
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Ambition | Compassion | Integrity Our vision is for a Perth and Kinross where everyone can live life well, free from poverty and inequality Council Building 2 High Street Perth PH1 5PH 18/03/2026 A hybrid meeting of the Housing and Social Wellbeing Committee will be held in the Council Chamber on Wednesday, 25 March 2026 at 09:30. If you have any queries please contact Democratic Services on (01738) 475000 or email Committee@pkc.gov.uk. THOMAS GLEN Chief Executive Those attending the meeting are requested to ensure that all notifications are silent on their device and other devices are in silent mode. Please note that the meeting will be broadcast online and recorded. The recording will be publicly available on the Council’s website following the meeting. Members: Councillor Tom McEwan (Convener) Councillor Sheila McCole (Vice-Convener) Bailie Mike Williamson (Vice-Convener) Bailie Chris Ahern Councillor Peter Barrett Councillor Bob Brawn Bailie Rhona Brock Councillor Angus Forbes Councillor Ian James Councillor Iain MacPherson Councillor Carol Mair Bailie Claire McLaren Councillor Frank Smith Councillor Colin Stewart Councillor Jack Welch Page 1 of 48
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Housing and Social Wellbeing Committee Wednesday, 25 March 2026 Agenda Members are reminded of their obligation to declare any financial or non- financial interest which they may have in any item on this agenda in accordance with the councillors’ code of conduct. 1 WELCOME AND APOLOGIES 2 DECLARATIONS OF INTEREST 3 MINUTE OF MEETING OF HOUSING AND SOCIAL WELLBEING COMMITTEE OF 21 JANUARY 2026 FOR APPROVAL (copy herewith) 5 - 8 4 OUTSTANDING BUSINESS STATEMENT (copy herewith 26/73) 9 - 12 5 ENHANCED COMMUNITY POLICING MODEL Presentation by Police Scotland 6 UK TOWN OF CULTURE 2028 Report by Strategic Lead - Economy, Development and Planning (copy herewith 26/74) 13 - 24 7 MID-MARKET RENT PROPOSAL Joint Report by Strategic Lead - Housing and Communities and Strategic Lead - Economy, Development and Planning (copy herewith 26/75) 25 - 48 Page 3 of 48
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DRAFT HOUSING AND SOCIAL WELLBEING COMMITTEE Minute of hybrid meeting of the Housing and Social Wellbeing Committee held in the Council Chambers, 2 High Street, Perth, on 21 January 2026 at 1:00pm. Present: Bailies R Brock, C McLaren and M Williamson, Councillors P Barrett, B Brawn, J Duff (substituting for Bailie C Ahern), A Forbes, K Harvey (substituting for Councillor J Welch), I James, I MacPherson, C Mair, S McCole, T McEwan, F Smith and C Stewart. In Attendance: C Mailer, Depute Chief Executive; E Ritchie, Strategic Lead – Housing and Communities; A Singh Strategic Lead – Children, Families and Justice; E Lindsay, N Rogerson, R Ross (all Children, Families and Justice); S Coyle (Finance and Business Support); N Lennon, J McColl (both Housing and Communities); S Hendry, J Guild, A Brown and M Pasternak (all Legal and Governance). Also in Attendance: G Binnie, Independent Chair of the Child Protection Committee; L Palmer (Tenant’s Committee Report Panel). Apologies: Bailies C Ahern and Councillor J Welch. Councillor T McEwan, Convener, Presiding. Councillor McEwan led on Items 1 – 4 and 8, with Bailie M Williamson leading on Items 5 and 6 and Councillor McCole leading on Item 7. 1. Welcome and Apologies Councillor T McEwan welcomed everyone to the meeting. Apologies were noted as above. 2. Declarations of Interest There were no Declaration of Interests in terms of the Councillors’ Code of Conduct. 3. Minute of Previous Meeting The minute of the meeting of the Housing and Social Wellbeing Committee of 26 November 2025 was submitted and approved as a correct record. 4. Outstanding Business Statement The Outstanding Business Statement was noted, and it was agreed to remove the completed actions. 3 Page 5 of 48
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DRAFT 5. Justice Update Report 2024/25 There was submitted a report by Strategic Lead – Children, Families and Justice (26/18) providing the Housing and Social Wellbeing Committee with an update on the work of council services and partners to meet local and national outcomes for Community Justice for the period 1 April 2024 to 31 March 2025. In introducing the report, E Lindsay, Community Justice Improvement Team Leader, provided a slide-based presentation and answered Members’ questions thereon. Resolved: (i) The approach being undertaken by PKC teams in respect of the Partnership, be noted. (ii) The contents of the report, be endorsed. (iii) It be requested the Strategic Lead for Children, Families and Justice bring forward an annual report detailing the PKC contribution to the Partnership. 6. Community Payback Order Annual Report 2024-25 There was submitted a report by Strategic Lead – Children, Families and Justice (26/19) introducing the Perth and Kinross CPO Annual Report for 2024-25 in compliance with that requirement and was submitted to CJS on 28 October 2025 and tabled at the Perth and Kinross Community Justice and Safety Partnership on 12 December 2025 for noting. In introducing the report, N Rogerson, Community Safety Service Manager, provided a slide-based presentation and answered Members’ questions thereon. Resolved: (i) Assurance be taken about the work being undertaken by the Community Justice Social Work (CJSW) team and the Unpaid Work (UPW) teams in respect of CPOs in Perth and Kinross. (ii) The contents of the report, be endorsed. (iii) It be requested, the Strategic Lead for Children, Families and Justice bring forward an annual report regarding the activity and performance of CPOs. 7. Tayside MAPPA Annual Report 2024/25 There was submitted a report by Strategic Lead – Children, Families and Justice (26/20) sharing the Tayside Multi-Agency Public Protection Arrangements (MAPPA) Annual Report for 2024 - 2025 (Appendix 1). The report was approved by the Tayside Strategic Oversight Group (SOG) on 21 October 2025 and subsequently published by the Scottish Government on 27 November 2025. Furthermore, the report was tabled at the Perth and Kinross Community Justice Safety Partnership on 12 December 2025 for noting. Resolved: (i) Assurance be taken about the work being undertaken in respect of the MAPPA in Tayside, and specifically, in Perth and Kinross. Page 6 of 48
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DRAFT (ii) The contents of this report, be endorsed. (iii) It be requested that the Strategic Lead for Children, Families and Justice bring back future annual reports to this committee. (There followed a recess and the meeting reconvened at 3.17pm) 8. Housing Revenue Account (HRA) Strategic Financial Plan incorporating the 5 Year Capital Investment Programme and Rent Strategy to 2030/31, Reserves Strategy and other Housing Charges for 2026/27 There was submitted a report by Strategic Lead – Housing and Communities and Chief Finance Officer (26/21) (1) seeking approval of the proposed Housing Revenue Account (HRA) budget for five years from 2026/27 to 2030/31, (2) outlining recommended increases to rents for houses and other HRA property service charges, and an appropriate level of reserves, it is also (3) seeking approval of the proposed budget for the next five years of the Capital Investment Programme, totalling £81.1 million from 2026/27 to 2030/31. Resolved: (i) It be noted that the HRA 30-year Business Plan has been updated to reflect and confirm the affordability of the proposals; (ii) The Housing Revenue Account Budget for 2026/27 and provisional budgets for financial years 2027/28 to 2030/31 as set out in Appendix 1, be approved; (iii) The proposed Housing Revenue Account Capital Investment Programme for 2026/27 to 2030/31 as set out in Appendix 3, be approved. (iv) The Rent Strategy for 2026/27 and a provisional Rent Strategy for the following 4 years to 2030/31 as stated in Section 8, be approved; (v) The rent increase of 6.5% in line with option 1, for the year commencing 6 April 2026 for all Council houses, be approved. This will mean an average weekly rent increase of £5.49 per week, resulting in an average weekly rent of £90.01 per week based on 52 weeks. (vi) The rent increase of 6.5% for the year commencing 6 April 2026, be approved for: • all lock-ups • all garage sites • dispersed tenancies owned by the HRA • Greyfriars Hostel. (vii) The Housing Revenue Account Reserves Strategy proposed in Section 9, be approved. (viii) The final movement in the Housing Revenue Account in 2025/26 is transferred to an earmarked Reserve (HRA) as proposed in Section 9.10, be approved. (ix) The proposal to set Housing service charges from 6 April 2026 as stated in Section 12, be approved. (x) The revised level of all housing related charges as detailed in Appendix 5, be endorsed and approved where necessary (xi) The progress made to date in delivering and maintaining the Scottish Housing Quality Standard (SHQS) for improving and managing the housing stock as set out in Section 6 and the related Business Cases, be endorsed. Page 7 of 48
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HOUSING AND SOCIAL WELLBEING OUTSTANDING BUSINESS STATEMENT (OBS) (Report No. 26/73) Please note that this statement sets out outstanding decisions of Council / this committee / sub-committee along with an update and estimated completion date. Actions which are overdue are shaded for ease of reference. Where an update reflects that an action is complete then agreement will be sought to its removal from the OBS. No Date / Minute Reference / Report Number Subject Title Outstanding Action Update Lead Officer /Service Action Due/completed Action Expected 50. 8 October 2025 Item 6 – SFRS Thematic Update – Wildfire Strategy Consideration to be given to implementation of guidance in relation to use of concrete pipes in high-risk wildfire areas. Further consideration and discussion with stakeholders to take place to allow informed consideration of appropriate guidance. This will come through the review of the Local Development Plan. N Sworowski / Economy, Development and Planning COMPLETE 25 March 2026 53. 8 October 2025 Item 7 – Strategic Housing Investment Plan Results of keyworker need survey to be shared and incorporated into housing objectives. Survey to be shared once follow up scrutiny of results is complete. Consideration will be given to including the survey results into the new and Housing Need and Demand Assessment (HNDA) that is currently underway and renewed every 5 years. N Sworowski / Economy, Development and Planning ONGOING Late 2026 4 Page 9 of 48
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No Date / Minute Reference / Report Number Subject Title Outstanding Action Update Lead Officer /Service Action Due/completed Action Expected Update March 26 – Survey response rate was low and advice has been sought from HSCP about whether it’s in line with what was expected or if an extension of the survey would be possible. The responses that have been received will be fed into the Housing Needs and Demand Assessment that is currently underway that supports the Local Development Plan and the Local Housing Strategy. The results of this assessment will be fed into both documents and results can be shared once finalised. 56. 21 January 2026 Item 6 – Community Payback Order Annual Report 2024 – 25 Actual figures in in relation to Chart 5: Reasons for CPO Terminations to be provided along side percentages. Circulated to Elected Members via email 16/03/2026. A Singh, N Rogerson / Children, Families and Justice COMPLETE 25 March 2026 Page 10 of 48
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No Date / Minute Reference / Report Number Subject Title Outstanding Action Update Lead Officer /Service Action Due/completed Action Expected 57. 21 January 2026 Item 6 – Community Payback Order Annual Report 2024 – 25 Further information to be provided in relation to lessons learned, outcomes and improvements from Mental Health Treatment Case Study on “Andrew”. Circulated to Elected Members via email 16/03/2026. A Singh, N Rogerson / Children, Families and Justice COMPLETE 25 March 2026 58. 21 January 2026 Item 6 – Community Payback Order Annual Report 2024 – 25 Further information to be provided on Caledonia Project funding, particularly in relation to figures and availability for P&K. Circulated to Elected Members via email 16/03/2026. A Singh, N Rogerson / Children, Families and Justice COMPLETE 25 March 2026 59. 21 January 2026 Item 8 – Housing Revenue Account Strategic Financial Plan HRA affordability tracker graph to be provided. Circulated to Elected Members via email 26/01/2026. S Coyle / Finance and Business Support COMPLETE 25 March 2026 Page 11 of 48
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee: Housing & Social Wellbeing Committee Date of Meeting: 25 March 2026 Report Title: UK Town of Culture 2028 Report Number: 26/74 Report Author: Julie Barnsley, Economic Development Officer Organisational Lead: Serge Merone, Strategic Lead – Economy, Development & Planning ___________________________________________________________________ 1. Purpose 1.1 The purpose of this Report is to provide an update on the UK Town of Culture 2028 competition which is being run by the UK Department of Culture, Media & Sport (DCMS). The Report seeks Committee’s approval to support the expressions of interest to the competition from Crieff (via Creative Crieff) and Pitlochry (via Pitlochry Community Action Trust). 1.2 Sections 1. Purpose 2. Recommendation(s) 3. Background 4. Links with Culture Strategy and wider cultural ambitions 5. Expressions of Interest 6. Shortlisting 7. Timescale 8. Conclusion 9. Impact Value Assessment 10. Appendices 2. Recommendations It is recommended that the Housing & Social Wellbeing Committee: 2.1 Note that Officers have been informed by Creative Crieff and the Pitlochry Community Action Trust of their intention to submit Expressions of Interest to the UK Town of Culture 2028 competition for Crieff and Pitlochry respectively, 6 Page 13 of 48
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and that Officers are working collaboratively with both organisations to support the development of their submissions. 2.2 Agree that Perth and Kinross Council will support the submission of both Expressions of interest and provide Officers’ assistance as required. 2.3 Ask Strategic Lead – Economy, Development and Planning to report back to a future meeting of the Committee or the Council. 3. Background 3.1 The UK Town of Culture 2028 is a new competition which was announced by the Department of Culture, Media and Sport (DCMS) on 14 January 2026. It is a UK-wide programme, developed in collaboration with the devolved governments in Northern Ireland, Scotland and Wales. The UK Town of Culture is intended to complement and build on the success of the UK City of Culture. 3.2 The competition states that its aims are to celebrate the significant contributions of towns to the UK’s national story, with a focus on building social cohesiveness where communities feel proud of their place and empowered to celebrate it. Furthermore, the UK Town of Culture provides an opportunity for towns and communities to use culture and creativity to tell their story. 3.3 The competition is intended to drive local economic growth and opportunity, bring local investment, create a lasting sense of pride, and open doors to the arts for everyone. 3.4 The competition is open to small, medium and large towns, with the winner delivering a vibrant cultural programme in 2028 which showcases the town’s story and visions. Bids can also be made by groups of places where these places share a common story and common geography. 3.5 Three finalists - one small, one medium, one large town - will be chosen. The winning town will be awarded £3 million to deliver a cultural programme in 2028 with a duration of around six months. Additionally, the two finalists from their category will receive £250,000 each to deliver elements of their bid. Category Population size Small Town Under 20,000 Medium Town 20,000-75,000 Large Town Over 75,000 The DCMS is using the Office of National Statistics definitions for towns based on population size. 3.6 The judging panel, led by the television producer Sir Phil Redmond, will decide which category bids fall within. The names of the full judging panel will be announced in due course. Page 14 of 48
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4. Links with Culture Strategy and wider cultural ambitions 4.1 Supporting local towns to bid for UK Town of Culture 2028 aligns directly with the Perth and Kinross Culture Strategy 2023–2028 approved by this Committee, which prioritises widening access to culture, strengthening placemaking, and supporting creative communities across all localities. The UK Town of Culture’s focus on local storytelling, inclusive participation, and partnership-led cultural delivery reflects the Culture Strategy’s strategic pledges and offers an opportunity to enhance cultural engagement and visibility across the region. 4.2 This activity complements Perth’s status as the UK’s first and only UNESCO City of Craft and Folk Art, reinforcing commitments to nurturing local makers, expanding creative networks, and embedding craft and creativity within sustainable community development. 4.3 Collectively, these UK Town of Culture bids will strengthen the cultural identity of Perth and Kinross and support our ambition to grow a vibrant, inclusive and internationally recognised cultural offer. 5. Expressions of Interest (deadline: 31 March 2026) 5.1 The invitation to submit Expressions of Interest was opened by the DCMS on 14 January 2026 (Appendix 1). This part of the process will close on 31 March 2026. 5.2 Bids must be made by a partnership representing the relevant town - this partnership must include the local authority. The partnership can be newly formed or well-established. 5.3 To help manage partnerships at a local level, Perth and Kinross Council launched an Interest Form for towns to indicate their intentions to apply. The deadline for making intentions known was 13 February 2026. 5.4 Creative Crieff and Pitlochry Community Action Trust both responded to the Perth and Kinross Council Interest Form and are both developing their UK Town of Culture Expressions of Interest. Officers are supporting both organisations with their submissions. 5.5 At the time of writing this report, the bidding towns are developing the content of their submissions. We will be able to share further information once these have been finalised, with the deadline for submissions to the DCMS being 31 March 2026. 5.6 A single organisation within the partnership must be nominated as ‘Lead’ and as such must be a formal, constituted and accountable organisation. This can be the local authority, or it can be another organisation within the partnership. 5.7 The partnership should demonstrate a commitment to work collaboratively and could include a range of community and cross-sector partners. Page 15 of 48
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5.8 The partnership should demonstrate commitment to actively including local communities in decision-making and supporting them to directly shape what happens in their area. It is highlighted that a commitment to community collaboration should be demonstrated at all stages of the competition. 5.9 Bids will be judged on three main criteria: Story – the unique story of the town. Culture for everyone – how the town will design a cultural programme for all. Making it happen - how the town will then deliver a successful programme. 6. Shortlisting 6.1 Shortlisted towns will be announced in Spring 2026. 6.2 DCMS has advised that in the event of a high number of applications, an initial sift will take place on the first criterion only i.e. ‘Story – the unique story of the town’. 6.3 Shortlisted towns will each receive £60,000 to support them with developing and strengthening their full application. 6.4 The panel will visit the shortlisted towns, who will be invited to present to the panel and engage in detailed discussions about their plans. 6.5 The panel will assess the full applications and presentations against the competition criteria, including any outcomes of public engagement and communications. 6.6 The panel will submit their recommendations for the finalists and overall winner of UK Town of Culture 2028 to the Secretary of State for DCMS, who will make the final decision. DCMS aims to announce the UK Town of Culture 2028 winners in early 2027 7. Timescale Milestones Dates Expressions of Interest (EOI) Opened: 14 January 2026 Deadline: 31 March 2026 Shortlisted places announced Spring 2026 Full application period Spring 2026 – Autumn 2026 Finalists and winners announced Early 2027 Delivery period 2028 Page 16 of 48
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8. Conclusion 8.1 Applying for the UK Town of Culture 2028 title gives our towns a powerful opportunity to articulate their vision and work collaboratively with partners and communities to shape and celebrate their story. 8.2 Through the development of a cultural programme, these partnerships will be strengthened as they co-create activities that address local challenges and make culture accessible to everyone. 8.3 This process encourages communities to express pride in their town, using creativity to showcase what makes their place unique. By putting forward a strong, inclusive programme of cultural events, towns can demonstrate meaningful collaboration and place themselves firmly on the map as centres of culture. 9. Impact and Value Assessment 9.1 This report has been classified as being an operational report and as such does not require a full Impact and Value Assessment. 10. Appendices 10.1 Appendix 1 - Expression of Interest Form Page 17 of 48
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Appendix 1 UK Town of Culture 2028 Competition Expression of Interest (EOI) Thank you for your interest in the UK Town of Culture 2028. Please ensure you have read the “UK Town of Culture 2028 Expression of Interest: Guidance for bidders” document before applying. All EOIs must be submitted using this standard template. The form comprises four sections which each require a statement response. You are provided with a series of prompts to use as a guide. You do not need to answer each prompt individually but your responses should address all prompts. The prompts draw from the competition criteria and bidding places should refer back to the criteria when completing the form to show the potential of their programme to make a contribution to the aims of the UK Town of Culture programme. The form has set formatting (e.g., font size and line spacing) which should be adhered to. Please note that the EOI form is strictly word limited and we do not expect at this stage detailed economic data, research or in depth fundraising or delivery plans. Responses should also only include text. The application deadline is 31 March 2026. Applications received after this date will not be considered. If a large number of applications are received, an initial sift will be conducted on the section, 'Section 2: Your Story', only. Contact: uktownofculture2028-competition@dcms.gov.uk 6 Page 19 of 48
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SECTION 1: BID INFORMATION In this section, we ask for information relating to your bidding team and place. The information will not be scored but will be used to confirm your eligibility. 1.1 Contact Information Please provide contact information for the single point of contact for your bidding team. Name, Position, Team / Organisation, Telephone Number, Email Address. 1.2 The Bidder Please provide information for the bidder. With reference to the definitions of the Accountable Body and Delivery Body in “UK Town of Culture 2028 Expression of Interest: Guidance for bidders”. You should include information on who the lead bidder is and who the key partners are. 1.3 The Geographical Area Please specify the geographical area that you are bidding for, with reference to the relevant geographical boundary designations. You may want to note the town categories set out in the “UK Town of Culture 2028 Expression of Interest: Guidance for bidders”. We will use your geographical area’s population size to categorise your bid. Page 20 of 48
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SECTION 2: YOUR STORY In this section, we want to understand the unique story and culture of your town. [Maximum 400 words for each section] 2.1 Vision Please use the following prompts to guide your response: ● What is the story of your town (e.g., places and landscapes, people, communities, culture and heritage) and what is special about it (e.g., including, how it has contributed to a local identity - and, if relevant, how it has contributed to the national story)? ● How will your programme celebrate the story of your town, and what themes will be explored in your programme? ● How will your programme help to build knowledge of your town (e.g., improving, celebrating, raising the profile)? 2.2 Local Needs Please use the following prompts to guide your response: ● What local challenges and issues does your town face that your bid can help to address? What priorities, needs, groups and demographics will your programme target and why? ● How does your bid align with any other local and / or regional plans to tackle local needs? 2.3 Empowerment Please use the following prompts to guide your response: ● How have you developed the ideas within this bid? To what extent have you already consulted your local community and community groups (i.e., residents, businesses, institutions, creative providers, and cultural organisations) on your interest in UK Town of Culture? ● How will your local community and community groups be involved in developing and delivering the full application, programme and its legacy? How will you hold yourself accountable to community groups and members when making decisions about the programme? Page 21 of 48
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SECTION 3: CULTURE FOR EVERYONE In this section, we want to understand how you will design a cultural programme for all which will provide visible, accessible culture that boosts the profile of your town. [Maximum 400 words for each section] 3.1 Quality and Innovation Please use the following prompts to guide your response: ● What is your cultural and heritage infrastructure, and how will you use it and build upon them in your programme? If your infrastructure is more limited, how could you leverage UK Town of Culture to develop your infrastructure on a permanent or temporary basis? ● What type of activities will your programme deliver, and how will they work together? Please refer to proposed lead artists / creatives, if they are known. You may refer to creating and / or promoting existing events that could become a returning event using the leverage generated by UK Town of Culture investment 3.2 Opportunity Please use the following prompts to guide your response: ● How will you ensure the initiatives and opportunities (e.g., learning and skills- building, career awareness, bringing different communities together) you are planning are genuinely aligned with your community's needs and interests, especially for younger members of the community? ● What social and community impacts will these help you to achieve in your area, and why are these important to your town? 3.3 Accessible Please use the following prompts to guide your response: ● How will you embed accessibility across the design and content of your programme? ● How would you aim to reach the widest possible audience? 3.4 Communication Please use the following prompts to guide your response: ● How will you build a communication plan that utilises a breadth of media formats and reaches different types of audiences? Page 22 of 48
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SECTION 4: MAKING IT HAPPEN In this section, we want to understand how you will deliver a successful programme. [Maximum 400 words for each section] 4.1 Partnerships Please use the following prompts to guide your response: ● How will you secure and work with additional external partners (e.g., artists and creatives, cultural and heritage organisations, funders, institutions, businesses, voluntary sector and civic society partners, and residents) to deliver the programme? ● How will you ensure your partners are representative of your town population? 4.2 Programme Management Please use the following prompts to guide your response: ● How will the programme be managed throughout the year, including leadership structure and delivery model? ● How will you provide clear roles and responsibilities, and ensure the team has the skills and capacity to deliver? ● What are the key risks associated with your proposed programme (i.e., risk, mitigating action, RAG rating)? 4.3 Financial Management Please use the following prompts to guide your response: ● If shortlisted, how would you use a £60,000 grant to strengthen your full application? ● How much do you expect it will cost to deliver your programme? ● How much additional funding will you need to raise to deliver the programme, and where will you get that additional funding (e.g., existing / reallocated budgets, income from charitable trusts and foundations, income from public funding bodies, business investment / sponsorship, crowdfunding, cultural partnership cash contributions / joint funding applications, in-kind support)? 4.4 Monitoring, Evaluation and Legacy Please use the following prompts to guide your response: ● What outcomes of your programme can be monitored and evaluated? Please refer to outcomes referenced throughout your bid, including those referenced in "Local Needs" and "Opportunity". ● How are you currently monitoring the impact of any culture and heritage programme(s) and how could these methods be adapted and used to evaluate UK Town of Culture? ● What baseline information is available to help assess the impact of your programme? Page 23 of 48
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee or Board: Housing and Social Wellbeing Date of Meeting: 25 March 2026 Report Title: Mid-Market Rent Proposal Report Number: 26/75 Report Author: James Ross, Team Leader, Housing Strategy, Economy, Development and Planning Organisational Lead: Joint report by Elaine Ritchie – Strategic Lead – Housing and Communities / Serge Merone – Strategic Lead – Economy, Development and Planning ___________________________________________________________________ 1. Purpose 1.1 The purpose of this report is to seek approval of Mid-Market Rent as an additional affordable housing model for the Council. In addition, to the extent it is within the Committee’s remit to do so, the report seeks approval of a recommendation to establish a Limited Liability Partnership (LLP) to enable the Council to directly deliver Mid-Market Rent, beginning with an initial tranche of 13 new homes at Westfields, Rattray. 1.2 Sections 1. Purpose 2. Recommendations 3. Background/Context 4. Main Issues 5. Proposals 6. Conclusion 7. Impact Value Assessment 8. Appendices 2. Recommendations It is recommended that Housing and Social Wellbeing Committee: 2.1 Agrees that Mid-Market Rent (MMR) is adopted as an affordable housing model for the Council, delivered through a Limited Liability Partnership (LLP). 7 Page 25 of 48
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2.2 Notes the proposal of the Strategic Lead – Economy, Development and Planning, in consultation with the Strategic Lead – Legal and Governance, to prepare a further report to the Council setting out the detail of the proposal for approval at a future meeting. 2.3 Authorises the Strategic Lead – Economy, Development and Planning in consultation with the Strategic Lead – Finance and Business Support to submit to full Council a proposal to borrow £1.38m from the general fund and then lend this to the LLP to acquire 13 new build affordable homes at Westfields, Rattray, subject to satisfactory due diligence and acceptable security arrangements. 2.4 Requires the Strategic Lead – Economy, Development and Planning to report on the progress to Housing and Social Wellbeing Committee at a future meeting. 3. Background/Context 3.1 Mid-market rent (MMR) is a type of affordable housing aimed at households on low to moderate incomes who may struggle to access suitable rented accommodation. MMR homes are let under a Private Residential Tenancy (not a social tenancy), but rent levels are set at or below Local Housing Allowance (LHA) rates to ensure they remain more affordable than typical private rents. In practice, MMR acts as a tenure that bridges the gap between social rent and private rent. Applicants must meet specific eligibility criteria to be offered an MMR tenancy – criteria that can be decided by the landlord to meet local housing need. 3.2 MMR is recognised nationally as an important element of affordable housing delivery. Housing to 2040, Scotland’s long term housing strategy, includes a commitment to deliver 110,000 new affordable homes by 2032. Of these, 70% are to be for social rent, with the remaining 30% delivered through low-cost home ownership and MMR. This report’s proposal contributes to the 30% non-social rent share via MMR. 3.3 The Perth and Kinross Local Housing Strategy (LHS) 2022-2027 sets out the strategic housing priorities for the area. The LHS includes a target to deliver 210 new supply affordable homes per year, with 70% for social rent and the remaining 30% delivered through alternative tenures such as MMR and low- cost home ownership, reflecting national policy direction. 3.4 Within Perth and Kinross, three Registered Social Landlords (RSLs) currently provide MMR properties, with a fourth expected to deliver homes over the next five years. Kingdom Housing Association manages 124 MMR properties across Abernethy, Perth, Scone, Blairgowrie, and Crieff. Hillcrest Housing Association manages 87 MMR properties across Perth and Blairgowrie. LAR Housing Trust manages 16 MMR properties in Blairgowrie. Page 26 of 48
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3.5 In addition, the current Strategic Housing Investment Plan (SHIP), includes Places for People (PfP) to deliver new MMR properties in Scone, which will add to the existing total of 227 properties. 4. Main Issues 4.1 In Perth and Kinross, demand for MMR continues to grow, particularly in areas with high housing pressure, above-average rents, and limited access to low-cost home ownership options. Current supply through partner RSLs is not keeping pace with need. 4.2 The Council must therefore adopt a more active and flexible delivery approach if MMR outputs are to meet the expectations outlined in the LHS and Strategic Housing Investment Plan (SHIP). 4.3 The Council cannot directly deliver MMR because a Private Residential Tenancy cannot be issued by a Local Authority and so currently, the delivery of MMR through the Strategic Housing Investment Plan relies entirely on RSLs that operate MMR, via their subsidiaries. 4.4 Benefits of the Council delivering MMR are that it: Provides an affordable option for those that are unlikely to be allocated a social tenancy. Many of whom approach our housing options service for help. Thereby reducing pressures on services and providing a viable alternative in areas with high private rents. Delivers greater flexibility and choice for those looking for their first, or last, home. Households can be offered a home with 1 bedroom more than social housing allocations would allow. Offers greater security of tenure than compared to the private rented sector. As an established landlord with a strong track record in property management and high-quality repairs, the Council offers tenants greater stability and reassurance than individual private landlords. 5. Proposals 5.1 The Outline Business Case sets out three potential options available to the Council to deliver MMR, a summarised version of this is provided as appendix 1. Following detailed appraisal, Option 3 has been identified as the preferred option. The three options considered are: - Option 1: Do Minimum / Existing Framework - Option 2: Leasing Arrangement with an RSL - Option 3: Establish a Limited Liability Partnership (LLP) 5.2 The development of the Outline Business Case has been informed by contributions from Housing Strategy, Housing, Legal Services, Finance, and procurement. In addition, external legal support has been procured from Burness Paul to provide specialist advice. Page 27 of 48
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Officers have also engaged with Edinburgh, Fife and Stirling Councils to learn from their experience of delivering MMR, as well as partner RSLs referenced in the report. Support has also been provided by the Scottish Futures Trust, who have supplied guidance and template documentation. 5.3 A suitable site has been identified for the first phase of MMR delivery. Construction is due to commence in 2026/27 at Westfields, Rattray, a location already approved within the Strategic Housing Investment Plan (SHIP). 5.4 Subject to Committee’s approval, it is anticipated that establishing the LLP will take approximately six months and external business adviser, Burness Paul, will support the full set-up process, ensuring all legal and governance requirements are met including subsidy control, conflict management, insurance, Health and Safety compliance and lettings/management arrangements. It would be important to ensure that allocations/eligibility avoid indirect discrimination and are line with Council’s priorities. A budget has also been set aside to procure external financial advice, ensuring compliance with all relevant financial regulations and the implementation of financial controls. 5.5 A financial appraisal has been completed for the initial tranche of 13 new homes, which will form the LLP’s first stock. The current appraisal confirms that £1.38m will be required, alongside Scottish Government grant funding (£1,213,864), commuted sums (£220,000), and Council Tax second / empty homes income (£260,000), to support the acquisition. Further sensitivity analysis will be carried out. This capital contribution would be paid on completion of the new homes and repaid by the LLP to the Council over a 30- year period. Once the initial investment has been repaid, any surplus generated will be reinvested in delivering additional MMR properties through the LLP. 5.6 Initial discussions have taken place with Scottish Futures Trust regarding the potential role of its investment subsidiary Scottish Futures Trust Investments Limited as the LLP’s second member. Further consideration of alternative second-member options will continue subject to Committee’s approval, with a final partner to be confirmed prior to the LLP being formally established. The selection of the second partner will be guided by criteria set by the Council such as public purpose alignment, governance capacity or no dividend leakage conflicting with affordability. 6. Conclusion 6.1 There is a clear and growing need for Mid-Market Rent (MMR) homes in Perth and Kinross, particularly for households who are unable to access social housing yet are priced out of the private rented sector. Current delivery arrangements are not sufficient to meet this demand, particularly in high-pressure areas. 6.2 The Outline Business Case demonstrates that establishing a Limited Liability Partnership (LLP) provides the most effective, flexible and sustainable mechanism for the Council to directly deliver MMR, while remaining compliant Page 28 of 48
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with legal and regulatory requirements. This approach enables the Council to take a more active role in addressing local housing need and delivering on the ambitions set out in the Local Housing Strategy and Strategic Housing Investment Plan. 6.3 The proposed first phase of delivery at Westfields, Rattray will provide 13 new MMR homes, supported by a robust financial appraisal. The required £1.38 million Council borrowing, to be on-lent to the LLP, will be fully repaid over a 30-year period, including principal and interest, ensuring the Council’s investment is protected. Any future surplus generated by the LLP will be reinvested to support further MMR delivery. 6.4 Approving the recommendations within this report will allow the Council to establish a scalable and financially sustainable model for MMR delivery, increase access to affordable housing, relieve pressure on housing services, and provide greater housing choice and security for residents across Perth and Kinross. 7. Impact and Value Assessment Impact and Value Assessment 8. Appendices 8.1 Appendix 1: Business Case 8.2 Appendix 2: Mid-Market Rent FAQ’s Page 29 of 48
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1 | O u t l i n e B u s i n e s s C a s e Appendix 1 Summarised Business Case FOR PROPOSED CAPITAL FUNDED PROJECT Title: Mid-Market Rent Proposal - PKC Executive Sponsor: Elaine Ritchie / Serge Merone Version: Author: James Ross Date: 27/02/2026 7 Page 31 of 48
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2 | O u t l i n e B u s i n e s s C a s e Executive Summary 1. Strategic Case 1.1. Project Objectives Mid-market rent (MMR) is a type of affordable housing aimed at households on low to moderate incomes, designed to help them access affordable rented accommodation. Homes for MMR are let under a Private Residential Tenancy (not a social tenancy) however rent levels should be at or below Local Housing Allowance (LHA) rates, to ensure that they are more affordable than private rents. Broadly it can be seen as a tenure that bridges the gap between social rent and private rent. There are criteria that must be met to be offered an MMR tenancy. National context MMR is seen as an important component of the delivery of new affordable housing nationally. Housing to 2040, Scotland’s long term national housing strategy, sets out a target to deliver 110,000 new affordable homes by 2032, with 70% of these for social rent, and the remaining 30% to be made up of low-cost home ownership and MMR properties. With the slowdown of low-cost home ownership schemes available, only 5 new shared equity units planned within the currently agreed Strategic Housing Investment Plan (SHIP) and the suspension, now lifted, of the Scottish Government’s Open Market Shared Equity (OMSE) scheme, to new applicants, there has been a greater reliance on MMR to deliver an alternative affordable tenure to social rent. The current climate makes it increasingly challenging to deliver new low‑cost home ownership schemes. Rising construction costs are undermining the viability of such models, as the market value of a property must exceed the cost of building it. At the same time, high interest rates are making mortgages less affordable for people on modest incomes. As market values rise, properties become less suitable for inclusion in low‑cost home ownership schemes, further limiting their feasibility The provision of MMR can assist young people looking to enter home ownership by providing a secure, affordable home, which enables them to save for. deposit on their first home and so creates a stepping stone into home ownership. MMR homes are often found in large urban areas to help those households on low to moderate incomes that have difficulty buying their own home or renting privately but who also would be unlikely to be allocated a social rented property. MMR properties can also be provided in more rural areas where residents often experience similar problems in securing housing within their community, as normally there is fewer options. Page 32 of 48
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3 | O u t l i n e B u s i n e s s C a s e This tenure is broadly seen as providing a route for young people to secure housing, often for the first time, alleviating the challenges they face navigating the housing market with a lower income. However, the tenant profile of MMR is varied and often is dictated by the type of housing on offer and its location, and so it should be seen as a tenure open to all ages. Through the affordable housing supply programme’s main grant fund, Registered Social Landlord’s (RSLs) will deliver MMR properties via a subsidiary, and many have substantial MMR properties as part of their stock. Whilst Local Authorities can also deliver MMR using Scottish Government grant, there is a need for a third party as they are excluded from directly offering Private Residential Tenancies. There are different approaches to how Local Authorities can deliver new supply MMR, and these are set out in this paper. Perth and Kinross The Perth and Kinross Local Housing Strategy (LHS) 2022-2027 sets out the strategic aims for housing within Perth and Kinross. This report aims to contribute to the following actions and milestones within that strategy: Action 1.1 Deliver PKC’s affordable housing programme of 1,050 homes over the next five years. Milestone Achieve an average of 210 affordable housing completions each year 30% other affordable tenure (315 out of total 1050 over five years – Low-Cost Home Ownership (LCHO), MMR and Self Build). Action 1.4 Seek opportunities to deliver a wider range of affordable housing options e.g., intermediate housing, LCHO and affordable self-build etc. Milestone Carry out feasibility studies. Identify and develop partnerships to deliver wider range of affordable housing options. In Perth and Kinross there are three RSLs that currently operate MMR properties, with a fourth RSL due to deliver new properties within the next 5 years. Kingdom Housing Association has 124 MMR properties across Abernethy, Perth, Scone, Blairgowrie, and Crieff. Hillcrest Housing Association has 87 properties across Perth and Blairgowrie. LAR Housing Trust has 16 properties in Blairgowrie. Within the current Strategic Housing Investment Plan, Places for People (PfP) are also programmed to deliver MMR properties in Scone, thus adding further to the 227 existing properties. The MMR properties by Kingdom, Hillcrest and PfP are delivered via the Strategic Housing Investment Plan using Scottish Government grant to part fund the cost. LAR however use a different model whereby Scottish Government loan funding has been used rather than grant, with additionally sourced private investment to fund the cost. It Page 33 of 48
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4 | O u t l i n e B u s i n e s s C a s e is not known whether this loan funding will continue to be available for LAR to deliver more homes in Perth and Kinross in that manner, though this is funding outwith the Strategic Housing Investment Plan. The Gannochy Trust, although not an RSL, are a charitable organisation within Perth and Kinross with almost 300 properties that they let out below LHA rates and so also make a valuable contribution to affordable rented accommodation in the area. However, Kingdom, Hillcrest, and PfP are continuing to pursue further MMR opportunities through the programme in Perth and Kinross and are being supported to do so by PKC as part of our role as strategic housing authority. Housing Strategy will remain in dialogue with LAR to consider any opportunities that fit in with their model. Work is also ongoing within PKC to enable organisations to harness Rural and Islands Housing Fund monies to assist the delivery of this tenure in rural areas also. The broad objective of this paper is to ensure that the delivery of MMR keeps pace with the targets set out in the Local Housing Strategy 2022-2027. 1.2. Existing Arrangements The current framework allows for PKC to direct where MMR is delivered on sites, where there is an identified need, though this would always be subject to a financial appraisal by the RSL, who would deliver the product. PKC has also in the past used commuted sums to support MMR projects where viability has been an issue, this ensures that the projects do not falter and can be delivered in areas of strategic importance. PKC’s Housing Strategy Team are tasked with coordinating the Strategic Housing Investment Plan, and it is via this document where the majority of MMR is delivered in Perth and Kinross. Beyond this, support is provided to qualifying applicants to access the Rural Housing Fund, where one of the potential end tenures is MMR. This is valuable work to enable local communities to have real input into the delivery of affordable housing local to them, but its outputs can be small, and time consuming, and so its capacity to supplement delivery of MMR is limited. The recently approved Strategic Housing Investment Plan sought to fund the delivery of 1426 new supply properties with 124 of these being MMR. It was hoped that a further 16 could be developed for low-cost home ownership, however this is proving difficult to make viable. Unfortunately, the delivery of MMR and low-cost home ownership homes are not keeping up with the expected targets, as these projections indicate less than 10% being delivered against a target of 30%. Low-cost ownership schemes are unlikely to deliver in the short term due to challenging conditions thereby placing greater weight on the delivery of MMR. The previous 5-year delivery of MMR also indicates that the Strategic Housing Investment Plan outputs will not increase significantly the MMR delivery without some action. 1.3. Business Needs Need and Demand Page 34 of 48
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5 | O u t l i n e B u s i n e s s C a s e Rents for MMR are capped at the LHA rate for first let, though are often slightly below and so the need for this product tends to be in areas where private rents are higher. LHA is the maximum rate of housing benefit a qualifying applicant can expect to receive to cover the cost of their rent in a private tenancy, in any given market area. For the properties proposed in this paper, the LHA rates are around 50% higher than the rent levels set if they were PKC social housing and so should be seen as very much a different type of tenure from social rent, albeit a recognised form of affordable housing. Often MMR is not deemed to be needed in areas where the LHA rates are too similar to the market levels. Across the Perth and Kinross area, the private rents are higher than LHA rates for all property sizes, though there is variance across the different size of properties, as shown in Table 1 below: Property Size Market Rents MMR 100% Difference 100% Difference 95% Difference 85% Difference 1 Bedroom £452 £424 -£28 -7% -12% -25% 2 Bedroom £613 £558 -£55 -10% -16% -29% 3 Bedroom £836 £748 -£88 -12% -18% -32% 4 Bedroom £1,348 £1,247 -£102 -8% -14% -27% Average £812 £744 -£68 -9% -15% -28% Table 1: LHA/Market rates by property size for Perth and Kinross. 2022/23 data The allocation of MMR, because it is different to social housing, allows for households to apply for a property that has one bedroom more than the households needs. Therefore, 2 or 3 beds would be a typical property size for new supply MMR and are the house sizes where there is greatest variance between market rents and LHA rates, indicating an alignment with need and prospective supply. However, as table 1 also highlights, by ensuring that the rent levels are lower than the maximum LHA rates, which would typically be the aim, the rent savings for all property types can become substantial and would therefore allow a greater number of people to access them. Naturally, there are specific areas within Perth and Kinross where market rents are higher and so places greater pressure on those seeking housing in the private sector. Table 2 sets out where the highest average rents are and the size of property with the highest rents. Size 1 bed - shared 1 bed 2 beds 3 beds 4+ bed Average Eastern £490 £422 £604 £774 £1,406 £801 Greater Perth £437 £447 £609 £819 £1,282 £789 Highland £431 £518 £660 £923 £1,302 £850 Kinross £261 £508 £650 £873 £1,310 £835 Strathearn £456 £472 £625 £891 £1,483 £868 Comrie £446 £458 £565 £773 £1,496 £823 Page 35 of 48
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6 | O u t l i n e B u s i n e s s C a s e Crieff £446 £458 £565 £773 £1,496 £823 North Eastern - £425 £650 £598 £1,600 £818 City Centre £431 £443 £600 £805 £1,209 £764 Perth & Kinross £441 £452 £613 £836 £1,348 £812 Table 2: Average market rents by location and property size. 2022/23 data Whilst evidence here shows that Highland, Strathearn, and Kinross would be areas to target delivery of MMR, it should be noted that it can be popular as a product even when the savings households can make on rents is minimal. This is because prospective tenants will consider aspects such as the quality of the property, the likelihood that repairs will be attended to promptly, and the security the landlord can offer. MMR landlords are typically recognised organisations with a well-functioning repairs system in place and as they are not private individuals, the risk of the property being needed back by the landlord is diminished. Whilst the introduction of Private Residential Tenancies meant that tenants had greater security of tenure than they did under Short Assured Tenancies, there are still a number of grounds that a landlord can evict a tenant under. These include, but are not limited to, the landlord wanting to sell the property, undertake major repair, to live in the property themselves or let out to a family member. This means that in practice, a prospective tenant will consider that renting from a landlord with only one or two properties, comes with less security. The locations where MMR has been delivered successfully in Perth and Kinross, demonstrates that it is not only the areas where need is greatest that have proved popular. All projects listed in table 3 have proved be in high demand and are successful MMR schemes. Site RSL Unit Number Year Moyness (Hazelwood), Blairgowrie Kingdom HA 7 24/25 Duchlage Road, Crieff Kingdom HA 8 23/24 Broich Road, Crieff Kingdom HA 4 23/24 Earlsgate, Scone (over 55’s only) Kingdom HA 51 21/22 Glenalmond Road, Rattray Kingdom HA 6 21/22 Table 3: MMR delivery in 2020/21 - 2024/25 (5 years) As noted earlier, MMR is not only targeted at those struggling to access good quality private rented accommodation but also those that cannot afford to access the home ownership market. For people living in communities where house prices are high, it is especially difficult to enter this market with a modest income. The table below shows the average house prices across a number of areas, and reflects the challenges faced within Perth and Kinross in trying to access home ownership. Page 36 of 48
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7 | O u t l i n e B u s i n e s s C a s e Table 4: Average house prices. 2022/23 data Whilst the average house price can demonstrate, broadly, the challenges faced within specific areas, it will include house prices of properties that many with modest incomes will not be pursuing. To assess the impact of house prices on the those with modest incomes, the lower end of the market needs to be considered. 2022/23 All Sales Average Price 1st Quartile Median 3rd Quartile 4th Quartile Eastern £228,176 £139,500 £219,975 £284,963 £844,626 Greater Perth £242,468 £133,390 £215,255 £315,548 £950,000 Highland £327,130 £187,000 £288,527 £432,500 £1,000,000 Kinross £305,881 £184,875 £283,000 £387,750 £800,000 Strathearn £313,241 £179,475 £270,000 £397,500 £995,000 Comrie £359,268 £202,488 £276,391 £389,250 £995,000 Crieff £286,330 £160,000 £249,450 £355,000 £865,000 North Eastern £354,616 £255,000 £280,000 £410,000 £844,626 Perth City Centre £205,533 £117,250 £187,886 £276,500 £780,000 Perth and Kinross £274,907 £155,385 £239,500 £344,998 £1,000,000 Table 5: House price quartiles. 2022/23 data Table 6 demonstrates how much a household would need to be earning, to purchase a property at the lowest quartile in each area, assuming a mortgage multiplier of 3.2, which is an affordable level. Many of the incomes listed below would be above the maximum income an applicant for an MMR property could have and so shows how out of reach home ownership is for many. It should also be noted. hat the more pressured an area, the greater the constraint there will be on supply also and so even if a household could afford a property at the lower end of the market, they are further inhibited by a constrained supply. Required for market entry LQ income to buy Ave income to buy Eastern £37,055 £60,609 Greater Perth £35,432 £64,406 Highland £49,672 £86,894 2022/23 All Sales Average Price Scottish Average + / - Eastern £228,176.13 11,839.13 Greater Perth £242,467.80 26,130.80 Highland £327,129.88 110,792.88 Kinross £305,880.21 89,543.21 Strathearn £313,240.84 96,903.84 Comrie £359,267.96 142,930.96 Crieff £286,330.02 69,993.02 North-Eastern £354,615.54 138,278.54 Perth City Centre £205,532.71 -£10,804.29 Perth and Kinross £274,906.82 £216,337 58,569.82 Page 37 of 48
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8 | O u t l i n e B u s i n e s s C a s e Kinross £49,107 £81,249 Strathearn £47,673 £83,205 Comrie £53,786 £95,431 Crieff £42,500 £76,056 North Eastern £67,734 £94,195 Perth City Centre £31,145 £54,595 P&K £41,274 £73,022 Table 6. Income needed to buy property. 2022/23 Furthermore, it should be noted that this reflects data from 2023/23, and it is known that property prices and private rents have been on the rise, and so the current situation is even more challenging for those on modest incomes than data here shows. Whilst traditionally MMR is seen as a tenure for young people entering the housing market for the first time, it should not be seen as solely a tenure for the young. The Earlsgate, Scone development has demonstrated that MMR is attractive to older people also, if the property types are suitable and in the right area. Here, 51 properties were delivered, managed by Kingdom Housing Association, and for over 55’s only, with great success and high levels of demand. Providing suitable, affordable housing for older people ensures that they are not left in increasingly unsuitable accommodation as their physical capacity declines. This means for those households their needs are better met and reduces the risk of reaching crisis point and a sudden need for additional services. Beyond that, often these households are downsizing and so it creates a chain by freeing up more housing for younger people both in the social and private sectors. The Scottish Governments ‘Mid-Market Rent Analysis: The Characteristics of MMR providers and MMR tenants - December 2020 to February 2025’ shows that whilst most tenants are below 34, there are tenants throughout the age groups living in MMR properties. 2. Economic Case A full Outline Business Case has been undertaken, including options appraisal, and can be made available on request. This summarised business case, provides a headline summary of the options available. 2.1 Options Available Summary of Options Option 1 – Do minimum / Business as usual The starting point for any options appraisal is to consider whether any substantial actions outwith current ways of working is required to achieve the results that are being looked for. The current approach to deliver MMR in Perth and Kinross, as set out in 1.2, is to support our partner RSLs to deliver MMR projects. Page 38 of 48
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9 | O u t l i n e B u s i n e s s C a s e To increase supply of MMR in Perth and Kinross within the existing framework, a re- orientation of the prioritisation framework that is used to assess potential sites, so that those sites delivering MMR are prioritised, could be done. This could achieve an increase in supply with minimal intervention, though naturally still relies on partner RSL’s to deliver them. Furthermore, if needs can be identified, such as key workers, or over 55’s, a negotiation can be had with our partner Housing Associations delivering these new properties to ensure that suitable allocations can be made. If PKC contributes to a scheme by providing additional finance via commuted sums, conditionality can be included to ensure that appropriate groups are targeted. An example of this, was the Earlsgate, Scone, development, which is an MMR project for over 55’s. Option 2 – Leasing arrangement with RSL A leasing arrangement is a type of agreement between the Local Authority and an RSL that operates or is keen to operate in that Local Authority area. These types of arrangements are used in neighbouring authority, Fife, where the Local Authority own 167 MMR properties that are managed by Kingdom and Ore Housing Association. PKC currently has a leasing arrangement with Kingdom Housing Association, though this relates to a social housing, rather than MMR, development in Perth. This would work by PKC delivering new supply homes via its new build programme and then leasing out the properties to a partner RSL’s subsidiary, who will then manage and deliver those properties as MMR. The leasing contract will set out: The length of the lease, how it rolls on thereafter, as well as any notification periods. Delineation of repairs responsibilities. These can be divided up between planned and reactive repairs, or a different negotiated position can be derived, right up to full repairs responsibility being passed on as part of the lease. The leasing price paid by the RSL, including how yearly increases are to be calculated. How allocations are to be administered and whether specific groups are to be targeted. The leasing price would be derived from a financial appraisal conducted by PKC, that considers the cost of the following: Construction, and other associated project costs, less any grant. Planned maintenance costs, if applicable. Ongoing costs, e.g. staff time, insurance, white goods Once a leasing price is derived (which will vary by site, location and maybe the number of units on offer), the prospective RSL, will then need to make their own assessment on whether it’s a viable scheme or not, and thereafter this will inform rent levels charged to prospective tenants. Naturally, the lower the leasing price, the more likely a below LHA rent can be applied by the RSL. Page 39 of 48
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10 | O u t l i n e B u s i n e s s C a s e The properties will then be managed by the RSL until the agreement is terminated by either party. As PKC are leasing the buildings to an RSL, it will be the RSL’s subsidiary that is deemed to be the landlord of the tenants and not PKC and so Private Residential Tenancies can be issued. This approach can either be used indefinitely, or as part of a transition to option 3. Option 3 – Establish a Limited Liability Partnership (LLP) Establishing a PKC Limited Liability Partnership (LLP) would be the most active approach to take forward the delivery of MMR. This is an approach taken by Local Authorities such as Stirling and Edinburgh. Stirling Council’s LLP, Steadfast Homes, has 128 properties and is actively seeking more opportunities. Whereas Edinburgh Council’s LLP, Edinburgh Living, has over 500 properties as part of its portfolio and similarly is continuing to look for opportunities. This would typically be funded via Scottish Government grant and a loan from PKC, who would obtain the loan from the Public Works Loan Board (‘PWLB’), which is then ‘on-lent’ to the LLP. This on lending should come from PKC’s general fund, rather than the HRA and would need to be approved by the Scottish Government. The loan would then be paid back by the LLP as part of its ongoing business operation. An LLP structure requires a minimum of two members to form, and so it would be a joint venture between PKC and a second party. External legal advice has been sought, and provided, which confirms 1. That the LLP set up is the most appropriate legal form 2. The legislative powers that PKC can use to establish an LLP to deliver MMR 3. The type of 2nd member that the LLP can have as a prospective 2nd member. The key legal documents required to aid the governance of this LLP would be the following. A Members Agreement This is the main document between the Local Authority and the second member that sets out and regulates what the LLP can do. A Facility Agreement: This is the document that sets out the terms of funding from the Local Authority to the LLP. A Deed of Entrustment This is the document that ties the mid-market rent LLP to deliver a service of public economic interest (SPEI) for subsidy control purposes. A Management and Maintenance Agreement: This is the document that sets out the agreement between the LLP and PKC to deliver management and maintenance services. PKC can do this in house or contract this out to an external party. PKC’s control and accountability would be enshrined within the governance structure to ensure strategic objectives are met and gives PKC complete control. Page 40 of 48
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11 | O u t l i n e B u s i n e s s C a s e There are two different approaches as to how the management of such properties would be undertaken, as different models are used by the Local Authorities, highlighted here. Option A – External Management Organisation The first approach is to contract an external organisation to manage the properties on behalf of the LLP and pay a fee for this arrangement. A procurement exercise would be needed to establish who would be best place to contract this out to. Option B – In House Management by PKC The second would be to pay a fee to PKC itself to manage the properties. As PKC Lets, a team based within the Housing Options Service, operates in this area currently for private landlords, the council is in a unique position to have existing structures in place to manage such a proposal or make minimal adaptations to current working to enable this. Due to the reasons outlined above the proposal here is to implement option B, and utilise PKC Lets as the preferred party to manage the stock. 3. Commercial Case 1.1. Procurement Strategy The 13 new build properties relate to a developer led housing scheme within the PKC new build programme. The PKC New Build Delivery Working Group, chaired by Property Services, has procurement representation ensuring that all procurement requirements are adhered to. External legal advice from Burness Paul has been sought to consider the procurement implications of the LLP, specifically the prospective 2nd member. This advice will be adhered to, and only suitable 2nd members are being considered. 1.2. Service Requirements The LLP will be formed of a ‘Board of Members’ and ‘Board of Management’ structure. The Board of Members would typically be made up of PKC senior management and elected members, with one representative from the 2nd member. Voting rights would be weighted in favour of PKC so it had complete control of the LLP. The day-to-day management of the LLP is delegated to a Board of Management, appointed by the Member organisations. This would typically comprise of six individuals, with five from PKC and one from the second member. The Board of Management would be made up of senior officers from PKC who oversee its operations day to day, and so this could be representatives from Housing, Housing (Strategy), Finance, Legal, and any other appropriate dept. Page 41 of 48
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12 | O u t l i n e B u s i n e s s C a s e The maintenance of the stock would be contracted out to PKC Lets, however whilst this is a service requirement, it is one that would be paid for by the LLP in terms of a management fee. 1.3. Charging Mechanism The development costs will be paid for as part of the PKC new build programme. These works will be funded by Scottish Government grant, Council Tax 2nd / Empty Homes, commuted sums and a capital contribution. The capital contribution will be paid by way of a loan from the general fund. A payment schedule from the LLP to PKC general fund will be required as part of the ongoing business operations, to cover the cost of loan and interest. The payment from the LLP to PKC Lets will be made via the management agreement, a draft version of which is held on file that can be shared internally on request. A budget for external financial advice has been included within the startup costs to ensure that the appropriate financial arrangements are in place. 1.4. Risk Transfer The exit strategy, should the LLP default on repayment of the loan, will consist of various options The HRA can purchase the properties and convert all the tenancies to social housing, with the loan being repaid to PKC. A partner RSL can be offered to purchase the properties to continue as MMR, with loan being repaid to PKC. The properties can be sold on open market, with grant returned to Scottish Govt, and loan repaid to PKC. 4. Financial Case 1.1. Capital and Revenue Requirements A separate appraisal has been conducted to establish the viability of the development. This sets out the capital costs in greater detail; however, the headline costs are set out below Capital Scottish Government Grant (Resource Planning Assumption – annual affordable housing grant allocation) - £1,213,864 Council Tax 2nd / Empty Homes - £260,000 Commuted sums - £220,000 Prudential borrowing - £1,380,000 Page 42 of 48
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13 | O u t l i n e B u s i n e s s C a s e Total - £3,073,864 An allowance has been provisioned in for external legal and financial advice, bringing the total capital contribution from the general fund to be on lent and paid back over 30 years at £1,380,000 Revenue The main revenue implication is derived from the management and maintenance of the stock. This will be undertaken by PKC Lets, though will be done for a management fee of £450 per property, per year, paid by the LLP to PKC Lets. This fee will increase 3% every year. Other revenue implications relate to the staffing required to be part of the ‘Board of Management’ and ‘Board of Members.’ It is expected that this role can be subsumed within current business operations and relates more to the governance of the LLP. This will need to be kept under review as more stock is added to the LLP, and future review may consider whether payment from the LLP to PKC needs to be made for these services also. 5. Management Case (for preferred option) 1.1. Programme and Project Management Methodology The new build properties will be managed and delivered in accordance with the current process for PKC new builds. They will be sold to the LLP on completion as they cannot be held on the HRA account. The management of the LLP is set out within the suite of legal documents that sit alongside this outline business case. These agreements are in draft form, with finalised versions to be created in tandem with external legal advisers. 1.2. Programme and Project Management Plans The delivery of the properties themselves will be part of the PKC New Build programme and will adhere to project management processes agreed. The function of the LLP is set out in the draft legal agreements held on file. The proposal itself seeks to deliver on our Local Housing Strategy (LHS) vision that “Everyone in Perth and Kinross has access to the right home, in the right place, at the right cost." It further seeks to deliver on the specific LHS objectives, such as Seek opportunities to deliver a wider range of affordable housing options e.g., intermediate housing, LCHO and affordable self-build etc. Page 43 of 48
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14 | O u t l i n e B u s i n e s s C a s e Achieve an average of 210 affordable housing completions each year 30% being of other affordable tenure such as LCHO, MMR, Self Build The proposed development sits within the Strategic Housing Investment Plan. This sets out investment priorities in new supply affordable housing over a 5-year period. 1.3. Use of Specialist Advisers External legal advice has been procured for initial advice and to assist with the suite of legal documents needed to establish the LLP. They will support PKC Legal Services in overseeing the establishment of the LLP. A budget for external financial advice has also been included as part of the startup costs, should that be required, to ensure that the necessary financial arrangements are in place to adhere to regulatory requirements. Page 44 of 48
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Appendix 2 Mid-Market Rent (MMR) FAQ’s Q. Do we really need MMR, when social housing is better and cheaper for people? A. Yes, MMR is needed wherever rents are much higher than Local Housing Allowance (LHA) rates, and this is clearly the case in some housing market areas in Perth and Kinross. Beyond that, MMR has been delivered in areas where rents are not substantially higher than LHA rates and these have still proved very popular. This shows that there is an identified need in some parts, but demand everywhere. MMR is not a substitute for social housing, it targets households who are unlikely to be allocated a social housing tenancy, but whom have a housing need and often approach our service for housing options assistance. Q. Will MMR properties reduce the number of social houses being built? A. No, the current Local Housing Strategy states 210 new affordable homes per year are needed. 70% of those are to be social rent with 30% of those to be either mid-market rent or low-cost home ownership, and this target will not change. Delivering MMR helps to achieve the 30% target and compliments the delivery of social housing, rather than replacing it. Q. Why do PKC need to do MMR, can we not just insist that the Housing Associations do more? A. As Strategic Authority, we can prioritise the delivery of MMR, though this still relies on partners doing it at the scale that we would want and in areas we would want. There are however competing priorities in terms of type of affordable housing being delivered such as adapted, supported etc. Having the capacity to do MMR ourselves gives us opportunities we do not have right now. Developing large scale developments requires a mix of tenures to create sustainable communities and so having the ability to deliver MMR will complement our PKC programme. We can also grasp smaller, off the shelf opportunities not suited for social housing. Q. Fife Council have a leasing arrangement with other Housing Associations, why can we not do the same? A. We can, though this is not the typical approach Local Authorities take to deliver MMR directly and does not offer us the control over management of the properties. This was a temporary measure to enable the formation of an LLP and so proposal is to deliver MMR directly using the mainstream approach to doing so. A leasing arrangement would not allow for PKC Lets to manage the properties and accrue income, and so would be an opportunity missed. A leasing arrangement and ‘business as usual’ were considered as options within the business case. These were assessed by representatives from Legal, Finance, and Housing Strategy and scored lower than the LLP option. This was due to the LLP providing greater control over the delivery of MMR and the allocation of the properties thereafter. Q. Why does it need to be an LLP? A. We have procured external legal advice on this matter and the advice is clear that the LLP is the appropriate type of legal entity to create to deliver MMR. PKC cannot issue Private Residential Tenancies for ourselves and so we need a 2nd member to provide the necessary separation from PKC to enable these tenancies to be issued. The LLP model is the one used by other local authorities. Q. An LLP seems complicated, how do we ensure all legal requirements are met and adhered to? 7 Page 45 of 48
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A. External legal adviser, Burness Paul, have been procured for initial advice and for after LLP is approved, to provide the necessary oversight ensuring that the LLP will meet all legal requirements. They are there to support the PKC legal service, who will oversee the actual legal arrangements. This has been budgeted for as part of start-up costs. There is also scope for procuring external financial advice to adhere to financial regulations, should finance team decide that is necessary. Q. Who will the 2nd Member organisation be? PKC have several options though first preference would be Scottish Futures Trust, though they have their own approval process for agreeing to be a 2nd member. They have, so far, not committed to us, though have been open to considering the proposal. This would enable the LLP to be established and allow us the opportunity to demonstrate how the LLP works to prospective 2nd members. Scottish Futures Trust would only agree to this in short term and so work will need to commence early on to identify the 2nd member that this would be thereafter. The external legal advice also specified what type of 2nd member organisation we can partner with, this will ensure that whomever we choose, the LLP will be a legally competent member. Q. Who is responsible for managing the LLP? A. PKC staff will operate the LLP as it will have no staff. PKC Lets will undertake the day-to- day management of the stock. A fee for these lettings' agency services will be paid. Beyond this, there will be a Lead Officer coordinating a working group of Officers from Legal, Finance, Housing, and Property to oversee the operation of the LLP itself. This group will report directly into the Board. Each Officer will have a different role, with varying levels of input, within the ongoing management of the LLP, summarised below. Team Leader, Housing Strategy (Lead Officer) – Coordinating role ensuring that all operational requirements are being met. Establishing working group meetings, providing board / committee reports, and ensuring a link between the varying departments. Solicitor, Legal and Democratic Services – Oversee the external legal advisors providing advice on startup. Thereafter providing ad hoc legal advice and assistance, within the parameters of what is appropriate, to the working group as part of ongoing operations. Team Leader, Finance – Oversee the establishment of the financial ledgers for the operation of the LLP and ensure payments can be made for services performed by PKC. Thereafter, providing budget monitoring statements from the LLP accounts to the working group ensuring that performance can be reviewed against targets by Lead Officer. Service Manager, Repairs and Improvements – Reactive repairs. Properties will be placed on PKC repairs schedule, as per council houses, and repairs done in same way. The cost of repairs will be paid for by the LLP. The role involves feeding in any issues with the repairs scheduling. Capital Projects and New Build, Service Manager – Large cyclical repairs. Properties will be placed on cyclical maintenance programmes as per PKC housing. This will not be needed for the first 10 years, though costs will be paid for by the LLP. Q. Will the LLP have a board, and if so, who sits on it? Page 46 of 48
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Yes, it will have two boards. However, the make-up of the boards will be agreed through the members agreement and so may vary depending on who the 2nd member is. A proposed board structure model would look like the below. 1. Board of Members. This is the main board that makes specific decisions about the LLP and sets its direction. It is made up of representatives from PKC and the 2nd member organisation. The PKC voting always outweighs that of the 2nd Member so that control is retained by PKC. Elected Members can sit on the Board of Members. There is an obligation on members to make decisions based on the best interests of the LLP Suggested participants include Strategic Lead, Housing and Communities, Strategic Lead, Economy, Development, and Planning 2nd Member Representative. Elected Members 2. Board of Management, or Senior Management Team (SMT) sits beneath the Board of Members and will oversee the day-to-day management of the LLP. This will be made up of senior management within PKC and representative from 2nd member organisation. The Lead Officer reports into this board. Suggested participants include: Strategic Lead, or Service Manager Housing and Communities Strategic Lead, or Service Manager Finance and Business Support Strategic Lead, or Service Manager Legal and Governance Strategic Lead, or Service Manager Economy, Development and Planning Strategic Lead, or Service Manager Property Services 2nd Member Representative There will be an obligation on all board members to review board reports, and act in the best interests of the LLP. Q. Who will do the LLP’s accounts? The ongoing financial management of the LLP will be done by the working group with budget monitoring by the Finance team feeding into the board reports. The proposal is that financial accounts will be reported to SMT for approval before being submitted by Strategic Lead, Finance. The initial tranche of properties is 13 and so financial arrangements should be straightforward to manage, however as the assets accrue, the ongoing financial oversight may need to be outsourced, paid for by the LLP. Q. Who will manage the actual properties? A. PKC Lets will manage the properties. They currently offer lettings agency services and so will take up this role on behalf of the LLP, for a fee. The maintenance of the properties will be undertaken by PKC, again with the cost paid for by the LLP. The properties will be added to planned maintenance cycles with a fee being paid for this. They will also be added to routine maintenance cycles, again for a fee. Any repairs to items such as white goods, blinds etc will be coordinated directly by PKC Lets. The LLP will have a budget for reactive repairs each year, which increases each year with inflation, and this will be used part of budget Page 47 of 48
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monitoring. Income will be held back to pay for future cyclical maintenance and replacements also. Q. Why does the LLP need a general fund loan to part fund the upfront capital cost, rather than the HRA? A. The HRA is prohibited from lending to the LLP. Whilst Scottish Government approval is needed to do so from general fund, this is the typical approach for Local Authorities to directly deliver MMR and so getting approval should be straightforward. Q. Does it have to be general funded, is there no other funds that can be used? A. Council Tax 2nd / Empty Homes has been used by Shetland, but the funding required would lead to a large reduction in monies available and this fund is needed to support wider delivery of affordable housing programme. Private finance can be used however this requires an interested private sector partner and substantial negotiation and so this avenue will be pursued once the LLP is established. Q. How can PKC justify using general fund monies for affordable housing, when budgets are so tight? A. Whilst the general fund will be ‘on lending’ £1.38m, there will be no detriment because this will be paid back with the interest charges covered and so it is being lent on a no detriment principle. The LLP will pay PKC Lets, a general funded service, a management fee for managing the properties and so there are also opportunities for generating income for the general fund. If there is a default on re-payment, the properties can be purchased by HRA and converted to social housing with loan repaid in full. Q. How long will it take to pay the loan back? A. The loan, with interest, will be paid back over a 30-year period. If the LLP accrues profit quicker than anticipated, then there will be option to increase payments, however the plan would be to pay back over 30-year period, and it has been appraised on such a basis. Q. What appraisals have been done to assess the financial viability of this proposal? A. A development viability assessment has been undertaken and established that the proposal stacks up financially, and furthermore, there are identified exit strategies should something go wrong. Page 48 of 48