HBC-Local Authority Controlled Development Company - Legal and Financial Advice

The withdrawal of central government grant from local authorities by the end of this parliament means that Hertsmere Borough Council , as other Local Authorities in Hertfordshire, must develop replacement revenue streams and become self-financing by 2020 if it is to maintain service provision at current levels.

The Council currently derives significant General Fund revenue income from its ownership of Elstree Film and Television Studios - managed on its behalf by a wholly owned limited company - and is in the process of developing further production facilities to the rear of the site to generate additional revenue income. The Council has also has established a Property Development Company, Hertsmere Developments Limited as a potential vehicle for the development or redevelopment of land in our outside the Borough for a mix of residential and commercial purposes in order to generate further ongoing, sustainable revenue streams in the form of loan interest, rental income, dividend income and business rate income.

Consequently, given that the Council’s prime objective is to generate sustainable General Fund revenue income through acquiring or developing homes or commercial premises to let, the Council requires clear legal advice on the extent to which conducting these activities through a trading company such as Hertsmere Developments Limited, can lawfully avoid the creation of secure tenancies and the Right to Buy as well as the risks of the Council having to re-open its HRA.

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