Purpose

Provides an update and seeks approval to
Populo Living’s Business Plan for FY26/27 along with
associated decisions.

Decision

For the reasons set out in this report and its
appendices, Cabinet RESOLVED to Agree to:
 

i) 
Approve the Populo Living Group Business Plan for 2026/27 as set
out at Appendix 1. 2.2

ii) 
Approve an adjustment of £3.5m to the existing Didsbury
Package investment loan facility from £58.8m to £62.3m
to incorporate rolled up interest costs accrued during the
development phase as set out in Appendix 3.

iii) 
Approve an adjustment of £1.6m to the existing Plaistow
package investment loan facility from £93.7m to £95.3m
to incorporate interest costs accrued during the development phase
as set out in Appendix 3.

iv) 
Approve an adjustment of £2.7m from £29.3m to
£32.0m to the existing Brickyard package investment loan
facility to incorporate rolled up interest costs accrued during the
development phase as set out in Appendix 3.

v) 
Approve allocation of up to £3.5m of funding and up to
£2.8m of GLA Grant to Populo Homes to enable Populo Homes to
fund the purchase from Populo Living of 28 London Affordable Rented
homes on the Brickyard Development in East Ham as set out in
Appendix 2, subject to:

· 
Compliance with the financial due diligence requirements contained
in the funding facility agreement with the Council; and

· 
GLA approved to the transfer of GLA grant from the Council to
Populo Homes.

vi) 
Delegate authority to the Corporate Director of Resources to
finalise the form of and then enter into
the legal documentation relating to the funding and loans referred
to at 2.5 above and to carry out such other matters as may be
necessary to bring that funding and the loan into effect.
 
Alternatives
considered
 
Business Plan
Approval
 

a) 
Populo is required by the Council to produce a Business Plan for
each financial year. If the Council did not approve this Business
Plan it would leave Populo operating within the parameters of the
previously approved Business Plan for 2025/26.

b) 
As sole shareholder, the Council could have directed the company to
continue to pursue a direct development strategy linked to working
capital and development / investment loan funding facilities in
line with previous plans. This was considered however due to
prevailing interest rates this alternative would not have allowed
the company to present a deliverable plan due to its cost of
finance from the Council.

c) 
 The Council could opt to scale back
Populo to a small housing management company overseeing 795 homes.
This remains an option however Newham continues to face an
affordable housing shortage and Populo provides the Council with a
resource capable of progressing the delivery of new homes. This is
considered a valuable commissioning route for the Council hence
reducing the company’s development team was discounted in
favour of expanding and increasing the use of Populo for
Development Management Services.

d) 
The Council could procure Development Management Services from an
alternative provider, using a suitable framework or other form of
competitive tender process but may not achieve the cost
efficiencies expected from using Populo. To support the continued
service provided by Populo, the council continues to test this
particular service through regular
benchmarking with the wider markets to ensure Populo demonstrates
value for money back to the Council.

e) 
Following consideration of the alternatives, the recommended
Business Plan strategy balances prevailing development economics
with a desire by the Council to continuing to commission Populo to
progress major residential development projects across the borough.
The Council commissioning Populo allows it to retain close control
whilst also benefiting from the skills and expertise in Populo and
promoting the sustainability of a Council company.

 

Populo Homes Brickyard Affordable Homes Funding Facility

 

f) 
If the Council were not to fund Populo Homes to purchase the 28
London Affordable Rent homes from Populo Living, then it would need
to find another Registered Provider to purchase the homes. That
could be the Council’s HRA or a 3rd Party RP. The Council has
not allowed a budget for this within the HRA 18 business plan. The
demand for these homes from other RPs is likely to be low given the
other regulatory cost commitments they currently face. The homes
are already managed by Populo Homes with tenants in situ under
tenancy agreements with Populo Homes. As such the most viable route
to be considered is to approve funding for Populo Homes to complete
the acquisition.
 

Brickyard, Plaistow, and Didsbury Package Funding

 

g) 
 The Council could opt not approve the
adjustment to the investment facility to cover the rolled-up
interest. This would leave Populo stuck in the Development stage
with interest rolling up at a higher rate and the Council not
receiving principal loan and interest repayment from the company.
This is not considered a viable option for either Populo or the
Council. Agreeing the adjustment to the facility allow the
Investment stage to commence and for revenue collected by Populo
from market rents to be returned to the Council in the form of
principal loan and interest repayments. Populo has demonstrated
that even with the additional interest cost it is still able to
repay the loans and deliver a positive impact on the Councils
Revenue position from day 1.