Decision Maker: Cabinet

Outcome: Decision approved (subject to call-in)

Is Key Decision?: Yes

Is Callable In?: Yes

Date of Decision: December 16, 2025

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

Content: 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.