Brighton and Hove City Council set up Seaside Community Homes in 2011 as a way to fund the refurbishment of hundreds of sub-standard council houses and flats.
But a report to the council’s Audit and Standards Committee this week highlighted the long-term problem with the finances which it described as ‘unsustainable’.
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An independent member of the committee, Diane Bushell, asked for a ‘deep dive’, also known as a comprehensive review, into the issue to establish how the council can deal with the problem.
According to the report, the rent gap between the amount paid to Seaside Homes and the amount received by the council in housing benefit is increasing.
Seaside has 499 properties and the loan agreement with its bank works on the basis of rent increases.
Homes are rented out at local housing allowance rates which are used as the basis to calculate housing benefit.
As the allowance – and as a result the housing benefit – has remained the same, the council is making up the shortfall.
During the Audit and Standards Committee meeting, councillors were told that the contract with Seaside was a long one and the shortfall was not a risk in the next few months but over the next 20 years.
Conservative councillor Joe Miller, who chairs the committee, said: “A deep dive might be an appropriate investigation.
“The organisation may have historic issues and things change.”
David Kuenssberg, the council’s director of finance and resources, told the committee that the finance team was working closely with the executive director of neighbourhoods, communities and housing Larissa Reed’s team on the issue.
He said that the council was improving relationships between the organisation and officers.
Councillors unanimously agreed for officers to focus on the problem, which may take up to a year to resolve and renegotiate.
Brighton and Hove Seaside Community Homes has brought properties up to the ‘decent homes standard’.
Tenancies are managed by the temporary accommodation housing management team.
People nominated for a Seaside Homes property are either homeless or have a particular special need.