Councillors and committees
HRA Sites Affordable Housing Development Feasibility Study
Decision Maker: Housing Sub Committee, Growth Committee
Decision status: Recommendations Approved
Is Key decision?: No
Is subject to call in?: No
To agree on options to progress the sites identified for possible affordable housing development following a feasibility study. Any recommendations for disposal of sites will be referred to Growth Committee.
The Sub-Committee considered a report on the findings of the HRA Sites Affordable Housing Development Feasibility Study which sought approval to enter into discussions with Registered Providers and private developers to dispose of the sites in the study to enable the development of homes on the sites. As the Growth Committee holds the remit for ‘Asset Management’, the recommendations from the Sub-Committee would be referred to that Committee.
As housing development land is in limited supply, increasingly innovative solutions are being sought in order to create new affordable housing development projects. The Affordable Housing Strategy for 2015-2017 (agreed by the Residents, Health and Care Services Committee in September 2014).identified new opportunities to create affordable housing sites, typically by exploring prospects for infill development or for redeveloping existing buildings and land more intensively.
HRA sites with potential for redevelopment where affordable homes can be created have been identified and each site has been assessed in more detail for the most appropriate method of development. It is proposed to dispose of a number of garage blocks which are no longer considered fit for purpose to contribute the receipts of these sales towards capital funding to develop the sites.
A report by Tibbalds Planning & Urban Design in May 2016 after detailed assessment and feasibility and viability appraisals on the sites concluded that seven RBK HRA sites could generate approximately 75 homes at an estimated overall cost of £11M.
The main source of capital funding which RBK has for housing development projects is one-for-one (141) Right To Buy (RTB) receipts. To date, RBK has retained £5.1m of one-for-one receipts. As these receipts can be used to fund a maximum of 30% of the development cost of new social housing units, an alternative source for 70% of the capital cost of the projects must be found. If RTB receipts are not used within 3 years, 4% interest must be paid to the Government on the returned receipts.
Therefore in order to progress development of these sites, RBK will need to identify 70% of the capital funding (approx. £7.7M) and, assuming all units built will be affordable/ social rent, this could utilise approx. £3.3M of 141 RTB receipts. If sites are disposed of, RBK can grant 141 receipts to Registered Providers or private developers towards their development of units to be let at affordable/social rent.
Three capital funding options to progress the development of the sites are set out in paragraphs 14 -16 of the report of which the two recommended options are:
· Option 1 Sell sites to Registered Providers (Housing Associations)on the condition that they provide 100% affordable housing
· Option 2 Disposal of the sites to Registered Providers or private developersto develop out the sites for a mix of affordable and private use with the private homes cross-subsidising the affordable ones
Feasibility studies are the key stage in the housing development process. The overall finding of the HRA sites affordable housing development feasibility and viability study is contained in Annex 1 of the report and summarised in the table in para. 9 of the report. A Registered Provider has formally expressed its interest in all of the sites identified in the study.
The process for disposing of sites can take up to eighteen months, depending on the conditions of sale. The housing development process, once ownership of the site is confirmed and funding is in place, can take at least two years.
In presenting the report, the Head of Housing advised that there was one amendment to the report, to delete the reference in paragraph 12 of the report to ‘Residential Occupants: The proposed development at Elm Road encompasses six bungalows, three of which are currently tenanted’ as this is no longer applicable.
Recommended the Growth Committee to:
1. agree the disposal of seven of the sites appraised in the feasibility and viability study to Registered Providers (RP) or private developers utilising a mix of approaches as set out in Option 1 (ref para 14 of the report) and Option 2 (ref para 15 of the report) to enable RBK to develop homes on the sites:
? Option 1 to sell sites to Registered Providers (Housing Associations) on the condition that they provide 100% affordable housing.
? Option 2 to dispose of the sites to Registered Providers or private developers to develop out the sites for a mix of affordable and private use with the private homes cross-subsidising the affordable ones .
2. agree that all disposals of sites to a Registered Provider should be:
a) for housing with affordable housing use in perpetuity, where provided, and the Head of Property, in consultation with the Head of Housing, to be authorised to agree the terms of the disposal? and
b) through a competitive tendering process.
Voting - unanimous
[Mr Robin Oliver, advisory member representing Registered Providers withdrew from the meeting during this item and took no part in the deliberations on it.
Reason: a Registered Provider has formally expressed an interest in all of the sites identified in the Study.]
Report author: Fidelis Linehan
Publication date: 30/09/2016
Date of decision: 13/09/2016
Decided at meeting: 13/09/2016 - Housing Sub Committee