London Borough of Hounslow. Delivery Plan for Affordable Housing Supply Target

Transcription

1 London Borough of Hounslow Delivery Plan for Affordable Housing Supply Target

2 Contents: PART ONE: CONTEXT PAGES 2-4 PART TWO: ENABLING NEW AFFORDABLE HOMES PAGES 5 9 PART THREE: HOUSE BUILDING PROGRAMME PAGES PART FOUR: ORGANISING DELIVERY PAGES Appendices Risk and Mitigation Action/ Issue and key risks Pledge Forecast Sites 2

3 PART ONE: CONTEXT 1.0 Purpose This report sets out the initial plan for delivering the Council s pledge to secure a further 3,000 affordable homes, including 400 new council homes by It clarifies the pledge and sets out the current position, risks and issues, and timeline for the delivery of affordable homes including next steps forward. 1.1 Background Over the past 4 years the Council successfully secured 2,574 affordable homes against the pledge set by Members to deliver 2,500 between 2010 and 2014.The pledge delivered a mix of affordable tenures for rent and low cost home ownership to meet the varying needs of residents. The table below breaks down how we successfully delivered the pledge: Completions Under Construction With Planning Permission Low Cost Home Ownership (including government funded initiatives) Empty Homes brought back into use Total ,574 Whilst successful delivery of this programme, has made a valuable contribution to meeting the local housing need, it has not alleviated our acute need for affordable housing in the borough, the new administration has set an ambitious target to enable the delivery of 3,000 affordable homes over the period NEW Affordable Housing Pledge: Manifesto Pledge Secure a further 3,000 affordable homes in Hounslow, 400 of which will be new Council houses Enable the construction of 3,000 new affordable homes in the Borough and directly provide a minimum of 400 Council properties to help meet the local housing need: ensuring Hounslow Town Centre and other major development sites make a significant contribution to providing affordable housing accessible to local people. In practice the pledge requires that by 2018 the Council maximises affordable housing on all private and Council planning applications, has a robust Council house building programme, brings empty homes back into use, ensures take-up of government incentives to assist new affordable home owner and completes the new Gypsy and Travellers site refurbishment. 3

4 In addition we will work across the Housing department to increase the supply of homes to meet the changing needs of tenants, including over-crowded families and households who are under-occupying their homes. This will include increasing opportunities for households to move into home ownership where appropriate. Within the overall pledge is a target to deliver 400 new Council homes. This is explored in further detail in Section Annual Output Milestones In order to facilitate delivery we propose to break the 4 year pledge commitment into annual milestones, which will be monitored quarterly through the Corporate Performance Indicator Monitoring. This is based upon information we currently hold on pipeline schemes including; those at pre-planning application stage, sites identified in the Local Plan and the Council s Asset Strategy, the Council s new house building programme, and Registered Provider indicative grant funded programmes. The table below shows the annual targets required to deliver the 3,000 affordable homes pledge and cumulative percentage progress: Pledge Year Units Pledge Progress % Cumulative 2014/ % 2015/ % 2016/ % 2017/ % Total 3, % Our current forecasts indicate that the annual pledge targets will be delivered from the following sources, as set out in the table below: Delivery Source Estimated Number of Units Negotiations with developers and Registered 1,900 to 2,200 Providers through the planning process Council house building programme 400 to 600 Securing additional units on schemes with existing 50 to 100 planning consents Empty homes brought back into use and Council 50 to 100 leasing of properties created from change of use e.g. office to residential conversion Vacancy creation through providing opportunities 50 to 70 for under-occupiers and extensions and deconversions within existing stock Government initiatives for Low Cost Home 50 to 100 Ownership and Intermediate rent GLA and other funding opportunities for example 26 additional 8 Gypsy and Traveller pitches Housing for Older People and other specialist 70 to 140 housing Purchase of streetproperties(p&r s ) and or 8 to 20 Existing Satisfactory/Off the shelf properties LBH/RP initiatives/intensification 50 Total 2,654 to 3,450 4

5 The above breakdown is intended to guide our planning of the delivery target and will be subject to on-going monitoring review. PART TWO: ENABLING NEW AFFORDABLE HOMES 2.1 Sources of new Negotiated Affordable Housing Supply A large proportion of the new affordable housing supply target will be enabled through external sources via a process of negotiation and partnership working primarily with developers and Registered Providers. Much of this supply will be secured through the planning process. During the last administration over 80% of the 2,574 affordable homes delivered, were secured through the negotiated supply route. It is anticipated that over the next 4 years at least 75% of new affordable housing supply will come through the statutory planning process. New affordable housing supply is likely to be derived from the following sources: Planning applications on sites providing over 10 residential units; Large Strategic Sites, including where the Council has land ownership, for example Brentford High Street, Hounslow Town Centre and Feltham Regeneration; Working with Registered Providers to secure affordable additional affordable housing on Section 106 and whole sites; Working with Registered Providers, private developers and other land owners on potential land assembly options 2.2 Tools for Negotiating Affordable Housing Supply The negotiated supply of affordable housing is dependent upon a number of key tools and conditions being in place. A strongly evidenced and implemented planning policy, clearly identifying housing need priorities; and the ability to influence negotiations effectively will determine the Council s ability to enable the affordable numbers required to deliver the pledge. Each of these elements is considered below, along with associated actions and risks. Strategic Planning Policy & Housing Need Having in place a clear and robust planning policy on affordable housing, which is rigorously and consistently applied, is critical to maximising the amount and type of affordable housing secured in new developments. The National Planning Policy Framework (NPPF) sets the context for the delivery of affordable housing through the planning process and is further refined regionally by the London Plan. At the local level, the Council s draft Local Plan is been submitted to the Planning Inspector and will be examined at a public inquiry later this year. The Local Plan will provide much needed policy guidance on the overall quantum, tenure mix and unit types/sizes required to meet identified affordable housing need. The Council currently defers to London Plan guidance for the delivery of affordable housing, which requires an overall 5

6 quantum of 41% affordable housing with a tenure split of 60% affordable/social rent and 40% intermediate housing. The National Planning Policy Framework (NPPF) requires that Local Planning Authorities have a clear understanding of housing need in their area which should inform the Local Plan. The key tool used to identify housing need for the Local Plan is a Strategic Housing Market Assessment (SHMA). A SHMA identifies the scale, tenure and mix of housing required over the Local Plan period. In addition the Council s own operational housing need data will be an important determinant in targeting new supply. The London Plan has identified an overall housing supply target for Hounslow of 822 dwellings per annum - this represents an increase of 75% on the previous London Plan 2011 and Hounslow Unitary Development Plan (UDP) of 470 dwellings per hectare for the previous period. Housing need data is drawn from a number of sources most importantly ONS and CLG. In order to support the affordable housing policies within the Council s emerging Local Plan the Council must commission a Strategic Housing Market Assessment. The Local Plan policies in respect of affordable housing will be further strengthened by the production of Affordable Housing Supplementary Planning Guidance (SPG). The SPG will set out detailed planning policy guidance to developers on affordable housing delivery. The absence of such a document is and will continue to weaken the Council s negotiating position during the planning application process. The Affordable Housing Supply Team is working closely with the Planning Policy team on the development of these policy documents and will continue to forge stronger links and establish a process for effectively monitoring new supply. Actions Meet with the Planning Policy team to jointly take forward preparation of a Strategic Housing Market Assessment Immediately Produce Affordable Housing SPG Monitor and Review policy implementation Risks Tools Required RAG Rating Publication of Local Plan delayed by examination in public Affordable Housing SPG delayed Updated SHMA information Existing resources Joint working: Strategic Planning Policy Red Optimising and maximising affordable housing supply to meet identified Need Identifying and projecting housing need is vital to producing a robust, evidence based Local Plan and providing a strong position for negotiating affordable housing through the planning application process. This evidence base is also used by the Council to defend its position if challenged at planning appeal. Maximising the overall number of affordable units is crucial to meeting the 3,000 target,however there may be occasions where in order to meet identified housing need it may be necessary, on certain development sites, to optimise the mix of affordable units rather than maxmise the overall number of units, subject to scheme viability. 6

7 For example, if housing need data indicates a high need for 3 bedroom units in a particular part of the borough it may be prudent to negotiate a smaller number of larger units rather than smaller 1 or 2 bedroom units. Further guidance is currently being prepared with recommendation on the circumstances under which this approach is taken. Any additional bedrooms secured in this way should be accounted for in reporting new supply and this will be addressed in the report. Actions Risks Tools Required RAG Rating Preparation of report to secure agreement on when schemes are optimised to meet high priority housing need Continuous monitoring supply v identified need New housing supply doesn t match identified housing need Guidance and Senior/Political Leadership endorsement of housing need priorities Joint work: Strategic Planning Policy, Housing Services Corporate sign-up of housing supply requirements Amber The Planning Application Process and Development Management The Affordable Housing Supply Team works closely with the Development Management team throughout the planning process to secure affordable housing on residential schemes of over 10 units. At pre-application stage the Affordable Housing Supply Team provides formal guidance on the Council s policy requirements for affordable housing as appropriate. Once a planning application is submitted the Affordable Housing Supply Team reviews the application and provides detailed formal comments on the affordable housing proposal. Where schemes fail to provide a policy compliant level of affordable housing the applicant is required to submit a financial viability report evidencing why the scheme cannot achieve this. The team works with an independent valuer to assess the viability report submitted by the applicant and negotiates with the applicant to reach an agreed position on the level of affordable housing which the scheme can reasonably provide. Once agreement is reached with the applicant the Affordable Housing Supply Team works with the Councils legal advisers to secure affordable housing delivery through a Section 106 agreement which are becoming increasingly complex and time consuming. It is important to ensure that the affordable housing definitions and provisions in the Section 106 agreement are robust and effective. Working with the Council s external lawyers the team is about to undertake a review of a sample of Section 106 agreements to ensure they are fit for purpose. Processes are being established to ensure the team is involved in the planning process at the earliest opportunity for example, attending Development Management fortnightly meetings where major planning applications are discussed. This early involvement provides the chance to provide comment at the earliest, and to work with applicants to secure the maximum levels of affordable housing. As the property market has improved the number of planning applications for residential development has increased. A fully resourced team will ensure that each application is fully assessed for its ability to provide affordable housing. 7

8 Actions Risks Tools Required RAG Rating Continue to strengthen working relationship with Development Management Team Early engagement with private developers and Registered Providers, through for example Hounslow Residential Development Forum and regular meetings Review S106 Affordable Housing definitions and provisions to ensure they are robust and effective Experienced external planning lawyers Failure to engage in discussions on large strategic sites Failure to engage in pre-application discussions Senior Leadership Champions Amber Financial Viability Financial viability assessment is enshrined in national and regional planning policy as the accepted approach for determining the quantum and mix of affordable housing which can reasonably be provided on residential developments of 10 or more units. Where policy compliance cannot be achieved the planning applicant is required to provide a fully evidenced financial viability report, which is then assessed by an independent assessor on behalf of the Council. It is becoming increasingly difficult to get close to securing 40%, policy compliant, affordable housing through the financial viability assessment approach. Often planning schemes, which show a deficit in financial viability and demonstrate that affordable housing cannot be provided, are surprisingly still implemented and built out or sold on with the planning permission. Some of the key factors which affect scheme viability are rising build costs and land values. Where viability assessment concludes that policy compliant affordable housing cannot be provided at commencement of development, a Review Mechanism/Deferred Payment calculation must be included in the Section 106 agreement to secure any future uplift in value based upon on out-turn viability review. To some extent this mitigates the loss of affordable housing at the planning application stage but is no substitute for on-site affordable housing. Developers are increasingly challenging the inclusion of deferred payment reviews in Section 106 agreements, particularly in a rising market. The Council must stand firm on such challenges and retain the inclusion of viability review mechanisms in Section 106 agreements as a tool for maximising affordable housing in the borough. However, and more importantly, there is a question around whether the current national policy approach to financial viability will ever yield the number of affordable homes required to meet targets. As part of the work being undertaken with external lawyers to review the structure of Section 106 agreements we will also be looking at ways of securing guaranteed off-site provision of affordable housing in exceptional cases where schemes are proven to be unviable for onsire provision. In addition the Council must be proactive in raising the profile of the financial viability debate externally with for example, DCLG, GLA and RICS. We are about to begin a series of 8

9 discussions with other boroughs to share current concerns and best practice and to explore whether there are any options for joint working. Actions Risks Tools Required RAG Rating Work with legal team to identify options for guaranteed delivery of off-site S106 affordable housing in exceptional circumstances Establish a Financial Viability Review group Advise Lead Member on all critcial viability negotiations at monthly update meetings Viability Assessor Procurement lead by Development Management Non-delivery of up to 75% affordable housing target Members and Chief Officers commitment to securing policy compliant affordable housing planning applications Red The Council as an Investment Partner The Council is unlikely to deliver the 3,000 pledge target through the negotiated supply and its own new house building routes alone. Delivery of affordable housing through the planning process is further hampered by financial viability. The Council should explore other ways of jointly working with developers and landowners as an active partner and investor to facilitate the delivery of affordable homes on financially challenged schemes and large strategic sites, particularly where the Council has land ownership. For example, this approach has already been effectively applied at Commerce Road and Heston Leisure Centre, where land has been secured in lieu of affordable housing which will then be delivered through the Council s house building programme. On entirely Council sites which are earmarked to deliver a range of corporate objectives affordable housing should always be secured. Innovative partnership approaches need to be established. For example, some larger Registered Providers working in Hounslow have experience of setting up Limited Liability Partnerships with other local authorities to deliver mixed use schemes. The Council should also be proactive in exploring partnership approaches in parallel with financial viability discussions. The Council has also been approached by a number of private investment companies with a desire to invest in Council development. We will continue to evaluate the appropriateness of such models with a view to reporting to Members in early Actions Present a paper to senior managers and Lead Member on how an LLP with a Registered Provider could work Risks Tools Required Non delivery of affordable housing on large sites Non delivery of Council home-building aspirations Resources 9

10 Cross-departmental commitment to collaborative working RAG Rating Red 10

11 PART THREE: HOUSE BUILDING PROGRAMME 3.1 Financing the Council House Building Programme Development capacity of the HRA The current HRA Business Plan (July 2013) indicates that the HRA has the financial capacity to deliver up to 600 new council homes between 2013 and 2018, and a further 350 new Council homes by 2023 using a combination of reserves, surpluses and borrowing. To date therefore, the AHS service has been planning a programme to deliver a maximum of 600 units in the first 5 years. Since this assessment was made, a number of changes have occurred: 1. A more sophisticated modelling tool has been procured which is capable of modelling more complex development scenarios. 2. The Council has been successful in securing almost 11m in grant funding through the GLA s affordable homes programmes to deliver over 400 homes by March The Council has started to receive additional capital income from retained Right to Buy receipts under the agreement that the Council has entered into with DCLG (just under 3m to date in 2014). 4. The previous business plan modelled the assumption that all new homes built in the HRA would be for social rent. In the programme to date, we have been developing a mix of social rented and shared ownership housing (the provision of approximately 40% shared ownership housing is a requirement of the GLA in grant-funded schemes). Over a 600 unit programme it is anticipated that shared ownership sales will generate approximately 20m in additional capital receipts. However, in recent months there has been a significant increase in development costs, with build cost inflation running at 10-15% depending on the trade. This is largely due to increased housing market confidence resulting in a rise in construction activity nationwide, which has driven up sub-contractor prices. At present the updated HRA Business Plan models suggests that, due to the additional income identified above, there is capacity to deliver 500 new homes currently identified in Phase 1, and approximately 200 more homes in Phase 2. Therefore the model confirms that the HRA has the financial capacity to secure the delivery of 400 new council homes by 2018 in accordance with the Council s corporate target. The Business Plan divides the house building programme into two phases: Phase 1 (years 1-5) which comprises all of the identified schemes as shown in the table at Section 3.2, and Phase 2 (years 6-10) for which delivery numbers are still indicative and specific sites have not yet been identified. It may be possible to exceed 700 units by extending Phase 2, depending on build cost trends, future grant funding opportunities and the use of income from Right to Buy sales (addressed below). 11

12 Greater London Authority grant funding and Right to Buy receipts: The Council has been successful in securing grant funding from the GLA in all of its existing programmes, including for general needs and older people s homes and for gypsy and traveller pitches. As described above, this helps to stretch the investment capacity of the HRA and should lead to an overall increase in the number of new homes that can be developed. The Council has also signed an agreement with DCLG which allows it to retain a proportion of capital receipts for re-investment in new affordable homes, and (following an increase in the maximum discount) there has recently been a rise in RTB sales which has produced a significant new affordable housing income stream for the Council. In financial quarters 1 and 2 of , the Council received a little under 3m in retainable receipts and it is anticipated that receipts will continue to be generated at this level until the end of financial year. However, it is likely that receipt generation will slow in the future if mortgage interest rates rise and fewer tenants are able to obtain finance for purchasing their homes so this income stream is not secure. Both types of funding discussed above come with restrictions and it is important to consider the most appropriate form of funding for each development so that the overall financial position can be optimised: Funding source: Advantages Disadvantages Right to Buy receipts Can cover up to 30% of development costs. Must be spent within 3 years of receipt or must be repaid to Significant income (at present). Allows Council to offset stock losses as a result of RTB. GLA grant funding External funding source which allows Council s own resources to go further. High profile grant delivery programme with reputational advantages. Places restrictions on future RTB discounts which prevents properties from being sold for less than their development cost. DCLG with interest. Cannot be used in conjunction with other capital grant or receipts. Difficult to predict income as subject to market conditions. Generally only covers 15-20% of development costs. Cannot be used in conjunction with RTB receipts. Failure to deliver schemes in accordance with grant agreements results in repayment of grant with interest. Places restrictions on types of homes to be delivered and to whom they may be let or sold (including 5% pan-london 12

13 Recommendations: The Council and its partners (such as London Councils) should continue to lobby central government to relax the current restrictions on the use of retained Right to Buy receipts. Where possible, sheltered and other supported housing schemes (which are exempt from RTB) should be prioritized for funding from RTB receipts, while general needs housing that will be subject to RTB should be prioritized for funding through GLA grant. 13

14 Actions Input all available data to new HRA business plan model and produce revised assessment of total development capacity. Update quarterly. HRA business plan update to be prepared for Cabinet approval in January. HRA development delivery plan in progress, to be finalised following receipt of revised business plan. Identify non-grant funded programme for which RTB receipts may be used (likely to be supported housing). Drive current GLA funded programme to ensure delivery milestones are met and grant is secure. Risks The HRA may not have sufficient financial capacity to sustain the rate of development desired in cash-flow terms. Current initial modelling suggests a borrowing crunch point at around year 5 of the business plan. Tools Required The cost of both labour and materials are increasing very quickly at present. The model will need to be regularly updated (quarterly) to account for market variations. The new income stream from retained Right to Buy receipts is not secure and a prudent approach to income assumptions should be adopted. New HRA business plan model to be fully functional and revised assessments to be produced. Model to be regularly refreshed. RAG Rating Amber 3.2 Tenure mix within the HRA Home-building programme: a) Overview as at start Q3 2014: Rented units Shared ownership units Total units Phase 1 (2013/ /18) Completed (since 01/04/2014) Under construction In design / planning In early feasibility Phase 2 (2018/ /23) Total units identified Units to be identified in Phase 2 ( )

15 Identified schemes within this programme will yield a mix of affordable homes to rent and buy on a shared ownership basis, with an overall split of approximately70% rent and 30% shared ownership. This is a slight departure from London Plan guidance which suggests a split of 60% rent to 40% shared ownership, however a site by site approach has been taken in order to find the most appropriate tenure solution for each development that best addresses housing need. b) General Needs rented homes - social rent: All new homes for rent within the currently identified programme are assumed to be for social rent, i.e. to be let at target rent levels on secure council tenancies. c) Shared Ownership homes: Shared ownership properties are assumed to be sold on a 50% equity share basis with rent being paid to the Council at 2.5% of unsold equity, although a bespoke affordability model will be produced for each site. In the East of the borough where market values are higher it is likely that it will be necessary to sell lower first tranches and possibly also charge rents at lower percentages in order to ensure that properties remain affordable to Hounslow residents. As mentioned in section 3.1, providing shared ownership housing generates capital receipts which can be re-used to provide more council homes. If the full projected 20m of receipts was realised, these receipts may enable the Council to build up to 100 additional homes that were not modelled in the original business plan (not accounting for the additional rental revenue also generated). The generation of these receipts may also delay any borrowing required by the HRA in order to fund the programme, by improving early cash-flows. The new HRA business plan model is capable of modelling this capital income, producing a more complete picture of investment potential. As the Council retains a proportion of the equity in shared ownership homes, the Council will also benefit from any uplift in property values as a result of changed in the housing market. It is likely that additional capital receipts will be received as occupiers of shared ownership properties purchase additional equity from the Council (known as staircasing ), although at present the HRA Business Plan model is not able to account for this income. 15

16 d) Housing for older people: Sheltered Housing: Frogley House (Hounslow) has recently been refurbished, providing 25 homes which now meet the Council s sheltered housing standards. The re-provision of two further schemes is currently underway, with Hogarth Court in Heston (which will produce 40 new homes) and Rectory Court in Feltham (which will produce 36 new homes) due to commence construction in January and April 2015 respectively. The completion of these schemes will fulfil the target of 750 sheltered units which meet the sheltered standard previously agreed at Cabinet and no further new sheltered housing provision is planned at present. The new sheltered homes will be available for social rent and these units are included within the overall numbers of rented homes shown in the table above. Extra-care housing: An Extra Care Housing Plan has been produced which recommends that two large Extra Care schemes are developed in the West Area and Heston and Cranford Area by 2018/19, to deliver a total of 140 units. These larger scale schemes would give the opportunity for some dementia specific provision and to act as a resource for people living in the local community. A need has been identified for a mix of both rented and shared ownership Extra Care homes, and there is potential for these units to be provided in the HRA which would bring them into the scope of Phase 2 of the Council House Building Programme. e) Other specialist housing: Gypsy and Traveller pitches: The Council has been successful in securing 766,000 in GLA grant funding to support the refurbishment of 20 existing pitches and provision of 6 new pitches. There is potential for a second phase of delivery which could provide a further 8 new pitches. Traveller pitch numbers are considered separately and have not been included in the housing delivery numbers in the table above. Supported housing for specific groups: Many of the available HRA development sites will yield only a small number of homes, and this may (depending on location and other site details) make them suitable for the development of specialist supported housing which benefits from comprising of small clusters, such as housing for care-leavers, or people with learning disabilities. Suitability for this type of housing will be appraised as part of the land capacity study which will inform Phase 2 of the programme. f) Alternative council housing tenures: The Council may wish to consider developing additional tenures in future in order to broaden the housing offer to residents; these may provide alternative options for existing council tenants and enable the release of council homes for re-letting. Potential alternatives may include models where the occupant first rents from the Council at a discounted marketed rent before buying a share in the property when they are able, or 16

17 rented accommodation offered at rents higher than current council rents but lower than the market. Actions Work in partnership with Children s and Adults Services to identify the need for different types of housing with care and support. Explore potential new supported housing in the HRA as part of Phase 2 of the house building programme, according to commissions from CAS. Risks Tools Required RAG Rating A mix of housing is delivered which does not meet core housing need, or is not financially efficient for the Council. Analysis of Hounslow residents housing needs, with a particular focus on the needs of existing secure tenants, those in temporary accommodation, those with a need for care and support services to be provided where they live. Amber. 17

18 3.3 Delivering the programme (1) delivery vehicles. a) Hounslow Homes Development Framework In 2009 Hounslow Homes entered into a development Framework with a duration of 4 years with United House Ltd (UHL) and Lovell Partnerships Ltd. The HH Framework Agreements with both contractors have expired in 2013 and no further schemes may be delivered through this mechanism. All existing contracts between Hounslow Homes and their construction partners have been checked and these contracts will be novated to the Council when Hounslow Homes Ltd ceases to trade. b) Traditional tenders: Tendering is currently under way for 3 rooftop extension schemes and two in-fill schemes, which are being tendered via a traditional contractor procurement route. These are small schemes where the development activity ties in with asset management activities, where the appointment of smaller, local contractors is considered the most appropriate form of delivery. c) Pre-procured Frameworks including London Development Panel In order to meet required delivery milestones for GLA funding, it will be necessary for the Council to make use of pre-procured delivery frameworks to appoint contractors for certain elements of the programme. This approach was approved as a medium term measure by Affordable Housing Committee in September The Council has signed up to this panel, which provides access to the list of panel members, procurement templates and support from GLA officers. The Council will need to carry out a mini-tendering exercise within the Panel to identify a contractor by the end of the financial year The advantage of this delivery route is that the Council will not be required to undertake a full OJEU compliant procurement exercise which can be both costly and time consuming, but will be able to access contractors with significant public sector construction experience. The LDP does not cover the full range of construction-related consultancy services, so it is likely that the Council will also need to make use of other frameworks such as IESE in order to obtain consultancy services such as Employers Agents, CDM Coordinators etc. Delivery route Hounslow Homes Development Framework Number of homes 375 Traditional contract tenders 80 Pre-procured frameworks 145 Future procurement for Phase

19 Total units 700 Actions Construction contracts for smaller schemes to be let through the traditional route once tendering has been completed. Tendering from the GLA Panel to commence following recruitment of Senior Housing Development Project Manager. Risks If there are any delays in the procurement of contractors there is a high risk of failure to deliver schemes by required GLA deadlines. There are relatively few contractors on the GLA Panel with an interest in simple design and build contracts. There is a risk that the response to tenders may not be sufficient for the Council to make an appointment and it may become necessary to re-tender using an alternative framework. Tools Required RAG Rating Maximum possible number of units to be offered to the Panel during procurement in order to be attractive to tenderers. Amber 3.4 Delivering the programme (2) land capacity The currently identified development programme is set out in detail in the HRA Housebuilding Programme Delivery Plan , and comprises approximately 500 units across 4 sub-programmes. In order to complete 600 new council homes by 2018 it will be necessary to identify development opportunities for approximately 100 additional units.. It is currently anticipated that this number of units can be identified from within existing HRA land holdings, although this is likely to be made up of a number of small (and therefore relatively expensive sites). Land development capacity appraisal As part of the approval of the HRA Business Plan, Members approved funding for the commissioning of a land development appraisal. The Council holds approximately 80 areas of land within the HRA which may have development potential in addition to the sites already identified for development within existing programmes. A full land appraisal is necessary in order to confirm the development capacity of the remaining sites, to include reports on title, statutory service searches, development capacity appraisals and valuation advice. This land capacity study will be commissioned by the end of financial year Most of the HRA sites referred to above are small sites which will yield 10 units or fewer. In addition, due to their location within existing housing estates, development capacity tends to 19

20 be constrained by their proximity to existing homes, amenity space and parking provision, and traffic management issues. Developing a small number of units in a location generally makes the development cost per home relatively high, as costs such as site set-up and health and safety supervision are similar regardless of the size of the sites. In addition, the development of these types of sites often requires removal of existing structures, clearance of asbestos or diversion of existing services, all of which add significantly to the development cost. The aim of the land capacity appraisal will be to prioritise the available sites so that the least onerous sites and those that will yield the greatest number of new homes can be identified. However, given that small sites do not optimise value for money in development terms, it will be essential for the Council to continue to seek opportunities to secure larger sites for this programme. Where larger sites can be secured for the house building programme, small (and more expensive) opportunities can be re-prioritised for delivery later in the programme.. Active Asset Management The existing identified programme includes approximately 90 units to be provided by adding additional storeys to existing Council-owned blocks, or adding additional houses to the ends of terraces. The Hounslow Homes Asset Management team has indicated that there is potential for up to 100 additional new homes to be delivered by adding storeys to existing buildings or building estate extensions, subject to planning consent. These would be significantly less costly and quicker to deliver than developing small areas of vacant land, so the identification of extension opportunities through active asset management will continue to be a key source of land supply. Acquisitions i) Existing Properties There is currently no identified capacity for the Phase 2 ( ) programme and future development opportunities need to be identified. Acquisition and refurbishment of existing street properties is a fast delivery route favoured by many registered providers, and is also a method of delivery for which GLA grant may be claimed. This option would also provide a quick way to identify new homes to which RTB receipts may be applied. Acquisitions ii) land and new build properties: The most efficient way to boost capacity and realise the Council s home-building ambitions will be to make some larger scale land and property acquisitions, whether from the private sector or other departments. Examples: 1) Commerce Road: The Council negotiated a lease on land at through the S106 route which has capacity for the development of approximately 80 affordable homes. This land should become available near the beginning of the Phase 2 period, however is 20

21 2) Heston Leisure Centre: The HRA purchased land for affordable housing development from the General Fund and is constructing 88 new council homes as part of the Phase 1 programme. Through securing this larger site the HRA has been able to benefit from a much more cost-efficient development opportunity and this will be a flag-ship housing development for the HRA. 3) Brentford Town Centre: The Council is working with developer Ballymore to secure a site within the Brentford Town centre regeneration scheme to be developed as part of the council house building programme. The proposed site would yield between 75 and 80 homes, and if it is possible to secure this opportunity this site could be brought into Phase 1 and a number of smaller sites re-prioritised for delivery in Phase 2. The Council should continue to explore opportunities to secure land and / or completed homes from private developers through planning negotiations, and to explore how the HRA can partner with the General Fund to achieve the best possible outcomes for the Council. The Council should seek, for example, to provide affordable homes in new school developments, and as part of the redevelopment of redundant assets such as former office buildings or depots. Actions Land capacity study to be carried out. Land and property acquisitions to be pursued to build development capacity for future programme. Risks Insufficient development capacity to realise the Council s homebuilding aspirations. Available sites are so constrained that these developments represent poor value for money for the Council. Tools Required Recruitment of Senior Housing Development Manager and corporate support to undertake procurement of capacity study. Close liaison with Affordable Housing Supply team and Property Management section to maximise opportunities to acquire larger sites. RAG Rating Amber PART FOUR: ORGANISING DELIVERY 4.1 Organising Delivery : The Affordable Housing Supply Service 21

22 The Affordable Housing Service has recently been restructured in order to fulfil the Council s ambitious affordable housing aspirations. The Service now consists of two newly formed teams: o o Affordable Housing Supply Team - enable the delivery of market derived affordable homes Housing Development & Regeneration Team deliver the Council s HRA-led home building programme. The Service will be directly responsible for delivery of the 3,000 affordable homes pledge and in particular the service will: Deliver a professional development service to internal Council departments Represent the Council to Funders, Registered Providers, landowners/developers and investors Be an active contributor within REDe to deliver wider regeneration opportunities Enable and create partnerships to unlock development opportunities Contribute to Council Policy and strategy as it relates to supply Identify and secure external and internal funding and ensure contractual compliance with the funding. Seek continuous improvement in affordable housing delivery across all areas (Value for Money, design standards, Wheelchair housing, supported housing, mix of tenures etc.) Work up detailed feasibility assessments of new innovation, ensuring derisked implementation of delivery Governance A clearly defined process of securing internal approvals for new build projects and other affordable housing supply schemes has been established. Key decisions around the strategic direction of the new build programme and other significant decisions around increasing affordable housing supply will be made by Cabinet. An updated HRA Business Plan, detailing the capacity of the HRA to build new homes, will be considered by Cabinet in December Decisions relating to programmes identified in the HRA Business Plan will be delegated to the Affordable Housing Committee, whilst the approval of detailed budgets for specific projects agreed by Affordable Housing Committee will be delegated to the Lead Member. Recommendations for new or alternative delivery vehicles, investment models and partnerships such as Joint Ventures will be made to Affordable Housing Committee in the first instance. Future dates for Affordable housing Committee will set at the beginning of January for each year, and monthly update meetings will be held with the Lead Member. Pledge Delivery Team Roles and responsibilities Role Officer Responsibilities 22

23 Pledge Sponsor Pledge Delivery Sponsor Delivery Manager Work-stream lead: Negotiated Delivery Work-stream lead: Council Home Building Programme Brendon Walsh Director of REDe Peter Matthew Assistant Director Housing Nadja Stone Head of Affordable Housing Supply Isabella Rossi Affordable Housing Supply Manager Suzannah Taylor Housing Development & Regeneration Manager Accountable for the Pledge to Leader and Chief Executive Accountable for strategic leadership and delivery Championing the Pledge with CLT, Members and other stakeholders Accountable for promoting a coordinated approach to cross departmental working Overall responsibility for the HRA Accountable for providing, commissioning and performance management. Responsible for building relationships with internal and external stakeholders who are engaged in delivery. Responsible for implementation of special projects. Responsible for managing risk to overall pledge delivery. Lead of negotiated,planning and partnering work streams Delivery of Council housing new build programme Next Steps : This paper has set out the delivery plan for achieving the Council Pledge target of 3000 affordable homes. This document is intended to be a working document which will be reviewed quarterly. The next keys steps and decisions are in the programme for delivery are set out below: Cabinet HRA Business Plan update to be considered by Cabinet in January

24 Affordable Housing Committee to meet on 3 rd December 2014 to consider the following reports: Delivery Plan : Affordable Housing Supply Target Housing for Older People Terms of Reference for the new Strategic Housing Supply Delivery Board Single Member Decisions by December 2014 Hartlands Travellers Pitch Budget Approval /Bid for additional GLA grant funding for new pitches Hartlands Allocation Policy Actions / Key Milestones Affordable Housing Supplementary Guidance to be drafted by March 2015 Work with Strategic Planning to commission a Strategic Market Assessment Survey Commission consultants to undertake Land Capacity Assessment by end of January 2015 Draft programme for delivery of housing for older people and other specialist housing in partnership with Adult Services by end of November 2014 Continuous Market Engagement for GLA grant funding for the Council s own house building projects and supporting Registered Providers in securing funding for their programmes in Hounslow Establish Hounslow Residential Development Forum Set Quarter 4 Review Meetings with key developing Registered Provider Partners and Developers Maintain the Council s Investment Partner Status with the GLA through intensive management of the grant funding programme and attending monitoring meetings with the GLA Meet with the Lead Member of Housing monthly to update and discuss issues and milestones Recruit to all the vacant posts so that we are adequately resourced 24