Basildon Housing Company Rab Fallon Corporate Specialist, New Business Initiative Basildon Borough Council
Introduction to Basildon Borough Our Borough 30 miles east of London it covers 42.5 square miles mixing rural and urban settings Our population Population of 175,000 people (increasing and getting older) 28% of the workforce commute to London Unemployment stands at 7.4% Low skill level of residents with low to medium educational attainment Our economy Over 6,000 businesses employing over 73,000 people Automotive/aerospace/defence manufacturing and R&D (Ford, Selex, New Holland) as well as financial services It is a given therefore that: There will be a healthy demand for new homes in our region There is likely to be a shortage of affordable homes given current market conditions 2
Our reasons for developing housing HRA reforms presented an opportunity our head room is not great but we had something to play with 3m Affordable Housing landscape has changed. RSL s are charging higher rents, and looking to consolidate nearer London. We noticed they are chasing easy s106 schemes rather than addressing our areas that need their extra investment Our new transformation agenda requires us to do things differently and generate wealth for the community We have large land holdings that can be better utilised and a housing stock we need to sustain from erosion by RTB We can stimulate the local economy and create extra training opportunities in partnership with local colleges We can take the lead in starting to slowly vary the housing stock and design in our borough Quality of housing options directly correlates with economic prosperity of a region We can learn about this industry and provide staff with enriched and varied work We can build the asset base for future generations 3
Two vehicles for housing delivery Housing Revenue Account (HRA) 2017 target 100 homes completed All affordable rent Sempra Homes Limited 2017 target 100 homes completed All tenures 4
5 Income Streams - 25m cash and borrowing approvals General Fund Borrowing Approval HRA Borrowing Approval HRA Extra Borrowing Approval (CLG) HRA Reserves Receipts from sales of high value homes RTB general sales receipts RTB residual receipts Section 106 affordable homes HCA grant funding Affordable rent conversions New homes bonus 5
6 Cabinet Approval to: 1. Approve the principal of establishing a Wholly Owned Company (WOC) 2. Approve outline business case objectives and work towards a Final Business Case 3. Authorise to work up further details i.e. structure, articles of association and operational arrangements 4. Authorise Officers to continue to develop the development programme. 6
7 Consultancy Support Main consultant PricewaterhouseCooper (PwC) Legal Advice Trowers & Hamlins Technical Support POD LLP 7
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9 Purpose The purpose of the creation of Sempra Homes was for the Council to create a special purpose vehicle that is a company limited by shares that will develop, rent and dispose of homes. 9
Objectives 1. To encourage economic activity 2. To maximise the Council s financial returns 3. Retention of affordable housing that is developed within the portfolio 4. Maintain control of design and density of schemes 5. Develop a more diverse housing offer for the Borough s residents continued 10
Objectives 6. Maintain levels of affordable housing stock in the Borough 7. Provide the Borough s citizens with training and learning opportunities through apprenticeships in particular with local education providers and specialist themes 8. Provide staff with more varied work and an enriched work portfolio 9. Champion low cost energy use and sustainable developments for those occupying the new homes 10. To grow the portfolio each year by prioritising schemes that: Address areas of decline or under utilised assets Take advantage of s106 new build or land opportunities 11
Sempra Homes Limited commercial structure Prudential Borrowing Loan repayment and interest Loan funding Issued share capital Council (GF) Loan repayment and interest and distributions Land WOC Loan and equity funding Construction contract M&M contract Sale receipts Private for sale housing D&B Contractor Housing contractor Sale receipts LCHO Properties Rental income and open market sale receipts Market Rent properties Affordable and Market Rent properties 12
Rationale A rationale for developing such a commercial structure is that the WOC can then borrow via the Council. A margin is applied between the Council s borrowing rate and that charged to the Sempra Homes. This would provide an income stream to the General Fund 13
14 Where we are now Company is registered as Sempra Homes Limited Trading begins next week with the first 5 homes for Market Rent Pipeline development in progress. Approx. 800 homes Company will provide circa. 100 homes in the first 2 years but has the capacity to grow from there 14
Latest position Planning permission granted for four new build two bed homes for Affordable Rent at 14 Quendon Road, Fryerns. Rettendon Gardens and Victoria Road garage sites recently gained planning permission for 7 affordable rent homes. A further 10 sites have been highlighted for progression, providing approx. 100 potential new homes. Other sites across the Borough are currently being investigated for development potential.
16 14 Quendon Road Site description & Opportunities Former disused day care centre, purchased in early 2015 from Essex County Council. Building is not fit for purpose which is why it was disused. Planning permission granted to demolish and replace with 4 x 2 bed 4 person houses for Affordable Rent. Design standard Designed to Code for Sustainable Homes Level 4 Secured by Design and energy efficient 2 x parking spaces for each property Brick built with white render and concrete tiles to match the current street scene. Anticipated Build Programme February 2016: Contractor Lead in Period April 2016: Start on site March 2017: Practical completion
17 Victoria Road Site description & Opportunities Council owned garage site currently used to under 30% capacity. We are looking to improve and repurpose this underutilised garage site. Planning permission now granted, these garages will be demolished and replaced with 4 x 2 bed 4 person houses for Affordable Rent. Anticipated Build Programme February 2016: Contractor Lead in Period April 2016: Start on site March 2017: Practical completion
18 Rettendon Gardens, Wickford Site description & Opportunities Redundant garage site in need of regeneration and additional security. Garages are in an isolated position and in poor condition. Planning permission granted, these garages will be demolished and replaced with 3 x 2 bed 4 person houses for Affordable Rent. Anticipated Build Programme (subject to Planning) February 2016: Contractor Lead in Period April 2016: Start on site March 2017: Practical completion
19 Sempra Homes Schemes The Triangle shops, Laindon Four 2 bed flats and one 1 bed flat for market rent Practical Completion: October 2015 Ballards Walk 23-5 new homes to be built for Sempra Homes by Redrow Completion: Summer 2017
20 Roman Way Site description & Opportunities Decommissioned Sheltered Housing Scheme in Billericay. The current buildings are coming to the end of their life expectancy and are no longer fit for purpose. Architects have been commissioned to explore the design opportunities for the site where it is anticipated we could build approximately 15 new homes. Anticipated Build Programme (subject to planning) Decant programme underway with a further 2 permanent tenants still to rehouse. Practical Completion: 2017