Legacy s exciting approach will create new homes and give young people many opportunities through education and sport. It is showing the way by building vibrant communities, backed by private sector investment, and using new and innovative approaches to building new homes to buy and rent. BRANDON LEWIS MP MINISTER OF STATE FOR HOUSING AND PLANNING
Our challenge Legacy recognises that during times of austerity Local Authorities are looking for innovative ways of delivering social and affordable housing for their tenants as well as building schools, hospitals and surgeries to support the local community. We aim to deliver schemes for Local Authorities that not only reduce the pressure on affordable housing and local community services, but will empower their tenants through onsite community and sporting facilities. We will be working with funding partners to devise a scheme that is both affordable and accessible for all. The model can deliver schemes without the Local Authority needing to finance the cost of the build programme whilst giving full occupancy and control when completed. We work closely with Local Authorities to understand precisely what is required in their area and look to deliver a scheme that will empower communities for generations. DELIVERING THE FUTURE LEGACY P1
The solution: empowering communities LEGACY FOUNDATION As part of our continued support within the local community, Legacy, through its Foundation always looks to reach out to local apprentices in the area who will be employed as part of the construction team to deliver the scheme. This initiative has two major benefits; it produces a strong work ethos for the local community and also teaches the apprentices invaluable skills alongside trained tradesmen and women. We are very proud to be part of Legacy, a team that will deliver brand new affordable accommodation to areas that are very close to our hearts. We have spent years thinking of ways we can really make a difference to our communities and we now have the team and finance in place to execute this dream. Legacy not only delivers brand new high quality family homes, but also supports the local community through sports facilities and events on site, as well as delivering schools and other amenity space where required. P2 Our aim is to deliver schemes that leave a legacy for future generations and we are very excited to work with local councils who share our vision for regeneration and change. RIO FERDINAND MARK NOBLE BOBBY ZAMORA THE LEGACY TEAM LEGACY DELIVERING THE FUTURE
We are ready to give something back MARK NOBLE RIO FERDINAND BOBBY ZAMORA DELIVERING THE FUTURE LEGACY P3
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Our goal is to deliver schemes that leave a legacy for future generations... DELIVERING THE FUTURE LEGACY P5
Roles LEGACY FUNDING PARTNERS PRIVATE SECTOR INVESTORS DEVELOPMENT > Planning > Design > Delivery COMMUNITY > Champion and fund an on-site sports facility > Providing funding during construction > Maintaining the high quality specification on behalf of the tenant KSS P6 LEGACY DELIVERING THE FUTURE
The funding structure Local Authority retains freehold Local Authority grant Long Leasehold to funding partners (typically 125 years) at a peppercorn Sub lease is signed by Local Authority (typically 45 years) Rent reviewed annually allowing for modest increases where appropriate Funding partners finance the scheme from planning permission date through to practical completion, with no financial commitment from the Local Authority at any stage of the development process Upon expiry of sub lease the Local Authority benefits from the option to purchase the Long Leasehold for 1, thus collapsing the 125 year Long Leasehold structure early Local Authority now benefits from an unencumbered freehold title including the entire built scheme Local Authority can now retain the Freehold and retain the income stream or sell the asset at market value or trigger a right to buy scheme for the Tenants at a discount to market value or sign a new sub lease and sell at investment value DELIVERING THE FUTURE LEGACY P7
The concept Sample dwelling and tenure mix Sample tenure split across the site UNITS BY TENURE BEDROOMS PEOPLE NUMBER OF UNITS % OF SCHEME SOCIAL 1 2 65 4% KEY WORKER/ AFFORDABLE 2 4 70 4% 3 6 405 23% 540 30% 1 2 43 2% 2 4 47 3% 3 6 270 15% 360 20% PRS 1 2 405 23% COMMUNITY/SCHOOL/LECACY FOUNDATION 2 4 405 23% 3 6 90 5% 900 50% 1,800 NUMBER OF TENANTS HOUSED BEDROOMS PEOPLE NUMBER OF UNITS NUMBER OF TENANTS 1 2 513 1,026 2 4 522 2,088 3 6 765 4,590 1,800 7,704 KSS P8 LEGACY DELIVERING THE FUTURE
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Q&As WHAT ARE THE BENEFITS OF THIS FORM OF FUNDING? w Reducing Risk: Contractors will be paid by Legacy/Funding Partners on a staged basis until the scheme completes. w Cost of Construction: Once planning has been achieved all costs will be paid by the fund including professional fees, remediation and all build costs. w Speed of implementation: Funds can be available within 4 6 weeks. As the funding is ungeared all decisions are made in-house and therefore flexible solutions can be delivered quickly. w Competitive: The Net Present Value of payments by the public sector can be similar to Public Works Loan Board and may better match revenue generation and development cash flow requirements. w Expertise: In addition to being cost effective the Local Authority will be able to capitalise on the funding partner s asset management and development expertise. WHAT HAPPENS IF THE NET RENTAL INCOME FROM THE SCHEME IS MORE THAN THE RENT PAID TO THE FUNDING PARTNER DURING THE SUB LEASE PERIOD? This is known as profit rent and will be retained by the Local Authority. Under most circumstances, the financial model that has been developed will provide a profit for the Local Authority. WHY ENTER INTO A LEASE WITH LEGACY/FUNDING PARTNERS? The sub lease the Local Authority will enter into is protected by low capped rent reviews. The local residential market, where rental levels are growing by, say, 5% 7% per annum, does not impact upon the rent reviews each year, but this does not stop the Local Authority increasing their rent at market levels to incease profitability. We note that a lot of affordable rents are based upon a discount to market rental levels which can make rents unaffordable in areas with high rental growth. WHAT DIFFERENT TYPES OF PROPERTY CAN THE MODEL BE USED FOR? The fund will build out residential/social accommodation, schools, hospitals, doctors surgeries, offices etc. Again, this will be down to the needs of the Local Authority at the point of delivery. MANAGING INFLATION/MARKET RISK In areas where market rental growth is unsustainable in relation to affordability, Legacy will look to offer very low base rents and low fixed increases at rent review to the Local Authority. WHAT HAPPENS IF WE WANT TO SELL THE ACCOMMODATION BEFORE THE SUB LEASE HAS EXPIRED? We can look at substitution rights within the sub lease whereby the accommodation to be sold can be swapped for alternative accommodation elsewhere in the borough. WILL THE FUNDING PARTNER MANAGE THE PROPERTIES ON BEHALF OF THE LOCAL AUTHORITY? No, this will be part of the Local Authorities responsibilities and can be sub-contracted to a third party management company. HOW WILL THE LOCAL AUTHORITY TRANSFER THE LAND OWNERSHIP ON A LEASEHOLD SALE BASIS? The Local Authority will instruct a third party surveying practice to determine the market valuation of the leasehold sale. HOW ARE LEGACY INTENDING TO DEAL WITH OJEU/PROCUREMENT? Legacy has instructed a specialist procurement QC, to analyse both the land acquisition and lease transaction regarding the OJEU/procurement process. An Opinion Letter is available on request to satify the Local Authority. P10 LEGACY DELIVERING THE FUTURE
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The team THE LEGACY TEAM Rio Ferdinand rio.ferdinand@legacyfoundation.co.uk Mark Noble mark.noble@legacyfoundation.co.uk Bobby Zamora bobby.zamora@legacyfoundation.co.uk COLLIERS INTERNATIONAL AGENCY AND PROCUREMENT TEAM Richard Walsh Director Colliers International Direct +44 207 487 1709 Mobile +44 7962 366381 richard.walsh@colliers.com P12 LEGACY DELIVERING THE FUTURE
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