The London Borough of Newham has an ambitious plan to support 40,000 new homes between 2011 and 2027. It has received grant funding from the GLA and is seeking to use its land and resources in innovative ways to subsidise development. However, the borough has identified a significant shortage of development activity in the private and housing association sector, meaning the acute demand for new homes is unlikely to be met without more council involvement.
The borough has established its own company to develop, deliver and acquire new homes for private rent. Red Door Ventures has recently completed a pilot development at the Leather Gardens estate of 36 new two-bedroom homes.
Red Door Ventures will operate as a business, commercially developing and delivering homes which will be let on market rent terms. It plans to build 3,000 new properties over the next decade and to acquire 518 properties, with a mixture of market rent and affordable homes. Acting commercially as a developer means it can support mixed communities and scheme viability through private sales where appropriate.
While the new homes built by Red Door Ventures will go some way towards tackling housing shortages in Newham, the continued shortage of wider development activity in the borough means there is likely to continue to be a shortfall in supply unless activity can be increased across the market.
Westminster City Council has used innovative methods to support the delivery of additional affordable homes with little grant funding, while simultaneously attracting further investment. The borough acts as both developer and development partner, with its part-owned subsidiary Westminster Community Homes (WCH) undertaking new-build schemes, infill development and residential conversions.
WCH began trading in 2009 and now has a portfolio of more than 400 affordable homes (a mixture of new-build and existing stock purchases). The council’s ALMO, CityWest Homes, provides development management services to the council and WCH to support the delivery of new housing. This income also cross-subsidises its core housing management service.
The borough established an Affordable Housing Fund in 2009 – drawing on housing receipts and planning obligation contributions where it is not practical to deliver new housing onsite – which has created 1,400 new affordable homes and committed a total of £87.6 million. The borough is also using the Affordable Housing Fund for estate regeneration.
Westminster is also renewing existing estates, such as at Ebury Bridge and Church Street, where it has developed 1,000 new homes (of which 500 will be affordable). Additionally, the borough is developing affordable housing which will be held in its investment portfolio.
The exceptionally high cost of land and property in Westminster sometimes threatens the viability of new affordable housing and scheme delivery. With a very high proportion of leaseholders on some estates, the cost of buying back their properties can be a barrier to redevelopment. Westminster has established a development team with commercial expertise to deliver the programmes, but the borrowing cap remains a barrier to increasing the pace of delivery.
Wandsworth Council has delivered nearly 250 new homes through its ‘hidden homes’ initiative, which identifies disused or problematic spaces on the borough’s estates and redevelops them as new housing for rent or shared ownership. As well as increasing housing supply, the initiative supports the delivery of new community facilities and reduced anti-social behaviour through the elimination of disused space.
The borough’s new housing delivery strategy focuses on the need for an increase of all tenures. Wandsworth’s vision is for a ‘high volume’ effect, delivering thousands of homes a year for low- or middle- income households and providing more options for rented housing.
Wandsworth aims to support the delivery of at least 18,000 new homes in the borough over the next decade and to provide 5,000 homes prioritised to meet resident demand. A key part of the strategy is the ‘Wandsworth Rent Model’, which will deliver low-cost rental housing and develop structured forms of private rental housing. The borough is also considering establishing up a Wandsworth Housing Company which will deliver private and intermediate rented homes.
The council is committed to improve its existing estates, including new housing. It was one of the first boroughs to be given the GLA’s housing zone status, for the development of a 57-acre site between Clapham Junction and Battersea Riverside. This is set to attract £1.4 billion of investment to deliver 5,000 new homes – including over 1,500 new affordable homes.
Wandsworth has identified the need to reduce unnecessary financial regulation to allow boroughs to use available resources to increase supply (for example: restrictions on combining right-to-buy receipts with HRA capital receipts, which could be relaxed as part of housing zone agreements). The council also wishes to see a greater recognition and flexibility in the way that HRA resources could be used for community benefit. Finally, the council supports government plans to bring public land holdings forward for development and supports potential requirements for public bodies to cooperate at a local level in development and regeneration.
In recent years the London Borough of Lambeth has pioneered a new community-driven approach to public service delivery, styling itself as “the co-operative council”. As one of the largest stock-owning authorities in the capital it has sought to extend this principle to its housing services. It is also supporting new housing delivery on its own land, which comprises around 14% of all land in the borough. This resulted in a commitment to build 1,000 new homes at council rent levels over the next four years, through development on small sites and estate regeneration.
Somerleyton Road, Brixton, is the council’s plan to for new housing and associated development which incorporates 300 new homes, as many as possible renter at council rent levels. There will also be a new theatre and provision for training and job opportunities.
To support a community solution for Somerleyton Road, the Brixton Green community benefit society was set up and has worked closely with the council to develop proposals for the redevelopment of the site.
On completion, the development will be owned and managed by a community body in which the residents, community and business occupiers and the wider community have their say. If the scheme at Somerleyton Road is a success, Lambeth intends to repeat the model on other sites in the borough.
The growing scale of the housing crisis means that the borough needs to go beyond its pledge to deliver 1,000 new council homes and ensure there are homes to meet the broad spectrum of housing needs in the borough. This includes more intermediate homes, more temporary accommodation and homes for young families and young professionals in the private rented sector.
Additionally, there is a shortage of available and developable land in the area to meet the borough’s housing need. This means that the council’s ambitions are currently focused towards the regeneration of existing council-owned sites, particularly housing estates.
The London Borough of Hackney has undergone significant demographic and economic change in recent years, but continues to be one of the biggest social housing landlords in London with stock estimated at 22,500 homes.
Until recent years, Hackney’s redevelopment and regeneration focus had been on site-specific solutions usually involving joint ventures or land disposal. However, individual schemes often proved unviable because of upfront repurchase costs for homes bought under the right to buy scheme.
Since the Local Authority New Build programme and the introduction of self-financing, the borough become a national frontrunner in direct new housing delivery through estate regeneration, to the point where it has a concrete programme to deliver 2,000 new council homes by 2018.
A particularly notable element of the council’s estate regeneration programme has been its ‘portfolio approach’, giving it an opportunity to combine the finances of schemes with potential to generate a surplus with those that require net investment. To provide confidence that the programme is financially deliverable, a consolidated viability assessment has been carried out. Each of the projects that make up the programme has individual financial assessments.
Hackney is also distinctive in that it has placed an emphasis from an early stage on securing the in-house expertise to ensure that projects are successfully delivered. This has included the appointment of senior leaders, project managers and legal professionals.
The borough intends to maximise housing revenue account (HRA) borrowing to the cap level through its development programme, but has said that it would do more with extra capacity. The necessity to remain below the cap level in all years means that even schemes with a moderate risk of breaching the cap in their peak debt years are restricted within the HRA.
As Hackney’s development programme is centred around estate regeneration, resident engagement is of particular importance. Schemes such as Woodberry Down have provided an exemplar of tenant participation. In some cases, the cost and bureaucracy associated with buying back leasehold properties have added risk to estate regeneration and can reduce viability.
As with most London boroughs, Sutton has seen a significant increase in private renting in recent years. Its proportion of socially rented housing is lower than the London average and households on lower incomes have found the private rented sector to be increasingly unaffordable.
Sutton has decided to adopt a ‘twin-track’ approach to new housing. It uses borrowing headroom and right to buy receipts to support new homes in the housing revenue account, through three major sites and a range of garage sites.
It also intends to develop using general fund resources through the creation of a housing company named Opportunity Sutton. The company is financed through prudential borrowing to deliver new housing in a range of tenures, with a particular focus on market rented accommodation.
The company is also intended to help unlock development through its connection with Sutton’s bid for Housing Zone status. Through this, the company may seek to purchase homes off plan to de-risk and accelerate the delivery of housing.
Unlike some London boroughs, Sutton has limited land under its direct control, so is looking to acquire private sector sites for development. This adds risk to its development objectives given the bureaucracy involved in land acquisition.