The Option of a local authority/developer-funder
Asset-Backed Vehicle for Regeneration

Does your local authority have a continuing need for estate regeneration?

Are you, and your residents and stakeholders, frustrated at the lack of public subsidy available to refurbish existing and procure new affordable homes?

Adams Integra has contact with developer/funders to assist in setting up local authority asset-backed vehicles or Joint Ventures (JVs).

We understand that a number of local authorities have entered into asset-backed vehicle partnerships with developer/funders following OJEU procurement where the partnership vehicle is a Limited Liability Partnership or LLP (jointly owned by the local authority and the developer-funder partner). In Liverpool, Salford, Solihull and Edinburgh the local authorities have entered into such arrangements.

A key advantage of the local authority-backed LLP is that the Vehicle can obtain institutional loan finance at very advantageous rates. For example, we understand that recent arrangements of this kind have attracted loan finance at some 2.5% below assumed current norm rates and cheaper than local authority prudential borrowing.

This means that the overall interest charge is much less than would otherwise be the case and, therefore, fewer new market sale dwellings are required to pay for new social homes, decent homes works, refurbishment and improvements to the public realm.

It could therefore enable the delivery of more new social rent homes (either as new Council homes or via a registered provider partner).

In Liverpool, Salford, Solihull and Edinburgh we understand that the LLP is able to give the local authority a modest capital receipt for each parcel of its land and contribute the remainder of the agreed valuation for each parcel into the Vehicle thereby enabling land assembly – tenant decants and leaseholder buyouts as well as land assembly from third party land/property owners, facilitating phasing and overcoming all too common start-up cashflow difficulties.

The LLP is able to employ other builders and developers underneath the Vehicle as it wishes.

The local authority share of the Vehicles ranges from 19% (typically 49%) to 99%, however, we understand the latter are treated as Council Owned Council Controlled Organisations or COCOs and may pose difficulties for local authority finance.

Nevertheless, regardless of the local authority’s equity stake in the Vehicle, the local authority may be able to take a majority of the enhanced capital value (e.g. in private house sales) and cross-subsidise other community benefits.

Adams Integra can explain the options and help work up viable schemes and act as critical friend and/or project manager as schemes progress.

We have a very skilled and experienced team – covering financial viability, planning, design feasibility, resident consultation, etc.

For more information and to arrange a no-obligation meeting please contact:

Andrew Seddon, Director, or Simon Jenkins, Director of Planning, Adams Integra, on 01243 771304 or email enquiries@adamsintegra.co.uk.

In case you were not already aware, the Localism Bill received Royal Assent on 14 November 2011 and will now pass into law as the Localism Act. In the coming weeks and months the measures in the Localism Act will begin to come into effect. Many of the measures are expected to be in place by April 2012.

For further information, including a summary of the key measures, please see the link below.

http://www.communities.gov.uk/news/newsroom/2030130

For the DCLG plain English guide to the Localism Act, please see this link:

http://www.communities.gov.uk/documents/localgovernment/pdf/1896534.pdf

In summary – the housing measures will:

• Abolish the requirement to have a Home Improvement Pack.
• Reform the Housing Revenue Account system for stock holding local authorities which may enable many to develop new Council housing.
• Provide for a new form of flexible tenure for social housing tenants.
• Allow local authorities to discharge their duties to homeless people by using private rented accommodation.
• Give local authorities the power to limit who can apply for social housing within their areas.
• Abolish the Tenant Services Authority and provide for a transfer of functions to the Homes and Communities Agency.
• Amend the way in which a social tenant can make a complaint about their landlord.
• Improve the ability of social tenants to move to different areas.

You can read the Act by clicking here:

http://www.legislation.gov.uk/ukpga/2011/20/contents/enacted/data.htm

Should you have any questions regarding the above please do not hesitate to contact Simon Jenkins or Andrew Seddon on 01243 771304 or simonjenkins@adamsintegra.co.uk or andrewseddon@adamsintegra.co.uk.

Does it Stack Up? Is it Viable?

It’s easy to say that a development proposal is not viable, but what does it really mean for Local Authorities who receive a planning application where the applicant outlines viability issues?

How do we measure viability?
What is the role of existing use value in considering viability?
What is the influence of banks and other lenders on viability?
Is the lack of viability down to market factors or is it more site-specific?

What would it take to make a development viable?

• A small rise in prices?
• A slightly lower profit?
• A different affordable housing mix, the new affordable rent in place of the traditional social rent?
• Social Housing Grant?

At what point can we say that a development is viable? At Adams Integra we are used to addressing all these questions particularly on site specific planning applications where:

• We can support Local Authorities determine if viability is the critical issue
• We can negotiate for LA’s with Developers, Registered Providers and other interested parties
• We can support LA’s in providing specialist appeal support
• We can negotiate CIL payments and other financial contributions

We have many years experience of viability studies for both local authorities and developers.
These might be site-specific or designed to test strategic policy.
We adopt a robust methodology to produce a case that will stand up to formal inquiry.
Our team consists of Chartered Town Planners and Chartered Surveyors, who have the professionalism and experience to develop a strong viability case.
We are currently working for 11 Local Authority Planning Departments providing scheme specific guidance and advice from pre application advice to Expert witness support at Inquiry.
In virtually all cases our Local Authority clients recharge applicants for this advice; we work for local authorities at no cost to their service

Our team work from their offices in SW London, Chichester, Christchurch and Langport near Taunton.

For an initial, informal discussion of your viability needs contact:
Simon Jenkins MRTPI 07795 485018 sjenkins@adamsintegra.co.uk
James Sinclair MRICS 07535 629165  jsinclair@adamsintegra.co.uk

Shedding light on affordable new homes without a grant

Organisations are struggling to procure sufficient affordable housing with the market still subdued and the CSR meaning social housing grant is likely to be in short supply. Organisations are concerned about the 51% cut in the affordable housing budget, worried about new affordable rents at 80% of market rents and confused by the caps to Housing Benefit/Local Housing Allowance.

Adams Integra can help.

Adams Integra provides development, planning services and training for Local Authorities, Housing Associations and Developers. We employ one of the most experienced helpful and friendly affordable housing teams. Now more than ever efficiencies and value for money are paramount, we can work with you to deliver new affordable housing. An initial consultation and advice costs you nothing.

For more information please contact Adams Integra tel 01243 771304 or email enquiries@adamsintegra.co.uk. One of our consultancy team will then contact you to arrange a no cost introductory meeting to discuss opportunities and approaches.

Use your Land

Make your land holdings work for you.
Do you have underused garage blocks or communal areas on existing estates?
Could you rationalise your building use to co-locate thus freeing up sites?
Has there been a recent review of all of your land holdings to identify those that might be surplus?

• Inputting free land delivers sub-market renting (75% to 80% of market rents) and shared equity in most cases without recourse to other capital subsidy (e.g. SHG).*
• Cross subsidy from housing for sale may be able to deliver new social rented homes at target rents to provide for people in low paid employment on market value land.
• Land/new units can be sold on a leasehold basis by you to maintain more control over the development.
• New homes can be delivered in a joint venture with a private developer/landowner and/or in conjunction with other social landlords.

What Adams Integra can do:

Adams Integra expertise in non-grant affordable housing.

• We have modelled nil-grant developments using scheme data for East London, western Surrey and Devon which shows that new sub-market renting and shared equity (assuming no abnormals and code 3) works.
• The new Government’s 80% of market rents appears to be financially viable and projects are unaffected by the LHA ‘HB’ caps.

But how do you provide new housing for those on low incomes?

• Cross subsidy from market housing – we’ve also modelled these scenarios assuming a JV where risks and rewards are shared.

We are currently working with the London Borough of Tower Hamlets to assess development partners, and delivery vehicles for large scale regeneration and infill schemes.

We are assisting Mole Valley District Council in Surrey with affordable housing viability reports, scheme specific appraisals, and affordable housing and infrastructure negotiations with our viability toolkit. We have assessed lease and other non-grant models with Devon Strategic Housing Group and we are discussing LHC options with Waverley Borough Council in Surrey.

Should you then wish to go ahead we can assist with:

Developing new affordable homes:

1. Project management, development procedures, 2012 commitments, OJEU procurement, bid submissions and financial monitoring; site finding, partnerships, risk appraisal and management and developing sustainable homes. Advise on partnerships/delivery vehicles mutuals. Negotiate with developers. We can provide a ‘1 stop shop’ team including project management, architect, QS and sustainability assessment.
2. Advise on funding models including Asset Backed Vehicles, Tax Increment Financing, lease finance etc.
3. Planning -Pre-application discussions, planning applications, S.106 support, planning advice and appeals. Master planning coordination. SPD revisions. Viability studies

Adams Integra 2011 – life after the CSR

We understand that the New HCA bid prospectus for 2011/15 is now later this month (February 2011)

Housing associations and others with HCA Investment partner status bidders will need both to commit to new 80% ‘affordable rents’ (80% inclusive of any service charges) and to reletting an agreed portion of voids at such and to disposals and so HCA will look at capacity to do development and relets at 80%.

• Capacity will include financial strength plus overall performance
• ‘Affordable rents’ will be either 80% of local market rent or the Local Housing Allowance (private HB) whichever is the lower
• It will be a 4 year funding programme (something like ‘tariff/cash programme’ for those with long memories)
• RPs who don’t bid will not be allowed to do relets at 80% rents
• Grant will be paid in 1 tranche on Practical Completion of the works
• Of the £4.5 billion public funding for 2011/15 about half is for committed schemes so only c £2bn for new schemes (including empty homes, mortgage rescue and travellers’ sites)
• S106 agreements– it is expected that Government will require new S106’s to include 80% market rents but it is uncertain how existing S106 agreements and LA/RP nominations agreements requiring social target rents will continue
• There may be some allowable exceptions to the 80% affordable rents agreed e.g. existing tenants being decanted for demolitionCode for Sustainable Homes and the existing HCA quality standards – will continue at Code 3 &c till April 2012 when Localism Bill is enacted which may well give LAs the ability to set their own standards
• The Government proposals also include Community Planning allowing a local ‘parish’ enabling authority and local housing trusts for both rural and urban neighbourhoods ;these will now only need a 50%+1 vote in favour
• The already announced new homes bonus will apply to all new homes with a higher tariff for new affordable dwellings
• It is also envisaged that from April 2012 HRA (LA housing revenue account) self-financing reform will come in giving stock holding LAs head room for new housing and the ability to have time-limited tenancies and 80% market rents
• RPs and LAs can ignore the 80% rent regime but be no HCA grant will be available for them if they do

The Government and the Homes and Communities Agency/TSA have now announced the new social housing product called Affordable Rent for consultation. They propose to modify the current standards relating to rent and terms of tenancy to enable private registered providers (PRPs) to develop and offer Affordable Rent homes. In this consultation they are seeking views on whether their proposed approach is sufficient to support participation in Affordable Rent
PRPs must adhere to the RICS ‘rent valuation method’

For more information or to obtain advice from Adams Integra please contact 01243 771304

Or email andrewseddon@adamsintegra.co.uk or enquiries@adamsintegra.co.uk.

After a career in Finance and Accounting, Mark supported the founding of Adams Integra with his father, Jeremy Adams, in 1998, with Mark as Finance Director. Mark has successfully run his own Accounting business in conjunction with being a director of Adams Integra.

In 2005, Mark organised a staff buy out of a successful firm of Architects where he is a shareholder and Financial Director. 

Mark is responsible for all aspects of Financial and Administration within Adams Integra.

Email: markadams@adamsintegra.co.uk

Andrew has a wide breadth of experience with over twenty years in social housing, predominantly in regeneration (including master planning), supported housing/care in the community and LSVTs, heading development including assisting client RPs to take forward their development programmes and in delivering Egan Compliance through partnering and the Construction Clients Charter.

Andrew’s record in delivering projects, often in challenging circumstances, is second to none. His focus is always on customer care whilst protecting the ‘bottom line’. As a previous Director of Development for two Registered Providers he has a proven track record in strategic planning, managing teams and negotiations. In both roles he was also responsible for property services and introduced asset management strategies for his RPs.

Andrew has led several OJEU partnering frameworks for RPs in the last few years.

Andrew has past experience as a Member of a London Housing Co-operative, a Board Member of a Registered Provider, and has a Masters Degree.

Email: andrewseddon@adamsintegra.co.uk

Simon has over 26 years experience in town planning and in housing with local government, housing associations and in the private sector.  He was elected as a member of the Royal Town Planning Institute in 1987 and the Chartered Institute of Housing in 1998.

Simon has worked in local government for authorities in Dorset and Hampshire in both planning and housing. His last 13 years were spent in working for a strategic housing authority, housing associations, for a house builder and in consultancy.

Specifically, Simon has worked in planning policy and housing strategy and enabling for local authorities. He has developed strategies to deliver mixed use schemes and the procurement of land for residential development from site identification, scheme inception through to construction on site. He is experienced in considering due diligence issues from a land and planning perspective. Simon has developed an expertise in assessing the viability of development schemes in the light of current legislation particularly the impact of affordable housing proposals on site viability.  Simon also has experience of sustainable residential development and the Code for Sustainable Homes. Simon has been a consultant for over 5 years working with Adams Integra, housing consultants.

Simon is currently progressing planning applications for a number of large housing developments on behalf of leading house builders and the HCA and is assisting some Registered Social Landlords in meeting their development objectives. In addition Simon undertakes a specialist role in negotiating S106 agreements for developers, registered providers and local authorities specifically looking at viability issues and the impact of affordable housing on these decisions.  He is well experienced in community engagement, having organised and attended a number of events.  He acts as an expert witness at appeal hearings and public inquiries, however where appropriate he is experienced in detailed negotiation to achieve beneficial planning consents. Simon is experienced in assessing the effectiveness of local authority and RP enabling and development teams and providing examples of good practice where appropriate.

Email: simonjenkins@adamsintegra.co.uk 

David has over fifteen years experience in housing, having worked in both the private and social housing sectors. He is an experienced project manager and has specialized in social housing development for the past ten years; his track record is of securing new schemes and delivering projects on time, on budget and to a high standard.

David’s key skills are in land acquisition, schemes appraisals, project management and establishing and maintaining good working relationships with key partners. He has also been involved in the strategic review of a large LSVT (Large Scale Voluntary Transfer) Housing Association.

David has extensive experience of Section 106 sites and works closely with Local Authorities, Registered Social Landlords and Developers to deliver high quality social housing solutions.

David has an Honours Degree in Building Technology and Management, is a Member of the Chartered Institute of Builders and the Chartered Institute of Housing and is a Board Member of a Registered Social Landlord.

Email: davidcoate@adamsintegra.co.uk