Midlands Quarterly Partner Meeting Homes and Communities Agency Newark, Nottinghamshire 26 April...

Midlands Quarterly Partner Meeting

Homes and Communities Agency Newark, Nottinghamshire

26 April 2012

Agenda

Looking back… Midlands Performance – a successful year’s delivery Looking forward… The Housing Strategy – an update Delivering growth through land In the Spotlight:

– Newark CIL – Boston, Lincolnshire

Notices and reminders

Looking back

What a year!!

April - Feb March!

http://www.google.co.uk/imgres?q=Looking+over+cliff+edge&hl=en&safe=active&gbv=2&biw=1280&bih=856&tbm=isch&tbnid=8yJ0pbyF8P3K_M:&imgrefurl=http://www.f1online.pro/en/image-details/5055841.html&docid=DirN3xbx6RA9FM&itg=1&imgurl=http://www.f1online.de/premid/005055000/5055841.jpg&w=267&h=416&ei=GROQT_6_KerV0QXQuaT_AQ&zoom=1&iact=hc&vpx=902&vpy=457&dur=1764&hovh=280&hovw=180&tx=94&ty=146&sig=101814097288375495456&page=1&tbnh=164&tbnw=105&start=0&ndsp=22&ved=1t:429,r:20,s:0,i:108

Having said that…

Futures Housing Group welcome tenants to the first homes at Heanor and Ripley, Derbyshire

Over the last 3 months

“Before and after” - Derby City Council and HCA transform derelict eyesores into much-needed larger family homes

Waterloo welcomes residents to Rookery Close in Lincoln – a supported living scheme of 16 homes

A first glimpse of the future “Hub” at Manor Kingsway in Derby, now a deal has been reached and developer appointed

Performance 2011-12

Kerry Hebron, Head of Strategy, Programmes and Performance

Performance – key highlights

£322m was invested in the Midlands last year Nearly 4,200 housing starts were recorded, including

over 2,000 starts for the AHP Over 8,800 new homes were completed*, including 508

rural homes Over £170m private sector investment was leveraged

through HCA investment/ enabling

* Includes Mortgage Rescue and FirstBuy

Expenditure & Receipts

Programme 2011/12 Outturn Expenditure (£m)

2011/12 Outturn Receipts (£m)

NAHP 105.45

Property & Regeneration 51.60 42.1

Decent Homes Backlog 51.57

AHP 37.44

Economic Assets 24.64 18.54

Mortgage Rescue 19.72

FirstBuy (shared equity) 11.81

Kickstart 10.38

Other 8.96

TOTAL 321.57 60.64

Housing starts

Programme Unit Type No.

NAHP

Rent 172

223LCHO 51

AHPRent 1,752

2,072LCHO 320

Property & Regeneration

Affordable 286

1,874Open Market 1,588

Empty Homes 12

TOTAL 4,181

Housing completionsProgramme Unit Type No.

NAHPRent 3,461

4,480LCHO 1,019

(of which) Rural 508 -

AHPRent 436

568LCHO 132

Property & Regeneration

Affordable 721,019

Open Market 947

Empty Homes 5

Mortgage Rescue 298

FirstBuy 663

LA New Build 214

Kickstart 1,568

TOTAL 8,815

Other outputs

Measure No.

Employment floorspace generated (sq m) 70,659

Brownfield Land reclaimed (Ha) 27

Private Sector Investment (£m) 171.98

Jobs Potential 1,649

Land Brought Back into Beneficial Use 104

HCA programmes update

Economic Assets

– Stewardship Packages have been grouped by LEP geography, and disposal strategies currently being agreed

– Plan to dispose of all sites across 10 year strategy with:

• Non–strategic sites or those with previously agreed strategy being disposed earlier; and

• Using those receipts to de-risk remaining sites for disposal as soon as possible

Affordable Homes Programme Still a couple of LA’s not in contract yet Developer Deed of Adherence is required to confirm units developed by an

un-registered body Agreements in draft for Empty Homes (12-15 programme), and finalised for

Homelessness Change and Travellers Pitch Funding Travellers Pitch Funding – CME open so please speak to your local contact

with details of any new schemes Right to Buy – Secretary of State agreement with LAs for comment and likely

to be sessions on how agreements will work Strong delivery required from partners on FirstBuy to ensure that we meet

21012-13 targets – delivery is key to retaining allocation

- According to HBF - market conditions appear very strong with enquiry rates doubling and over 1,000 new firm reservations achieved Nationally in February alone

IMS will re-open on 20 April 2012

- Automatic calculation of a blended grant rate if changes agreed to no of units of funding

Looking forward

Challenges Opportunities Priorities Government thinking

Progression of the Housing Strategy

Mark Banister, Area Manager,

HCA Midlands (North)

‘INCREASING SUPPLY’ Mortgage indemnity Growing Places Fund Get Britain Building

(Stalled sites) Public Land Land auctions Locally planned large-scale

development Custom Build (Self-build) Community-led NPPF

Reinvigorated Right to Buy Stock transfer

Private Rented Sector Empty Homes

‘SOCIAL AND AFFORDABLE HOUSING REFORM’

OTHER

Housing Strategy – Overview of Key measures

Launched 21 Nov 11

Housing Strategy Progress (1)

NewBuy (Mortgage Indemnity) – went live 12 March– New build only homes <£500k; available to any buyers (as main place

of residence)

– Being led by HBF & CML

Get Britain Building (GBB) – national funding pot increased to £570m– Midlands has shortlisted programme of £122m (3,652 units), now

subject to due diligence. Spans all sub-areas

Growing Places Fund – extra £270m allocated in the Budget

Housing Strategy Progress (2) ‘Reinvigorating’ Right to Buy – from 2 April, the cap on discounts

raised from £25,000 to £75,000– Pledge of a 1-for-1 replacement with affordable rent home

New National Planning Policy Framework (NPPF) – came into effect 27 March– Presumption in favour of sustainable development

– Primacy of Local Plans / Neighbourhood plans

– Recognition of ‘intrinsic value’ of countryside

– Stipulation of identifying 5 yr housing supply + 20% for LAs with ‘track record of under-delivery’

Community led housing – HCA currently taking bids

Empty Homes 2012/15 – Midlands programme = £15.5m / 1,289 units

Unlocking growth through land

HCA Development and Disposal Strategy

Published 3 April 2012 Sets out objectives for how HCA will deal with its land holdings Some issues:

– Market context– Planning– LA & LEP involvement in use of HCA land– De-risking– Use of receipts– Value for money

Disposal Pipeline of sites to be brought to market over next three years– Both residential and commercial opportunities, including EAP

assets

Midlands Disposal Pipeline

http://www.homesandcommunities.co.uk/ourwork/land-and-development-opportunities

http://www.homesandcommunities.co.uk/ourwork/land-and-development-opportunities

HCA land ownership at March

Operating Area Area (ha) %

East and South East 2,080 28%

London 230 3%

Midlands 2,600 35%

North East, Yorkshire and The Humber

630 9%

North West 1,430 19%

South and South West 460 6%

Total 7,430 100%

Delivery Partner Panel

Current DPP runs from 2012 to 2013– HCA: 12,000 homes being procured on 38 sites– HCA partners: 100 partners signed up; 12,000 homes

being procured on 73 sites

Reprocurement of panel has commenced (DPP2)– Will run for four years (2013-2017)– OJEU notice published end March 2012– PQQ submissions to be returned 8 May 2012

Contribution to the Housing Strategy

Disposal Pipeline Accelerating release of public sector land Transfer of Milton Keynes assets Private rented sector Custom Build Land auctions

In the spotlight:

Newark’s Community Infrastructure Levy (CIL)

Peter Wilkinson, Newark and Sherwood District Council

CIL

Community Infrastructure Levy

Peter WilkinsonPlanning Services Manager

Newark & Sherwood District Council

Summary

• CIL - An Introduction;• CIL - Adoption Stages;• Lessons Learnt;• Pros of CIL;• Issues with CIL

An Introduction to CIL (1)

• CIL is a charge that will fund the infrastructure required to support growth;

• CIL will be levied in £ per Sqm of the net additional increase in floorspace. The area of existing buildings is deducted from the final CIL charge.

• CIL charges are based on the size, type and location of development;

• CIL will apply to all new dwellings and to any other development over 100sqm;

• CIL rates will be set out in a Charging Schedule;

An Introduction to CIL (2)

• CIL must be based on evidence of need for Infrastructure and an assessment of the impact of CIL on the economic viability of development.

• The Charging Schedule may be based on a fixed rate or have differential rates for different categories of development and different locations;

• CIL may replace or act in parallel with planning obligation contributions. However the use of planning obligations will be severely restricted when CIL is adopted or in any event after April 2014

• CIL rates will be worked out using the following formula:

CIL Rate x Chargeable Floor Area x BCIS Tender Price Index (at Date of Planning Permission)BCIS Tender Price Index (at Date of Charging Schedule)

CIL Charging ScheduleDifferential Rate CIL System can employ variable rates for different categories of development, for different locations or a mixture of both.

Charging Zones may be quite simple (e.g. urban and rural) but in many cases the economic circumstances of Authorities will vary significantly across their area and justify a more sophisticated approach.

It is likely the commercial and residential value zones will be quite different and will require preparation of separate Charging Zone maps.

Charging Zones may be based on any type of boundary e.g. Parishes, Wards, Post Codes but the boundary must be robust and defensible based on the valuation evidence.

CIL – The Purpose

CIL is intended to contribute to the Infrastructure intended to support new development as part of the Authority’s development strategy. Relevant infrastructure might include :-

•Highways and Transport Improvements;•Educational Facilities;•Health Centres;•Community Facilities & Libraries; •Sports Facilities;•Flood Defences; and•Green Infrastructure

CIL cannot currently be used to fund affordable housing though this is being reviewed for the Amendment Regulations 2012.

CIL Production Stages

1 Assessing the Strategic Infrastructure to be funded by CIL

2 Producing an Evidence Base of Land and Property Value and Construction Cost

3 Undertaking Viability Assessment

4 Determining whether to adopt a Fixed or Variable rate

5 Produce and consult on a Preliminary Draft Charging Schedule

6 Produce and consult on a Draft Charging Schedule

7 Consider whether to publish modifications, and if so invite representations

8 Submit Draft Charging Schedule for Examination

9 Holding a CIL Hearing and obtaining the Inspector’s Report

10 Formal Adoption by Full Council Resolution

The Appropriate Balance (1)

This is a key thing to be aware of: CIL Regulation 14 requires that a Charging Authority, in setting CIL rates:-

Must aim to strike what appears to the Charging Authority to be an appropriate balance between ‘the desirability of funding infrastructure from CIL’ ... ‘and the potential effects (taken as a whole) of the imposition of CIL on the economic viability of development across its area’

The Charging Schedule Procedures advise :-

• Rates do not need to exactly mirror the evidence• Avoid setting a charge right up to the margin of economic viability • There is some room for pragmatism.

The Appropriate Balance (2)

• Ensure rates are set in accordance with the CIL Charge Setting and Charging Schedule Procedures. In the event that a Differential Rate system is adopted note guidance at sections 34-40 on consistency of approach

• Where the evidence indicates negative or very marginal viability, zero CIL rates may be considered

• CIL is not a policy tool. Statutory Guidance advises that rates should only be set in accordance with economic viability evidence

• Selectively favouring certain categories of development by zero rating them to encourage growth may breach State Aid rules. CIL challenges may emerge beyond Examination

Lessons Learnt (1)

• Get familiar with the Regulations, there is a lot to get through including all the supporting documents and need to give time to read and understand it all;

• Importance of Project Planning - There is a lot involved in producing CIL Charging Schedule therefore important to know what resources will have available (both financial and personal) and based on this, how long will take to deliver;

• Need to be able to demonstrate that have an infrastructure deficit to justify CIL Charging Schedule;

Lessons Learnt (2)

• Need evidence base to support the charges proposed;

• Avoid setting a charge right up to the margin of economic viability;

• If having different charging zones, try to keep it simple (but based on evidence);

• Be well prepared for the examination; and

• Be prepared for implementation

CIL – The Positives

• Fairer, faster and more certain and transparent than the system of planning obligations which causes delay as a result of lengthy negotiations;

• Levy rates will be set in consultation with local communities and developers and will provide developers with much more certainty ‘up front’ about how much money they will be expected to contribute;

• The levy creates a fairer system, with all but the smallest building projects making a contribution towards additional infrastructure that is needed as a result of their development;

• Provides far greater certainty. It provides the basis for a charge in a manner that the planning obligations system alone could not easily achieve; enabling, for example, the mitigation of cumulative impacts from development.

CIL - The Issues (1)

CIL Inflexibility

• Once adopted CIL must be charged even if there is a compelling planning or political reason not to.

• CIL viability assessment cannot take account of abnormal construction costs (e.g. contamination) so there may be occasions when the application of CIL or Section 106 contribution would make development genuinely unviable but the CIL charge or equivalent contribution under the relief regulations is unavoidable.

CIL Charging Zones

• Charging Zones should take account of development strategy and new sites that are likely to emerge. Relying on ‘political’ boundaries may not be the best approach.


CIL Regulation 128

• Development permitted by any planning permission (including outline with subsequent reserved matter approval) in advance of formal adoption of a CIL Charging Schedule will be exempt from CIL.

CIL Regulation 123

• Once CIL is adopted or in any event after April 2014, no more than 5 planning obligations can be used to fund any one piece or type of infrastructure. This will affect any obligation entered into after April 2010 and will fundamentally change the way Authorities plan for infrastructure delivery in the future.

Regulation 123 Infrastructure List

• The list of infrastructure to be funded by CIL. This may be changed at any time with no consultation.


CIL Infrastructure Delivery

• Unlike a Section 106 Agreement, CIL is not a legal agreement with the landowner. CIL provides funding for infrastructure but no obligation to provide the land to build it on. As drafted the Regulations prevent infrastructure being provided by a mix of Sec 106 Agreement and CIL (the double counting issue) so this is difficult to resolve.

Lawful Use vs In Use

• The Regulations are designed to encourage Brownfield development by providing CIL relief for existing buildings being re-used or demolished that are in Lawful use. However Reg 40 sub Para 10 introduces a new concept of Lawful use, determining the buildings should have been ‘in use’ for a continuous period of 6 months within the previous 12 months. It is difficult to interpret what ‘in use’ means and make reasoned judgements. Could lead to unintended consequences and make some development unviable e.g. re-use of Listed Buildings.

CIL - Developer Issues

CIL Uncertainty for the Developer

• CIL contributions are not returnable. Developers will make contributions with a reasonable expectation that the declared infrastructure on the Reg 123 List will be delivered. However there is no guarantee that any of the essential site specific infrastructure will be forthcoming (e.g. roads, schools, health centres etc). The developer is at the mercy of the political spending priorities of the Local Authority.

Essential Site Based Infrastructure

• If a development requires essential infrastructure to enable occupation. e.g. a junction improvement, and this infrastructure is to be funded by CIL, the developer has no control over the timing and delivery of a key element to the implementation of planning consent. Grampian conditions restricting occupation prior to CIL infrastructure being delivered could make some development unfundable. Mechanisms will need to evolve to overcome this.

CIL & Localism

Under the Localism Act, Charging Authorities will be obligated to distribute ’meaningful proportion’ of CIL to Parish or Community Councils

• Growth mitigation in Zero rated disadvantaged areas• Transparency & Accountability

CIL - Toolkit

Produced a toolkit covering the various aspects of CIL.

Copies can be obtained from:

www.nationwidecilservice.com

CIL - Queries

Andrew [email protected] or Tel 01636 655855

Adrian Kerrisonnationwidecilservice.com

[email protected] or Tel 01636 655801

In the spotlight:

Boston, Lincolnshire

Neil Kempster, Chestnut Homes

KICKSTART PROJECTS

REGENERATING BOSTON

NEIL KEMPSTERLAND AND DEVELOPMENT DIRECTOR

CHESTNUT HOMES LIMITED

KICKSTART PROJECTS – CHESTNUT HOMES REGENERATING BOSTON

1. INTRODUCTION

* Chestnut Homes - Lincoln based Developer- Operating throughout Lincolnshire for over 20

years- Building 100-150 new homes per year- Strategic Sites/Mixed Use Development

* Partnership Schemes - Core part of business- Developed 200 affordable units over 15 sites- Various funding sources:

- Section 106- NAHP- Kickstart - HomeBuy Direct- Firstbuy- NewBuy- Get Britain Building


2. OVERVIEW

A. KICKSTART ROUND ONEBoston Town Centre Regeneration Project

(i) Quaker Lane, Boston27 Affordable Housing Units

(ii) The Quays, Boston 15 HomeBuy Direct Units12 Open Market Units

B. KICKSTART ROUND TWORiverside, Boston

32 Affordable Housing Units for Rent10 HomeBuy Direct Units10 Open Market Units


3. BOSTON TOWN CENTRE REGENERATION PROJECT

3.1. LOCATION



3.2 EXISTING SITESQuaker Lane, Boston- Purchased by Chestnut Homes in 2004- Planning Permission for 26 apartments and 1 house in 2004- Temporary use as a car park- Chestnut Homes unwilling to commence development



3.2 EXISTING SITESThe Quays, Whitehorse Lane, Boston- Purchased by Chestnut Homes in 2006- Planning Permission for 27 dwellings- Former industrial units – HP Foods- Unviable due to date of purchase/high development costs.



3.3 KICKSTART BID

- Combine 2 sites to achieve 50 unit threshold

- Strategic fit with Boston Borough Council Policy to regenerate area

- Both schemes ready to go – just not financially viable

- Bid enabled Chestnut Homes to achieve financial package that gave company ability to start both sites.



3.4 SCHEME DETAILSQuaker LaneAll affordable housing units for rent to be transferred to New Linx Housing on completion:

1 x 2 bed/3 person house4 x 1 bed/2 person apartments16 x 2 bed/3 person apartments6 x 2 bed/4 person apartments

TOTAL : 27 Dwellings



3.4 SCHEME DETAILSThe Quays15 HomeBuy Direct Units:

2 x 1 bedroom apartments10 x 2 bedroom apartments3 x 3 bedroom apartments

12 Open Market Sale Units:

10 x 2 bedroom houses2 x 3 bedroom houses

TOTAL 27



3.5 FUNDING PROFILE

Income Expenditure

Quaker Lane

Scheme Costs 2,830,642

Income transferred to Waterloo Housing Group 1,200,000

NAHP 1,624,074

The Quays

Scheme Costs 3,279805

Income Sales Received (incl. £230k of HBD Funding) 2,938,000

Allowance Profit 366,627

GAP Funding 715,000

6,477,074 6,477,074



3.6 COMPLETED PROJECT

Quaker Lane




The Quays



3.7 CHALLENGES/ISSUES

1. Public Sector Bureaucracy - Cultural change for Chestnut homes

2. Timescales- Delays in Legal Process- Winter 2010

3. Market Sales- Loss of HBD Funding- Market Conditions

4. Technical Issues- Flood Defence Foundation Ties


4. KICKSTART 2 – RIVERSIDE, BOSTON

4.1 LOCATION



4.2 EXISTING SITE

- Existing use as a Park Homes site close to Boston Town Centre

- Secured under Conditional Contract by Chestnut Homes Limited

- Planning Application submitted for 100+ units in 2009 - delayed due to flood risk issues

- Unviable due to collapse of housing market and high development costs



4.2 EXISTING SITE



4.3 KICKSTART BID

* Project to kick start regeneration of area

* Provision of affordable housing

* Provision of employment and skills package

* Bid provided impetus to overcome planning/technical issues

* Financial certainty of affordable housing sale provided company with guaranteed income stream

* HBD Funding helped mitigate sales risk



4.4 KICKSTART BID

32 Affordable Housing for Rent:12 x 1 bed/2 person apartments3 x 2 bed/3 person apartments12 x 2 bed/3 person houses5 x 3 bed/4 person houses

10 HomeBuy Direct Units:4 x 2 bed houses6 x 3 bed houses

10 Open Market Sale Units:4 x 2 bed apartments6 x 2 bed houses



4.4 KICKSTART BID



4.5 FUNDING PROFILE

Income Expenditure

Affordable Housing

3,153,857

Transfer to Longhurst 1,400,000

NAHP 1,602,000

Homebuy Direct Funding

Total HCA Grant 188,954



4.7 CHALLENGES/ISSUES

1. Planning- Flood Risk

2. Working with Statutory Organisations - British Waterways - Network Rail/BR (residuary) Ltd - Central Networks


5. SUMMARY

* Successfully completed over 100 new homes which would not have been built without Kickstart funding.

* Generated high profile economic activity in town during downturn.

* Provided nearly 60 affordable homes for rent and assisted 12 purchasers via HomeBuy Direct.

* Created apprenticeships and local labour scheme.

* Provided high quality developments in tight timescales:- Civic Pride Award for whole project- Boston Borough Building Excellence Award at The Quays- RTPI Regional Regeneration Award at Quaker Lane

* Kick-started further regeneration in both areas.

Notices and reminders

Next meeting – 13 September (venue TBC as we still hope to move venues around the patch for this meeting)

NHF Community Land Trust’s Conference and Exhibition – 22 May, Savoy Place, London. www.housing.org.uk/events

Rural Affordable Housing Day – 18 September, EMHA Coalville. Email [email protected]

Don’t forget to keep up to date on HCA in the Midlands at www.homesandcommunities.co.uk/Midlands or follow us on twitter hca_uk

www.homesandcommunities.co.ukFollow us on twitter: HCA_UK

http://www.housing.org.uk/events

http://www.housing.org.uk/events

mailto:[email protected]

http://www.homesandcommunities.co.uk/Midlands

http://www.homesandcommunities.co.uk/

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Midlands Quarterly Partner Meeting Homes and Communities Agency Newark, Nottinghamshire 26 April...

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