The Democratic Services Officer presented the draft Final Report of the Economic Development and Infrastructure Scrutiny Panel on Housing Delivery Vehicles (HDVs).
The aim of the scrutiny investigation was to investigate Housing Delivery Vehicles (HDVs) to ascertain their effectiveness in addressing local housing market needs.
The Panel discussed conclusions and recommendations for inclusion in the Final Report. It was suggested that additional information in relation to the housing stock transfer to Erimus Housing in 2004 should be included in the background information in the report. It was also proposed that tenants and/or local residents should have representation on the Board of any HDV Company that was constituted.
AGREED as follows that:
1. The following conclusions were included in the Final Report:
a) TERM OF REFERENCE A - To investigate different models of Housing Delivery Vehicles (HDVs) and the benefits and challenges they can provide to Local Authorities including evidence of best practice models in operation.
From the information provided by North Kesteven District, South Tyneside, Croydon, Birmingham City and Stockport Councils the Panel considered various wholly-owned companies and joint ventures in detail. Whilst the main focus for the majority of HDVs is to generate income, other benefits such as meeting the needs of the wider population, job creation, and quality are also extremely important and can be tackled through the establishment of an HDV.
HDVs also provide an opportunity to re-shape the local housing market; enable and increase home ownership and reverse the current high proportion of private sector renting.
Councils taking a more pro-active role in housing the market enables staff to develop new skills and in-house services. However, tensions can occur and establishing good working relationships is vital. Good governance and a clear business plan at the outset are essential to the success of a HDV.
b) TERM OF REFERENCE B - To identify the initial resources needed to set up a HDV as well as the potential financial returns.
The Panel found that most HDVs are established with capital funding from the Council and further lending as required. In addition to Council lending, there are various funding sources available. The potential financial returns to the Council are received through loan repayments, generally with an interest rate of 4-5% and any dividends from company profit.
As well as income generation it is noted that other issues which can be addressed by HDVs such as homelessness, providing specialist housing for people with disabilities or older persons' housing, can also contribute indirect savings to Council resources.
c) TERM OF REFERENCE C - To examine Middlesbroughs Local Plan to understand what sites are currently available for housing throughout the town and how the projected increase in population and need for a further 5,500 dwellings by 2029 can be met.
Middlesbroughs Local Plan is currently being renewed and indicates the need for a further 5,500 dwellings by 2029. Whilst that number can most likely be achieved from the current market, having an HDV will provide more scope and control over available land.
Other Local Authorities are now getting their Local Plans adopted and Middlesbrough will be competing with sites which, in marketing terms, are more desirable.
d) TERM OF REFERENCE D - To investigate how Middlesbrough Council can ensure that the requisite associated infrastructure for new housing development including roads, schools, services and green spaces can be delivered in conjunction with a HDV.
The Local Plan is reviewed every 5 years and infrastructure requirements are taken into account based on best assessments and development sites. An Infrastructure Delivery Plan is produced alongside the Local Plan outlining the requirements to support the Plans proposals. With an HDV in place, the Council has greater control over the timescales for delivery and design of sites. Whilst sites can be controlled by planning conditions, Developers can apply to vary conditions to increase the number of houses from the original plan, in order to maximise profit, which impacts on infrastructure requirements.
2. The following recommendations were included in the Final Report:
a) In order for Middlesbrough Council to take pro-active role in re-shaping the local housing market, as well as Middlesbroughs landscape, the Council should establish its own Housing Delivery Vehicle (HDV) in the form of a wholly owned Company Limited by Shares (CLS).
b) The Council will provide the initial capital required to establish the Company with a loan from the Public Works Loan Board (PWLB). The Company will repay the loan to the Council at a higher interest rate, and the profit should be re-invested into housing provision.
c) Council-owned land will be transferred to the Company for housing development. Efforts should be made unlock unused sites which are not attractive to Developers and maximise the delivery of houses on brownfield sites.
d) The Company will provide mixed tenure housing for sale and rent, in the first instance, ensuring affordable, innovative, sustainable and excellent quality provision, which contributes to the social and physical regeneration of Middlesbrough in line with the Councils Strategic Plan 2017-2021.
e) Through its HDV, Middlesbrough Council will strive to be an exemplar landlord, retain control over rents, and provide high customer service standards that other landlords will aspire to achieve. Tenancy agreements will include requirements in relation to the standards expected of tenants in respect of their accommodation.
f) The Council will use its HDV to expand training opportunities for local people, provide apprenticeships and, where possible, employ local people.
g) The Council should consider utilising its own in-house architectural services to provide greater control over the quality, size and design of builds. Having modern, innovative and attractive designs is crucial to developing a housing offer that appeals across different demographics and encourages inward migration to Middlesbrough. An in-house service can also trade in the private sector and realise additional revenue for the HDV.
h) The Council should also consider providing an in-house property maintenance service to ensure that all properties remain in good condition and tenants receive high quality and reliable provision.
i) All new development by the HDV should be demand-led with an effective marketing strategy in place, to ensure that accommodation is not unoccupied for any length of time once completed, since this will impact on a schemes profitability.
j) When planning new housing developments, the Company should engage with Middlesbrough residents and/or potential tenants to ensure that the accommodation provided meets local needs.
k) The Council will ensure that the Infrastructure Delivery Plan supports Middlesbroughs Local Plans proposals so that the requisite open spaces, transport, highways, education, utilities and community facilities associated with providing a further 5,500 dwellings by 2029 are provided.
l) Once the wholly owned Company is settled, consideration should be given to expanding into building and managing social housing stock, possibly through a separate Housing Delivery Vehicle.
3. The report would be submitted to the Overview and Scrutiny Board for consideration.