If your local authority is planning to commence the regeneration of housing estates in 2022 there are some extra New Year's resolutions which might be worth considering.
The first is to make a thorough analysis of the financial funding which is likely to be required for the regeneration, including the cost of reacquiring Right To Buy homes/land assembly. An estate's location may also have a bearing on the ability of new market home sales to cross subsidise new affordable homes (and other public facilities). This early work should inform a council's ambition as to what the regeneration should. It might also dictate the most suitable delivery option.
If cross subsidy from market homes is unlikely to be sufficient to deliver a council's objectives, then it will need to assess whether there is sufficient headroom in its Housing Revenue Account (HRA) or its General Fund (GF) to meet any gaps. The HRA will support the provision of new council housing, the GF could support the council developing market homes for sale or even retaining, them through a housing company. The Public Works Loan Board's (PWLB) lending criteria favours the use of PWLB funds for the development of either council housing or to support housing in general.
If a council has insufficient borrowing headroom, it can also attempt to access a range of central government funding programmes. The UK Shared Prosperity Fund (UKSPF) is the replacement for EU programmes. It is possible that UKSPF might be available to improve housing and related education training and employment outcomes. Recent government programmes that have assisted with some estate regeneration schemes include housing infrastructure funds, brown land funding, levelling-up funding and even net carbon zero funding. In summary local authorities should keep an eye on potential new funding streams.
The second New Year's resolution is to ensure that your authority has an effective and ongoing engagement with residents. Our experience is that when residents are involved (in a meaningful way) this significantly improves the prospects of a successful estate regeneration. There is no single route on how best to do this (it is worth asking residents). We have worked on schemes where residents contributed to masterplans, set outcomes for the regeneration, where they were informed and fed back through "resident/citizen jury's". Some authority's also involved residents in the procurement process together with enshrining their ongoing involvement in their renewed community.
The third resolution is to choose how to structure the delivery of the regeneration. There is not a 'right' option of how to do this. The respective suitability of each option will accord with local circumstances: internal council resources and capacity/experience; the attractiveness of the proposal to potential investors/developers; and each local authority's preference/experience of using the options elsewhere.
Delivery options include traditional development agreements whereby a private and/or RP developer assumes the risk of delivering the regeneration (which can deliver new council homes and/or RP affordable homes). Local authority self-delivery is also an option. This is more suited to high value areas and when a council is able to resource a delivery team. Under self-delivery a council commissions design, demolition and construction from contractors. The authority assumes the developer role (which involves managing risk) to deliver replacement council homes, intermediate homes and market sale homes.
Other options include hybrid self-delivery (the Council delivering part of the scheme); joint ventures, and the inclusion of market rented homes (held by an investor or a council housing company).
The final New Year's resolution is to make sure your local authority thoroughly prepares before engaging with any external partners. Councils effectively compete to attract the best partners/investment. Good partners are much more likely to invest their resources in a procurement process if the council involved provides them, in advance, with detailed information; articulates financial/technical objectives (which are realistic) and has thought through the delivery structure.
To be in the driving seat make sure:
- the financial assessment has been undertaken;
- residents are already involved;
- choose a structure which works for the estate/local circumstances;
- provide bidders with likely CIL and s106 obligations and make sure these complement your regeneration outcomes.
Our bonus holiday gift is the below recording of our recent webinar where we discussed Estate Regeneration with Scott Dorling and sector leaders Barbara Brownlee and Catherine Cummings.
