Focus on: Homes for Lambeth

This Monday (25th April) a presentation was given to members of Tenants and Leaseholders Council to update them on Homes for Lambeth. This joint meeting was held at the request of the Chairs of Tenants’ and Leaseholders’ Council. 

Faced with a lack of money for refurbishment and a serious shortage of genuinely affordable homes, Lambeth Council is taking a lead in bold, but necessary, decisions like setting up Homes for Lambeth as this will allow the Council to build homes for council rent, intermediate rent and private rent, all with long tenancies and rent stability.

You can download a PDF of the presentation by clicking here.  The presentations answered the questions that many residents have put to the Council about Homes for Lambeth - you can see these questions and the the Councils answer below.

Q) Why doesn’t Lambeth simply build new Council homes in the Housing Revenue Account (HRA) and offer secure tenancies?

A) The HRA is a finite resource and the money available is being used to bring existing homes up to the Lambeth Housing Standard. In addition the cap on borrowing and the cost of financing borrowing means the HRA cannot borrow more money. Social rents are also so low that they do not provide enough income to fund new building so market housing is needed to subsidise new homes for social rent. The Localism Act empowers local authorities to establish companies and in this case one to build more housing.

Q) What options does the Council have for building more homes?


A) The Council has a number of options which you can see below along with pros and cons of each one.

1) Enter into a Development Agreement with a housing developer

Pros:

  • Development risk sits with the developer
  • The Council provides the land but the developer finances the work
  • Track record of maximising the number of home

Cons:

  • Income generation a priority for the developer - they traditionally look for a 15% to 20% developer margin
  • Council’s ability to shape the pace, quality and mix of new homes is limited to the agreements in the contract and the planning process
  • Affordable homes sold to a housing association and assured tenancies

2) Contract with a Registered Provider

  • Similar pros and cons to the above as many Registered Providers now act as developers
  • Registered Providers have a good understanding of affordable housing delivery

3) Secure affordable housing through the planning process (i.e. s106 deals)

Pros:

  • Development risk sits with the developer
  • The Council provides the land but the developer finances the work
  • The new affordable homes could sit in the HRA and offer secure tenancies

Cons:

  • Limited opportunities and so limited supply
  • Separates geographically market and affordable housing

Q) What is Homes for Lambeth?

A) Homes for Lambeth will be a new company set up by Lambeth Council to deliver much needed housing. In doing this there are a number of pros and cons - please see below:

Pros:

  • The Council will have more control over the type of new homes being delivered on Council land
  • The land is retained by the Council on a Freehold basis and held within Homes for Lambeth which is owned by the Council
  • Homes for Lambeth will address market failure by prioritising new homes at Council rent levels and market rent homes which are affordable to Lambeth residents
  • The traditional 15 to 20% developer margin will be reinvested in more housing in the borough
  • There is scope for Homes for Lambeth to deliver 100’s of new homes at Council rent levels over the next few years

Cons:

  • Some residents are concerned that the Council could decide to sell the company in the future
  • The new tenancies will be assured not secure – but will be written by the Council and will be made as similar to secure tenancies as possible
  • Requires the Council to act more commercially


On balance the Council has decided that the pros outweigh the cons when measured against the house need in Lambeth and the other options which are available. 

Q) Can Homes for Lambeth be sold?

A) Homes for Lambeth will be protected from sale by a ‘Triple lock' to stop the housing from being sold:

  • Unanimous Cabinet vote
  • A 2/3rds majority of the full Council
  • Unanimous agreement of the HfL Board

The affordable housing is also protected in planning and so if homes were sold then they would need to remain affordable. Also the land will remain in Council hands - Homes for Lambeth only has a leasehold.

Q) What does the new lifetime tenancy look like?

A) Homes for Lambeth can’t grant a ‘Secure Tenancy’ as these can only be granted by councils directly. However the Council has tried to match the rights Secure Tenants have at the moment as closely as possible with a new ‘Assured Lifetime Tenancy’.  

The diagram below shows you which rights you get with both kinds of tenancy; which rights you only have at the moment; and which completely new right you will have. The right to refuse changes to your tenancy agreement without your consent only comes with the new ‘Assured Lifetime Tenancy’. 

Tenancy_Explained_infographic_-_800.jpg

Q) How will Homes for Lambeth work?

A) The general structure of Homes for Lambeth is shown below.

Screen_Shot_2016-04-26_at_22.16.37.png

 

The key point is that Homes for Lambeth will be 100% owned by the Council. The governance structure is currently been worked on however:

  • Lambeth Council retains the Freehold
  • Homes for Lambeth builds the new homes
  • Homes for Lambeth subsidiaries will own the new homes
  • Homes for Lambeth will tender management and maintenance services

Q) Where will we see Homes for Lambeth start work first?

A) Residents will start to see Homes for Lambeth start to work in a number of places in the borough including:

Lollard Street 

  • 89 new homes
  • 70 at Council level rents
  • New nursery
  • Construction starts in May 2016
  • Completion expected in March 2018

Somerleyton Road

  • 304 new homes
  • More than 120 will be at Council rent levels
  • 65 homes for elderly residents
  • Planning permission granted in 2015
  • Construction schedule in planning

Westbury, Knights Walk, South Lambeth & Cressingham Gardens

  • More than 650 new homes
  • More than 320 will be at council level rents
  • Last autumn approval given for Westbury, South Lambeth and Knights Walk and development management teams appointed
  • Approval given for Cressingham Gardens last month
  • Consultation and construction schedule in planning

Q) What are other Council’s doing?

A) Council's are looking at a range of options including:

Ealing: Broadway Living - A wholly owned subsidiary created to enable direct development of mixed tenure housing

Southwark - Wholly owned company to deliver Council homes

Thurrock: Gloriana - A wholly owned vehicle to deliver affordable housing across the borough

Barking & Dagenham - Council granted long lease of site to fund which developed units and underlet site to Council's wholly owned company. Quasi PFI solution: company's rental income stream enabled it to repay fund over agreed long term period

Lewisham - A borough wide vehicle intended to encompass a number of diverse sites and opportunities. Potential to create multi layered legal structure with individual SPVs sitting underneath an operating company

Enfield: Enfield Innovations Ltd - Vehicle to invest in the Private Rented Sector (PRS) in the borough, initial through the Small Housing Sites project but potentially more widely

Royal Borough of Kensington and Chelsea - Vehicle intended to act as a developer of mixed tenure housing across borough

Wandsworth - Vehicle to invest in PRS across the borough

Gateshead LABV - A Local Asset Backed Vehicle (LABV), which is a 50/50 joint venture vehicle with private sector partner. The intention is to cross- subsidise between different types of sites and deliver 2500 new homes

Greater Manchester - Pension Fund Council to act as developer, commissioning building contractors to deliver mixed tenure housing, with investment from the Council’s Pension Fund

You can see Homes for Lambeth introductory film and FAQs by clicking here.

Created with NationBuilder