In the current economic climate and in the face of falling house prices, reduced demand, reduced lending, reduced covenant strength and reduced private sector development (and s106 contributions), the delivery of social and affordable housing is becoming increasingly difficult. Clearly the demand for social and affordable housing remains as significant as ever but Government delivery targets are regarded as unachievable and local authorities are being increasingly encouraged to consider innovative options to take the lead in housing delivery. This development became very apparent during the latest round of housing PFI credits, which was heavily over-subscribed by local authorities. While we await the announcement of the successful local authorities, many are already considering alternative models for meeting the social housing demands for their communities.
At Bevan Brittan, we are advising on a number of housing PFI schemes, for both the public and private sectors, some of which are reliant on private homes for sale and are affected by the current fall in land values and the drying-up of credit. We are working with one bidder to realign the phasing of their scheme to be more responsive to anticipated demand and for their bid to withstand any change in funders.
We are also already working across the housing sector looking at how we can help both the public and private sectors put together alternative housing models to PFI. In the current market, local authorities are being urged to consider self-delivery, with the HRA system being adjusted to allow for retention of capital and rental receipts on new housing or to consider joint venturing - via Local Housing Companies - as a means of influencing the type and timing of schemes to generate greater community and land values.
Examples of our current work include assisting Bristol City Council to explore the establishment of a Local Housing Company; helping developers and local authorities to adjust s106 agreements; and advising Registered Providers (formerly RSLs) through land and asset deals, which create strong loan-to-value schemes. We are finding housing market participants are adjusting to take on a more long-term view - phasing rather than shelving mixed community projects or looking at setting up joint venture vehicles - to respond to local authority requirements. We are also working on a number of wider regeneration schemes looking at integrating social housing projects with other infrastructure projects.
Bevan Brittan is a market leader in PFI and PPP projects and in providing legal services to local authorities, Registered Providers, contractors and funders. We have strong experience in partnering between public and private sector – be it contractual or corporate - and our team of Housing PPP specialists has considerable experience and a strong track record of acting for CLG, local authorities, housing associations and private sector clients including on HRA and Non-HRA schemes.
The following are a few examples of the schemes and projects we are currently working on:
- CLG – derogations review on a HRA PFI scheme being delivered on balance sheet by an RSL
- Regenter and MMHA – “Gateways to Oldham”, HRA Regeneration and Refurbishment – delivering social, affordable and private housing for sale
- Regenter and Wates - Kirklees HRA Scheme: Extra Care Housing and Housing for Smaller Household - delivering social and extra care housing
- Pinnacle - Lambeth HRA - Myatt’s Field North, Regeneration and Refurbishment – delivering social, affordable and private housing for sale
- Bristol City Council – Local Housing Company Pilot Project