Agenda item - New Homes for Neighbourhoods - Final Scheme Approval - Findon Road and Garage Sites Update

8.1      The Committee considered the report of the Executive Director Environment, Development and Housing which focused on development proposals for the site at Findon Road, Whitehawk (former library site) that the Estate Regeneration Team now wished to progress through planning and construction stages.  The report was presented by the Project Manager who referred to an error in the report.  Recommendation 2.2 (iv) should not have mentioned the Wellsbourne site. 

 

8.2     A Green Group amendment to the report recommendations had been circulated to Members prior to the meeting. The amendment was proposed and seconded by Councillors Gibson and Phillips.

 

8.3     The Chair referred to recommendation 2.1 ii which related to the scheme rent levels.  She understood this had been agreed at a previous Housing Committee.  The Executive Director Environment, Development and Housing explained that previously the committee had agreed the scheme in outline.  The Housing Programme Manager explained that the previous report contained modelling regarding potential rent levels and options.  Once the detailed design has been carried out officers present a report with rent options and explain the effects on the HRA. 

 

8.4     Councillor Gibson set out his reasons for the amendment which related to affordability.  There was a commitment from the previous Housing Chair to see if rents could be a little bit lower and more affordable.  No-one else was providing social or living rents in the city.  It was not a question of reducing subsidy from the government.  Subsidy was not going into buildings.  It was going into the benefits of people who had their wages topped up by housing allowance. 

 

8.5     Councillor Gibson stated that the committee should be bold and ask officers to model some lower rents; either living rents or social rents on these new council houses.  Councillor Gibson stressed that the council had lost over 100 socially rented Council houses in the city through Right to Buy.  The council could go some way in replacing these properties.  A social rent was half of the levels of the rent in the scheme proposals. 

 

8.6     Councillor Gibson stated that officers had made the point that the lower the rent charged the less there would be in revenue.  However, Councillor Gibson considered that the modelling had overlooked certain benefits.  For example, management costs would not be increased when the properties were built.  There could be consideration about the period the modelling took place.   40 years would be more sensible than 30 years.  Councillor Gibson asked for an affordable rent strategy.  He stressed that there were 10,000 people who could only afford social rents and that it was incumbent on the council to go some way in meeting the needs of these people.  Councillor Gibson welcomed the progress of 200 new homes.  He asked for some to be truly affordable.  The current rates were not affordable. 

 

8.7     The Interim Head of Housing stated that with regard to management costs, anything could be included or excluded in the modelling.  He was not sure if the modelling suggested by Councillor Gibson was being carried out anywhere else.  It would mean that the council would be asking existing tenants to pay for the management costs of new tenants.  There was a need to be seen as fair.  If the council were building hundreds of homes it could not achieve this type of modelling.  For this reason the suggestion was not feasible.  The Principal Accountant concurred with the Interim Head of Housing.

 

8.8     The Interim Head of Housing suggested that there could be a different mix of housing.  For example, houses for sale to subsidise rented housing. However this would result in the delivery of fewer affordable units.

 

8.9     Councillor Miller stated that he considered that rent should be lower and the costs cheaper.  He asked why the costs were so high.  The Executive Director explained that work was tendered in the market to achieve the best possible rate for the build. The building costs with inflation were very high.  The Housing Programme Manager reported that the £14.1m was the end cost not just the build costs.  Officers were finding a shortage of skilled labour and materials in the local market.  There were other issues with this particular site.  Extensive ground work had increased costs.  The scheme had a number of wheelchair units.  There were three high specification lifts in the development.  These were the reasons why it was more costly than a private development.  The scheme would be brick built and officers would aim to bring more information to councillors.  A workshop for councillors relating to development process and finance was suggested. 

 

8.10   Councillor Mears did not consider that the site at Findon Road was difficult in terms of gradient.  There was an issue regarding costs.  She was concerned that the council had external architects to draw up plans before in house architects took over to finalise the scheme.  Councillor Mears stated that she wanted to understand the funding of the land.  When the library was built in Whitehawk the grant was £5.9m. There was a shortfall of 2m.  There was a proposal to sell land to pay back the general fund.  This did not happen.  Councillor Mears asked exactly what was being paid to the general fund for the land.

 

8.11   The Principal Accountant confirmed that total cost to the HRA for the both sites was still  £1.3m.  The £0.940m was an element of the £1.3m for Findon Road.  When the development proposals for the Wellsbourne site progressed the balance would be paid to the GF for that land. 

 

8.12   Councillor Mears referred to the financial implications and mentioned that in the past the council had a 30 year business plan.  There was now a 10 year difference.  Why was the council carrying risk for an extra 10 years?

 

8.13   The Principal Accountant explained that the building valuation  had a life of 60 years and the rental stream was expected to go beyond than 60 years. It was standard practice to model borrowing between 30-40 years and this didn’t carry a risk to the viability of the Business Plan.

 

8.14   The Housing Programme Manager explained that external architects were used at the initial stage to get high quality design.   The plans were then passed to internal architects.  This method worked very well and did not involve duplication.  Section 106 funding was included in the modelling at £5000 per unit, but actual costs would not be known until after planning permission had been gained.  

 

8.15   Councillor Miller asked questions relating to cycle storage, the ground floor and whether the police had been consulted on the scheme.  He further asked why rent was charged weekly rather than monthly and asked if rents could be lowered if costs were kept low.  

 

8.16   The Housing Programme Manager explained that there was a need to meet the standard with regard to cycle storage.  There were 10 disabled flats on the ground floor.  This number might be reduced to 7.  The police were involved in the planning consultation.  There would be a more detailed consultation as part of the planning process.  With regard to costs, alternative models were being investigated for future schemes.

 

8.17   The Project Manager stated that each flat had some private amenity space in the form of a balcony or garden. 

 

8.18   The Interim Head of Housing explained that a review was being carried out on rental income and recovery.  The question of whether to move to monthly payments would be investigated as part of the review. 

 

8.19   Councillor Barnett stressed the need for family homes.  She was disappointed that the plans did not show any children’s play areas.  The Project Manager replied that there was general amenity space.  Meanwhile, officers had worked with the Neighbourhood Council and would look at options for the Whitehawk area outside the planned development scheme.

 

8.20   The Chair stated that having read the report and the Green Group amendment she was concerned that the development might be postponed.  She was also concerned that if rents were lowered it would lower the number of homes.  There was a need to ensure that rent levels were feasible in order to be able to deliver new homes that were needed in the City.    

 

8.21   Councillor Phillips asked Members to consider who would provide affordable accommodation if the council were unable to provide it.  She asked Members to vote in favour of the amendment.  Councillor Phillips asked if the committee could support a working group which would include representatives of the Brighton Housing Trust, the Community Land Trust and the developers of the low cost houses in Lewes (KSD Housing) to see if the council could achieve truly affordable accommodation in the city. 

 

8.22   At this point of the proceedings the Committee considered the Green Group amendment.  Councillor Phillips requested that each recommendation be voted on separately.  The Chair stated that there would be a vote on the whole amendment. 

 

8.23   The Senior Lawyer stated that she had serious concerns about adopting a policy which would create a rule of thumb for the future.  She referred to 2.2 (vii) of the amendment and recommended that this should not be agreed without a written report. 

 

8.24   The Committee had a short break before returning to vote on the amendment.

 

8.25   The Committee considered the following amendment. 

 

Proposed amendments to the recommendations listed in the report:

 

To delete recommendation 2.1 (ii) “The scheme rent levels,” as struck through and replace it with a new recommendation, “model rent options  that provide for living rent or social target rents as part of the Findon Rd development  and bring these back for decision to the next housing committee*,” as shown in bold italics below; and

To insert a new recommendation 2.2 (vii), “Adopt a policy of not increasing rents on new affordable homes, in such a way that in subsequent years the gap between affordable rents and social “target” rents reduces more quickly,” as shown in bold italics below:

 

2.1             That the Housing and New Homes Committee approve the:

 

(i)       The final design;

(ii)     The scheme rent levels, Model rent options  that provide for living rent or social target rents as part of the Findon Rd development  and bring these back for decision to the next housing committee*”

(iii)   The estimated levels of additional investment required from the Housing Revenue Account (HRA) for the chosen rent model and delegates authority to the Executive Director of Environment, Development & Housing and the Executive Director of Finance & Resources, in consultation with the Estates Regeneration Member Board, to agree reasonable amendments to that subsidy if changes arise; and

2.2    That the Housing & New Homes Committee recommends to Policy & Resources Committee to:

 

(iv)    Approve that the land at Findon Road, former Whitehawk library site is appropriated to the HRA for a capital receipt of  £0.940 million for planning purposes and the development of new housing;

 

(v)      Approve a budget of £14.1 million for the Findon Road scheme in the HRA Capital Programme which will be financed through a mixture of unsupported borrowing and retained Right to Buy capital receipts;

 

(vi)    That the site at 4-7 and 15-20 Kensington Street is appropriated for planning purposes and the development of new housing; and

 

(vii)  Adopt a policy of not increasing rents on new affordable homes, in such a way that in subsequent years the gap between affordable rents and social “target” rents reduces more quickly.

 

*This may be achievable by:

 

·        Altering  subsidy levels

·        Revising the modelling to recognise that the management costs allowed for in the modelling does not represent real additional expenditure and so could be disregarded

·        Building into the model recognition of the subsidy provided to the HRA from rents should  the loan be a repayment loan

·        Acknowledging that in any case after a 40 year period when the loan is repaid the scheme rents  will generate a subsidy for the Housing Revenue Account (HRA) justifying an initial subsidy

8.26   The Committee voted on the amendment proposed by Councillors Gibson and Phillips.  Two members voted for the amendment and eight members voting against.  The Committee then took a vote against the amendment.  Eight members voted against the amendment and two members voted for the amendment.  The amendment was not carried.  

 

8.27   Members then moved to the recommendations in the report (as amended by the deletion of ‘and Wellsbourne site’ in paragraph 2.2 iv) which were agreed.  Two members abstained on recommendations 2.1, i, ii and iii.   

 

8.28   RESOLVED:-

 

(1)   That approval is given for:

 

i.           The final design.

 

ii.         The scheme rent levels.

 

iii.       The estimated levels of additional investment required from the Housing Revenue Account (HRA) for the chosen rent model and delegates authority to the Executive Director of Environment, Development and Housing and the Executive Director of Finance and Resources in consultation with the Estate Regeneration Member Board to agree reasonable amendments to that subsidy if changes arise.

 

 

(2)       That the Policy and Resources Committee be recommended to:

 

iv.                Approve that the land at Findon Road, former Whitehawk library site is appropriated to the HRA for a capital receipt of £0.940 million for planning purposes and the development of new housing.

 

v.                  Approve a budget of £14.1 million for the Findon Road scheme in the HRA Capital Programme which will be financed through a mixture of unsupported borrowing and retained Right to Buy capital receipts.

 

vi.                 That the site at 4-7 and 15-20 Kensington Street is appropriated for planning purposes and the development of new housing.