Agenda item - Public Involvement

To consider the following matters raised by members of the public:

(a)      Petitions: to receive any petitions presented by members of the public to the full Council or as notified for presentation at the meeting by the due of (10 days);

(b)      Written Questions: to receive any questions submitted by the due date of 12 noon on the 5^th October, 2017;

(c)      Deputations: to receive any deputations submitted by the due date of 12 noon on the 5^th October, 2017.

b)           WRITTEN QUESTIONS

(i)            Living Wage Joint Venture Business Plan

41.1      Ian Bailey put the following question:

“The rent levels indicated within the LWJV business plan and associated documentation indicate a percentage level of 37.5% of gross income from the living wage. When considering this as a percentage of net income it is significantly higher at 57%. Accepting this is still just below housing benefit levels and taking into account rising living costs including energy, council tax, transport and consumer goods how is this considered to be genuinely affordable to both residents and the council?” 

41.2      The Chair provided the following reply:

“The rent levels for the new homes have been carefully considered to make them affordable to lower income working households within the city as well as providing a balanced business plan.  The 57% figure quoted is not correct and when the calculation of net income taking into account  current tax and national insurance allowances for working households, the rents are between 39% and 41% of net income (excluding service charges) and around 43% of net income (including service charges). 

The report demonstrates that the rents set out in the joint venture business plan are significantly lower than those charged for private rent and affordable rent tenancies.  They are therefore amongst the lowest on offer in the city and compared to equivalent market rents range between 54% of market rent for a 3 Bed flat and 68% for a studio apartment.  If the joint venture were to adopt a policy of social rents the business plan would become unviable and the project would not be able to proceed.  High sustainability standards for the new homes will mean that households will also benefit from significantly reduced energy bills”.

41.3      Ian Bailey asked the following supplementary question:

“Are you able to indicate what level of sustainability that might be perhaps in relation to the old code for sustainable homes levels or something along those lines that benchmarks it?”

41.4      The Chair provided the following reply:

“We’ll provide you that in a written answer”

(ii)          Living Wage Joint Venture Business Plan

41.5      Peter Clarke was unable to attend the meeting therefore his nominated representative, Ian Bailey, put the following question on his behalf:

“Two of the sites identified within the LWJV business plan would be considered as ‘difficult’ to develop due to steep terrain and potential geotechnical considerations. If the value of the LWJV scheme is set at ~£120M and the number of homes to be delivered is 1000 this equates to ~£120k per unit including the cost of land, it is not clear if this is a viable benchmark against recent developments in the city. Given the additional costs with developing ‘difficult’ sites what protection is there to the rent levels in the event of escalating construction costs?”

41.6      The Chair provided the following reply:

“Extensive due diligence checks have been undertaken on the strategic financial model to ensure that the joint venture can deliver homes at living wage rent and that these rent level are protected.  The new homes will be funded by sales receipts from the shared ownership properties in addition to the £59.8 million investment from each party.  The business plan therefore has a total of £186 million to develop the new homes, which is significantly higher than the investment figure of £119.6 million.  The financial model also includes an allowance for site purchase and abnormal costs.  Abnormal costs have also been considered by the independent valuer and are therefore reflected in their site valuations.   

As part of the due diligence process a number of scenarios have also been modelled including construction costs increase by 10%, drop in sales by 10%, and increase in land cost by 50%.   The three sensitivities were also combined to show the impact of all three occurring simultaneously, the Business Plan would still be balanced.   The living wage rents are set out in the business plan and any change to these would therefore need to be referred back to the council a reserved matter.  Each project will be agreed by the joint venture board and the Development Manager will need to demonstrate that it is viable and in line with the parameters within the business plan to proceed.  The business plan has also been reviewed by the independent Project Monitor who is satisfied with the assumptions used and found it to present ‘a viable business proposition’”

41.7      Ian Bailey asked the following supplementary question:

“In the event of profits being made from the Living Wage Joint Venture due to the expected average construction costs being met, what assurances can the limited liability partnership make regarding any profits being fed directly into the development of more affordable housing stock for Brighton & Hove through similar schemes and perhaps with the Brighton & Hove Community led housing opportunities and the Community Land Trust that have larger community benefits across the city”.

41.8      On behalf of the Chair, the Executive Director, Economy, Environment & Culture Chair provided the following reply:

“If additional surpluses were made, they would go back equally to each party. Clearly Hyde has charitable objectives to develop affordable housing and any surpluses that would come back to the city council would be subject to decisions by committee as to how those surpluses could be used. I would refer the questioner to the amendment that was agreed at Housing & New Homes Committee in terms of the commitments that were made by that committee to look at how the city council can support community land trust groups and other community housing providers to bring forward the development of sites and there was a commitment by that committee to bring a report back to a future meeting on that subject”.

(iii)         Living Wage Joint Venture Business Plan

41.9      Caroline Bailey was unable to attend the meeting therefore his nominated representative, Ian Bailey, put the following question on his behalf:

“One of the biggest concerns for residents of Coldean, Moulsecoomb & Bevendean are that family homes are over-extended, turned into HMOs then filled with students, pricing out families & making streets unpleasant to live in; what steps are being taken to protect LWJV developments across the city from this now or in the future?”

41.10   The Chair provided the following reply:

“The primary purpose of this joint venture proposal is to provide lower cost rental and sale homes for low income working households in Brighton & Hove and the council will retain control over the allocation of the homes through membership of the joint venture board.  The letting of homes will be in-line with the council’s allocations policy and the joint venture will continue to have full control over the sale, letting and management of the homes.  Through our 50% stake in the joint venture the council will be able to ensure that sub-letting is not allowed and prevent the use of the homes as HMOs.   As with rent levels, the tenure of the new homes is set out in the business plan and any changes would therefore be considered a reserved matter and need to be referred back to the council”.

41.11   Ian Bailey asked the following supplementary question:

“Given that universities are seeking to increase their numbers gradually in the coming years, how is the council looking to use planning policy to generally safeguard communities against overall incremental HMO increases for instance, enabling or expecting universities to provide student accommodation on campus to cope with both the existing and expected numbers of students rather than hoping that the city’s housing stock will soak up their needs?”

41.12   The Chair provided the following reply:

“That’s probably a question that should be addressed to the Tourism, Development & Culture Committee which handles planning policy but I would say we’ve just got Preston Barracks through Planning Committee and obviously there’s the development at Falmer at the University of Sussex site so more purpose-built student accommodation is coming on stream. I think the question on whether student numbers will expand is not one I’d necessarily agree with and not one we can answer here. We’ll provide you with a relevant policy response on that”