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Brixton Somerleyton Road development, Ovalhouse and Brixton Green - funding, proposed rents etc

OvalhouseDB

Well-Known Member
I did notice that the build cost of the Theatre is assumed to be six and a half million. The Oval site ( part of deal is that the Council will get Oval site in exchange for Theatre coming to Somerleyton) is assumed to be worth £3, 100 000. Where is the rest going to come from? The Theatre is one of the risk factors in the scheme.

In the end it will be up to Council what proportion will be at Target rent.

As I said before if residents choices are limited due to financial constraints of the Council then this has to be made clear and noted.

I’ve done consultation before and am wary of being seen as wholeheartedly supporting a Council scheme. Critical support yes but I do not want to see Council press releases saying this is all agreed with local residents and everyone is 100% happy with outcome. How wonderful the Cooperative Council is etc.
It was in Neil Vokes' introduction that the remainder of the funding for the theatre build will come from the Arts Council (bid pending - fingers crossed) and from our other fundraising - they didn't show the various income sheets specifying that. We have trigger dates set into our draft Heads of Terms to demonstrate fundraising progress. Grant Thornton have modelled the scheme with and without Ovalhouse - in fact that sheet was left up on the screen while we were all talking for far too long for my liking ;)

I think it does need to be made clear what the constraints are, and that if residents consultation says '100% target rent across all 286 (?) homes' and the financial reality is that the cost of the build plus the cost of borrowing the money for the build is more than the income from the rents then that is a constraint. Consultation is about what is possible within the constraints - although consultation has actually led to some good ideas about how constraints can be worked around.

As a matter of policy Pete Robbins also explained that LBL favoured a mix of housing on the site and if there was a capacity in the council to provide more target rent properties then they would like to make these available in other areas of the borough as well as in Coldharbour Ward. And that the council are looking at this scheme as a pilot for developing other sites in the same way across Lambeth to achieve more target rent homes.
 

OvalhouseDB

Well-Known Member
Passivhaus has been used by Camden Council. I did hear it was about 15% more cost to build this way.

The proposed Code for Sustainable Homes for the Somerleyton road scheme is level 4.

This article says that Camden Council got Passivhaus development built at same price as building to level 4.

Worth a field trip? Or asking Camden Council how they did this?
Personally I think that's a great idea and well worth pursuing.
 

Crispy

The following psytrance is baṉned: All
If you design for it from the beginning, rather than carry on "as normal" and then try and cram "sustainability" in at the end (as my boss is wont to do), then it's not neccesarily any more expensive. It's just a matter of priorities and careful design.
 

Tricky Skills

Well-Known Member
Here's the Future Brixton reporting of the meeting.

“Grant Thornton modelled the development using 60% of the homes at private rent levels and 40% of the homes at Council target rent levels (e.g. £94 per week for a one-bed flat. They then showed that if 100% of the new homes are Council target rent, the rent levels are not high enough to pay back the borrowing and the scheme has a financial hole of £21m.”

Note the negative approach for trying to brush aside a positive aspiration.

Still - that 40% target really should be noted and referred back to over the months and years to come.
 

leanderman

Street Party: July 2
At meeting it was said that the build cost was higher at the north end of site and less at southern end of site due to tunnels.

I did notice that the build cost of the Theatre is assumed to be six and a half million. The Oval site ( part of deal is that the Council will get Oval site in exchange for Theatre coming to Somerleyton) is assumed to be worth £3, 100 000. Where is the rest going to come from? The Theatre is one of the risk factors in the scheme.

In the end it will be up to Council what proportion will be at Target rent.

As I said before if residents choices are limited due to financial constraints of the Council then this has to be made clear and noted.

I’ve done consultation before and am wary of being seen as wholeheartedly supporting a Council scheme. Critical support yes but I do not want to see Council press releases saying this is all agreed with local residents and everyone is 100% happy with outcome. How wonderful the Cooperative Council is etc.
b
Here's the Future Brixton reporting of the meeting.

“Grant Thornton modelled the development using 60% of the homes at private rent levels and 40% of the homes at Council target rent levels (e.g. £94 per week for a one-bed flat. They then showed that if 100% of the new homes are Council target rent, the rent levels are not high enough to pay back the borrowing and the scheme has a financial hole of £21m.”

Note the negative approach for trying to brush aside a positive aspiration.

Still - that 40% target really should be noted and referred back to over the months and years to come.
£94 a week sounds pretty good for those lucky enough to get a flat
 

Gramsci

Well-Known Member
Council report on Somerleyton road finance meeting.

Link here to summary of financial models for site.

(Scroll down to Somerleyton road to find the three summaries.)


Just had a look at they are taken out of main report without explanation for layperson.

First model is the traditional developer led one. Council does a deal with a developer to build out whole site. In exchange the developer gets a % of housing to sell on open market.

Second and Third are where the Council retains ownership of site and borrows money to build out the site. The loan being paid back by rental income. Some housing will be rented at market rent some at target ( affordable) rent.

PWLB is Public Works Loan Board. Borrowing from government. Cheapest way for Council to borrow.

Institutional investor is for example a Pension Fund who want a long term guaranteed return. Second cheapest way to borrow after PWLB.

This is not the full report. The full report is promised.

Did hope that Grant Thornton would produce a written summary that is more explanatory.
 
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Gniewosz

Active Member
Council report on Somerleyton road finance meeting.

Link here to summary of financial models for site.

(Scroll down to Somerleyton road to find the three summaries.)


Just had a look at they are taken out of main report without explanation for layperson.

First model is the traditional developer led one. Council does a deal with a developer to build out whole site. In exchange the developer gets a % of housing to sell on open market.

Second and Third are where the Council retains ownership of site and borrows money to build out the site. The loan being paid back by rental income. Some housing will be rented at market rent some at target ( affordable) rent.

PWLB is Public Works Loan Board. Borrowing from government. Cheapest way for Council to borrow.

Institutional investor is for example a Pension Fund who want a long term guaranteed return. Second cheapest way to borrow after PWLB.

This is not the full report. The full report is promised.

Did hope that Grant Thornton would produce a written summary that is more explanatory.
Interesting set of financial numbers.... "Surpluses arising to council" varying from £7.7m up to £133m, ie pure profit to the council to be used how they like (letting and maintenance costs already covered elsewhere in the financial model). Just based on this, I think the council will be pushing the PWLB funded option.
 

Gramsci

Well-Known Member
Has anyone else noted that it is no longer 40% council rent, but rather 40% affordable with a 65% blend?:
http://futurebrixton.org/somerleyton-road-project/somerleyton-road-issues/somerleyton-road-issues-housing/

After a bit of rough backwards calculation, it now looks like only ~12% council rent in the Somerleyton Rd proposal.... no better than any private development.
You are right. It has been brought up at consultation meetings. The blended rate is supposed to be for family size homes and be near Council target rent.

What I do object to is that one and two beds are likely to be up to 80% of market rent for the area.

3) Affordable housing

The aspiration is to have this as a policy compliant scheme for affordable housing and therefore we are aiming for 60 per cent private and 40 per cent affordable.

The affordable housing will be in line with the Council’s policy i.e. 65 per cent blended rate of market value (incl. service charge). This means one and two bed homes would be up to 80 per cent of market rent and larger family sized homes would be at social rent. We will run a financial appraisal to see whether the scheme can afford to provide more units at target rent.
I think you are correct to say that this is little better than a Developer would do on a large site. The main difference is that the Council will retain control/ ownership of the housing.

There is or should be more discussion on this issue. As its the most important aspect of the scheme. Repeatedly when local consultations take place about Brixton the thing that comes up is that people want more affordable housing.
 

Gniewosz

Active Member
You are right. It has been brought up at consultation meetings. The blended rate is supposed to be for family size homes and be near Council target rent.

What I do object to is that one and two beds are likely to be up to 80% of market rent for the area.



I think you are correct to say that this is little better than a Developer would do on a large site. The main difference is that the Council will retain control/ ownership of the housing.

There is or should be more discussion on this issue. As its the most important aspect of the scheme. Repeatedly when local consultations take place about Brixton the thing that comes up is that people want more affordable housing.
But even the premise that Council remains in control appears also to be on its way out if you read further down the page:
5) Ownership and management of affordable housing

Recent reforms allow the Council to borrow money to fund new council housing. Therefore, we will see whether it is feasible to retain the new affordable homes as council homes. If it is not feasible then either the new affordable homes will be managed by a Housing Association or by some alternative model yet to be discussed and agreed.
 

OvalhouseDB

Well-Known Member
This (12% target rent) doesn't sound familiar to me!

Is the webpage you are looking at the one that is 6 months out of date? (I'll stir up the need to update it with the project team).

The council and steering group are still very much looking at achieving at least 40% at target rent and maximising affordable (rather than 'affordable') housing.

Metropolitan Workshop, appointed by Igloo to do the Urban Planning, are working on a potential site layout to make this work (no problems flagged up about it!), and my understanding is that once that is completed it will be shared for feedback. I was in an operations team meeting on Wednesday and the discussion was very much at least 40% target rent.

The website refers to the council policy position, not the aims of the Somerleyton Rd project - which is why it is the standard 12%.

The publication of updates is clearly lagging way behind, this needs to be sorted.
 

Gramsci

Well-Known Member
This (12% target rent) doesn't sound familiar to me!

The council and steering group are still very much looking at achieving at least 40% at target rent and maximising affordable (rather than 'affordable') housing.

Metropolitan Workshop, appointed by Igloo to do the Urban Planning, are working on a potential site layout to make this work (no problems flagged up about it!), and my understanding is that once that is completed it will be shared for feedback. I was in an operations team meeting on Wednesday and the discussion was very much at least 40% target rent.

The website refers to the council policy position, not the aims of the Somerleyton Rd project - which is why it is the standard 12%.

The publication of updates is clearly lagging way behind, this needs to be sorted.
I would like an update. As from what I can remember the Council policy position is the one that was the one that I first heard about.

The rationale is that the larger family sized homes would be at equivalent of target rent.

The issue is how the loan is paid back. Target rent for all 40% would reduce income coming in so make it longer to pay back loan.

The financial model was going to be used to test out different options.
 

Gniewosz

Active Member
This (12% target rent) doesn't sound familiar to me!

Is the webpage you are looking at the one that is 6 months out of date? (I'll stir up the need to update it with the project team).

The council and steering group are still very much looking at achieving at least 40% at target rent and maximising affordable (rather than 'affordable') housing.

Metropolitan Workshop, appointed by Igloo to do the Urban Planning, are working on a potential site layout to make this work (no problems flagged up about it!), and my understanding is that once that is completed it will be shared for feedback. I was in an operations team meeting on Wednesday and the discussion was very much at least 40% target rent.

The website refers to the council policy position, not the aims of the Somerleyton Rd project - which is why it is the standard 12%.

The publication of updates is clearly lagging way behind, this needs to be sorted.
It would be very useful to get clarified. When I was at Lambeth's New Town Hall tent at the Country Show, the lady that was there to explain things didn't know there was a difference between affordable housing and council target rent housing. She seemed quite shocked when I explained the difference.
 

Tricky Skills

Well-Known Member
The community consultation continues - a drop-in design workshop for this Monday. It just so happens to coincide with the Cabinet meeting that will rubber stamp the regeneration rather than repair of Cressingham :facepalm:

BBuzz piece.
 

Gramsci

Well-Known Member
The community consultation continues - a drop-in design workshop for this Monday. It just so happens to coincide with the Cabinet meeting that will rubber stamp the regeneration rather than repair of Cressingham :facepalm:

BBuzz piece.
During the court case to evict Carlton Mansions HC the Council insisted that the start date for commencement of building works was summer 2015.

It was one of the reasons that Carlton Mansions lost as it was Councils argument to the Judge that it was reasonable of them to seek empty possession of a property when they needed it for redevelopment.

I have had no satisfactory explanation why design work is dragging on for so long.

It could be argued that the Council knew full well that empty possession of Carlton Mansions was not needed for that date. That they only used that timescale for works until they had evicted the long term residents.

I noticed shortly after the court case ended the Council changed the timescale for the project.

I may be cynical here but this is all to convenient for the Council.

To add I do not blame the lead officer on the Somerleyton road project for this. The eviction of Carlton Mansions was taken from the top.
 

editor

hiraethified
The role of Brixton Green in all this is a mystery which I fear even the great detective Sherlock Holmes would fail to unlock.
 

CH1

"Red Guard"(NLYL)
An update on Somerleyton Road - Cllr Hopkins has an 'aspiration' for 50% affordable housing. Plus also talk of a housing co-op.
You are on more familiar terms than me with Councillor Hopkins - but I reckon this housing co-op is going to be the sort of co-op that a Co-op Council sets up as a quango to keep the keep the property ownership separate from the council to avoid issues of Right to Buy etc.

Here is some legal guidance from Trowers and Hamlins (http://www.trowers.com/uploads/Files/Delivering_new_affordable_housing_-_opportunities_for_council.pdf)

"However, there are incentives for exploring alternative models using a special purpose vehicle (SPV). Development outside the HRA In particular, an SPV structure could enable new properties to be developed outside of the HRA, provided Communities and Local Government (CLG) consents (through either a specific or general consent), and therefore any SPV borrowing would have no effect on the HRA borrowing cap. This could leave any existing HRA borrowing headroom free to be spent on the council's existing stock.
The Right to Buy
A further consideration is the right to buy (RTB). Some councils may not be adverse to (and some may indeed welcome) allowing tenants of new build social housing the RTB. However, most councils regard it as important to avoid the loss of social housing in this way and so an SPV which takes ownership into an entity at one remove from the council (even if the SPV is wholly owned by the council) may be attractive. This is likely to be even more relevant since the increase in the maximum right to buy discount to £75,000 came into force on 2 April 2012, although it is of course worth bearing in mind the potential application of the right to acquire if the landlord is an RP or the properties have been built with HCA grant funding.
Wholly-owned council SPVs
Some councils are looking at small-scale new build programmes and if there is sufficient borrowing 'headroom' (within the council's general fund) identified
by the council's section 151 officer, a wholly-owned council subsidiary may be attractive as the properties could be labelled as 'council housing'. Any borrowing
by a wholly-owned SPV would be 'on balance sheet' but, for small-scale developments, the financial requirement may be modest, particularly if prudential borrowing is available (secured against the assured rental stream available to the SPV).
 

Gramsci

Well-Known Member
An update on Somerleyton Road - Cllr Hopkins has an 'aspiration' for 50% affordable housing. Plus also talk of a housing co-op.

I still don't see why the existing housing co-op at Carlton Mansions had to be smashed up to help enable this scheme.
Cllr Hopkins blog post makes no mention of the community the Council evicted from the site. In court, when the Council were having problems making the fire risk argument stick, they said that they would be pursuing the case for eviction in any case as they needed the vacant possession for a redevelopment scheme. This they said was due to start in summer 2015. So they told the judge that it was not unreasonable to get vacant possession at that point.

As an ex Coop member said to me recently in court the Council treated us like riff raff to be got rid of.

From Hopkins blog:

At a time of uncertainty for many, the Council and its community partners are delivering on our commitments to put local people in the driving seat for their futures in this part of the ambitious regeneration of Brixton. We are walking the walk, not just talking it – and I hope that more people will want to get involved, grabbing the opportunities which are out there.
Everything which is being developed on Somerleyton came from the community and at every stage we have been clear that the communities’ ownership of the elements is vital to making sure it is a success.
I do not see it that way from my experience.

There is a feeling from many people who I speak to that the forces influencing where they live, the businesses that can exist and the houses they can afford to live in, are out of their hands. But on Somerleyton Road the Council is ensuring that the changes are driven by and for our existing communities, so they get to share in a changing Brixton, and that the community can genuinely feed in to whatever further changes happen in their neighbourhood.
Its more than a feeling. One thing I learned from all this is that was out of my hands.
 

OvalhouseDB

Well-Known Member
Just to point out that the 50% affordable includes the 40% of homes that are offered at council target rent (40% of the homes overall - not 40% of the 50%!). This is way, way in advance of the policy demanded of developers which merely refers to 'affordable'.

And CH1 is correct - there will be no Right To Buy on the scheme.

The community in Carlton Mansions didn't need to be broken up in that way to enable the Somerleyton rd Development. The Somerleyton Rd Development was really benefitting from the input of CM residents, who had come to the earliest meetings and were generous, in particular, of their support for the idea of the theatre on the site. The co-op had voted to agree to the development, knowing that it would mean being re-housed. We were all sure that we didn't want the Mansions empty, for all sorts of reasons. :(

Once the Fire Inspection had taken place the Somerleyton Rd Team found that it was out of their hands, too. It was a housing issue.... :(

In truth, as an individual, I ask myself if as a council tax payer I want my local council to take rent and council tax for accommodation which has been declared a fire risk, and the answer is no. I don't want any landlord to be taking money for housing that is declared a risk(and I know the co-op took their own advice and increased fire prevention measures, and there will always be two views on the level of risk, but I would guess the council, any council, would take a conservative view given their liability), but I saw some of the immense upset caused by the eviction which was so much sooner than the agreed vacating of the building that had been discussed, and it was all a big mess. The co-op members lost their homes and the site lost the continuity with the only residents ON the site, who could have been the foundation of the new community.

The project is progressing steadily - once Igloo started work it became clear that ground issues and other matters would need more time and attention. (Tunnels, trees, the fact that the original terraces were simply demolished into their basements leaving 3m deep rubble all the way down the frontage of the W side of Somerleyton and on Coldharbour...there could be some very interesting archaeology once that is all dug out).

Over 100 people came to the 'Meet the Architects' event - it was really lively.
 

OvalhouseDB

Well-Known Member
Planning Permission submitted by the end of summer this year...that could take 3 months...then work beginning in 2016. Igloo are trying to ensure that work begins on CM as soon as possible in the scheme, with the Ovalhouse building a close second. But it will be an 18 month building / re-furbing process.

The architects looking after Carlton Mansions are trying to see if there can be temporary non-resi uses at the front on the ground floor.... but again, to an extent, that is our of our hands. But should be possible.
 

ViolentPanda

Hardly getting over it.
Just to point out that the 50% affordable includes the 40% of homes that are offered at council target rent (40% of the homes overall - not 40% of the 50%!). This is way, way in advance of the policy demanded of developers which merely refers to 'affordable'.

And CH1 is correct - there will be no Right To Buy on the scheme.
"No RtB" is pretty much the sine qua non for any co-development between local authorities and private money. We've already been told that when Cressingham Gardens is re-developed (yes, as usual Lambeth are arrogantly sure of themselves!), residents will lose RtB and that their secure tenancies will be amended to "assured lifetime tenancies".

I suspect that the tenancies on offer for the "council rent" properties will also be "assured lifetime tenancies", and will only have any meaning while the council still retains a financial interest in the development (something that isn't assured if they use an SPV to generate the finance).
 
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