Agenda item

The report will seek Cabinet Member approval for the disposal of up to 20 small Council infill sites to Sanctuary Housing Association as the Council’s preferred developer following a competitive process.

RESOLVED

The Cabinet Member considered the report, which sought approval for the disposal of up to 20 small Council infill sites to Sanctuary Housing Association, as the Council’s preferred developer following a competitive process.

      I.        To  declare surplus to requirements and to dispose of 20 sites to Sanctuary Housing Association for the purposes of enabling development to increase housing supply. The sale contract for these sites to be subject to obtaining planning consent; compliance with Secretary of State Consent for disposal requirements (if required); and obtaining market value for the land and based on the (draft) Heads of terms set out in Appendix 3. The Council will receive 100% nomination rights for  affordable rented homes subsequently developed on these sites  and  any intermediate affordable homes will be marketed to borough priority groups which will include existing Council and Registered Provider tenants within Haringey.

    II.        The  agreement with Sanctuary Housing to include a provision  to substitute other suitable infill sites (being vacant HRA land), the cumulative  market value    land receipt for  any such substitute sites to be less than £500,000, should any of the 20 sites within the current portfolio fail to proceed following further site and planning due diligence. This decision to be delegated to the Director of Regeneration, Planning and Development after consultation with the Cabinet Member for Housing Regeneration and Planning.

   III.        That the agreement of final heads of terms and price for each site  is delegated to the Director of Regeneration Planning and Development after consultation with the S151 Officer and Cabinet Member for Housing Regeneration and Planning.

Reasons for decision

There is an acute shortage of housing supply, particularly of affordable housing,  in Haringey and the borough has identified a portfolio of 20 potential development sites within its ownership to help address this shortage

The Housing Revenue Account budget is under pressure due to the 2016-20 1% per year rent reduction and the proposed High-Value Voids Levy to fund the Right to Buy extension for housing association

Haringey operates a Preferred Partner List of Registered Providers (a small number chosen for their strategic fit with the Council and their development capacity ) to work in partnership with the borough to ensure the quality of new developments and day to day management are delivered to the highest standards

Registered Providers have the development capacity and expertise to efficiently deliver housing on these sites and disposal to a Preferred Partner would transfer any funding requirement (other than potentially some borough Right to Buy Grant for affordable  rented accommodation if applicable) and development risk away from the Council whilst maintaining 100% Council nomination rights for the affordable housing delivered. Registered Providers (RPs) are development- focused and resourced to speedily obtain planning consent and commence delivery of the homes

In order to enable site due diligence and design work to commence quickly, it is proposed to exchange contracts on all sites within this portfolio early in the New Year. This exchange will be subject to obtaining planning consent for a viable and deliverable scheme; complying with any requirement for Secretary of State Consent to the disposal and the Council being satisfied that it has received market value for the land value taking into consideration the unit and tenure mix

Planning consent is required prior to disposal to protect the borough’s position in obtaining market value for the land value, given that it is the planning consent that will create this value

The Council expects the dwellings on these sites to be delivered within a reasonable timescale and the Council will have a legal Option to re-purchase the site should there be unreasonable delay due to Sanctuary Housing not progressing development proposals in a timely manner

The valuation of the land will be based upon the tenure and unit mix achieved at planning consent. Sanctuary Housing has committed to a minimum of 50% of all units across the sites portfolio to be affordable dwellings .Whilst this percentage significantly exceeds planning policy, the demand for affordable housing and shortage of supply is such that it is considered of greatest value to the Council to maximise affordable housing provision beyond the 50% level. This will be reflected in the value of the land at the point of sale and will need to reflect market value at the time

Alternative options considered

To sell on the open market:

This option would provide a capital land receipt, however the vast majority of these small infill sites will yield less than 10 units and as such fall below the planning threshold for the delivery of affordable housing. In addition to little or no affordable provision, this option would result in an unknown landlord immediately adjacent to our existing stock, potentially sharing access and external amenity areas and would not give the confidence in consistently high management standards compared to a trusted Preferred Partner Registered Provider.

The Council to develop:

The Council has a phase 1 infill programme in construction. Since this programme was approved, significant constraints have been placed upon the HRA budget including the 2016-20 1% per year rent reduction and the proposed High-Value Property Levy to fund Right to Buy. It is considered that an RP can procure planning and construction more efficiently than the Council and will fund the projects and take development risk whilst the Council will retain 100% Nomination rights to the affordable properties.