Agenda item

[Report of the Director of Housing, Regeneration and Planning. To be introduced by the Cabinet Member for Housing and Estate Renewal.]

This report seeks authority to enter into a Deed of Variation based on the draft heads of terms agreed in a proposed Letter from the Council to Newlon set out in Appendix B, enabling the £6.5m RTB funding to be spent on the Ferry Lane garage site and the Monument Way site, and/or other sites in the borough which will result in the delivery of the affordable housing

The Cabinet Member for Housing and Estate Renewal introduced this report which sought authority to enter into a Deed of Variation based on the draft heads of terms agreed in a proposed Letter from the Council to Newlon set out in Appendix B, enabling the £6.5m RTB funding to be spent on the Ferry Lane garage site and the Monument Way site, and/or other sites in the borough which will result in the delivery of the affordable housing

The Cabinet Member noted the Council’s Borough Plan included objectives to increase the supply of new affordable housing, which was also reflected in our Housing Strategy. The Council had now put in place a direct delivery programme to work towards building 1,000 new Council homes at Council rents by 2022. This represents a positive use of current RTB receipts, which we would no longer choose to allocate to delivery by external partners, as was done in March 2016. However, the amendment of that Original Funding Agreement will ensure that those funds are spent within the borough of Haringey and not returned to Government.

The Cabinet Member closed by noting the Council was demonstrating its commitment to the development of new, high-quality affordable rented homes for local people.

In response to questions from Councillor Brabazon, the following information was provided:

• The Cabinet Member confirmed the Ferry Lane garage site was located on Ferry Lane near Hale Wharf.
• Regarding the Monument Way development, the Cabinet Member recognised there were concerns around this.
• Officers noted retention of resources in the borough was key and so the Council had been working with the housing association Newlon to other areas of spend towards the delivery of affordable housing, and to refine estimates of spend at the Monument Way site up to the end of the 2019/20 financial year. Consequently, it was identified that significant spend was incurred towards the acquisition of the Ferry Lane Garage Site, which was intended to deliver affordable housing in due course. The Council’s main objective was to ensure that any money was not returned to the GLA but rather utilised in the borough where possible.
• The Cabinet Member noted discussions had been made regarding the housing mix on the proposed new site. Officers added that the Cabinet Member had requested that a provision for larger units be included in the Funding Agreement, in order to minimise or avoid one bed units where possible.

Further to considering exempt information at item 26,

RESOLVED

1. To agree the reallocation of the £6.5m RTB funding from use solely on the Monument Way site, to also include use on the Ferry Lane garage site and any other sites, and for the provision of 54 affordable rented homes to be provided on other sites (including Monument Way site, Ferry Lane garage site and other sites in the borough) as set out in paragraph 6.4 of this report, and for the Council to enter into a Deed of Variation based on the draft heads of terms contained in a proposed Letter from the Council to Newlon attached at Appendix B to vary the Original Funding Agreement, dated 21st December 2017, with Newlon Housing Trust, to give effect to the recommendation
2. To give delegated authority to the Director of Housing, Regeneration and Planning after consultation with the Director of Finance and the Assistant Director of Corporate Governance to agree the final Heads of Terms and the final terms of the Deed of Variation, and to agree any further reallocation of any part of the £6.5m funding to best enable the delivery of 54 affordable-rented units.

Reasons for decision

Under the terms of current arrangements under the Local Government Act 2003, local authorities are required to spend retained Right to Buy receipts within three years, and for the receipts to fund no more than 30% of total development costs. Where a local authority is unable to spend receipts within three years they have to be returned to the MHCLG, together with interest of 4% above base rate.

In March 2016, Cabinet decided to allocate up to £5m RTB funding to Newlon. The Council did not have a direct delivery programme in place at that time, and therefore chose to work closely with housing associations in order to ensure that RTB funds were retained within the borough. Through a further Cabinet Member decision in October 2017, and a Leader’s Decision in January 2018, this was increased to £6.5m, due to an increase in units and an increase in costs, respectively.

On 21st December 2017, the Original Funding Agreement was entered into and £6.5m of RTB funding was released to Newlon. The Original Funding Agreement contained a milestone condition requiring Newlon to commence on site by 30th September 2018. Also on 21st December 2017, Newlon had also satisfied the conditions of the Agreement for Lease, which allowed the Council to grant the 250-year Lease of the Monument Way site to Newlon. The Lease was subject to a legal charge in favour of the Council as security for the £6.5m RTB funding provided to Newlon. The Original Funding Agreement allows the release of the legal charge over the Lease once Newlon has delivered the 54 units of affordable rent.

The reason for the delay is the need to deliver significant infrastructural works, including the realignment of Fairbanks Road in order to release developable land within the Chesnut Estate. It has also had to be delivered within a challenging environment, with construction logistics coordinated between a number of developments around Tottenham Hale simultaneously.

The Ferry Lane Garage site is owned by Newlon and is a designated site in the Tottenham Area Action Plan (AAP). It is part of the Hale Wharf site designation, but it is outside the boundary of a development which is being delivered on site currently. The AAP recommends ‘appropriate development of the garage site’, enabling better access to and use of The Paddock, a local underused green space. It is currently designated as Green Belt land, but the AAP notes that consideration would be given to previous developments on the site. It is therefore considered appropriate for the delivery of new housing, including affordable homes, subject to Green Belt guidance in the National Planning Policy Framework.

Due to delays at the Monument Way site, and in order to minimise the risk of returning the £6.5m RTB funding to MHCLG, it is recommended that the existing funding agreement is varied to allow for the £6.5m RTB funding to be reallocated and applied to multiple sites within the borough.

Alternative options considered

An alternative option is to not amend the Original Funding Agreement and for the Council to clawback the £6.5m from Newlon. However, this would mean that the Council is unable to identify sufficient qualifying spend before March 2018, and the Council would be required to repay these funds to MHCLG, with additional interest at 4% above base rate.