Agenda item

Report of the Director of Placemaking and Housing. To be introduced by the Cabinet Member for Council Housebuilding, Placemaking, and Development.

This report seeks approval to appoint the recommended winning contractor to complete a new build development comprising thirty two council rented homes and nine private for sale flats and houses at Cranwood, 100 Woodside Avenue, N10 and to appropriate the land for planning purposes to facilitate the development process.

The Cabinet Member for Council Housebuilding, Placemaking, and Development introduced the report which sought approval to appoint the recommended winning contractor to complete a new build development comprising thirty two council rented homes and nine private homes for sale at Cranwood, 100 Woodside Avenue, N10 and to appropriate the land for planning purposes to facilitate the development process.

The Cabinet Member noted that eight of the proposed homes would be 3-bed homes and five of the homes would be adapted for the bespoke housing programme for those with disabilities. It was added that the scheme would also deliver an open, green space of 830sqm and a new subway to Parkland Walk. Subject to Cabinet approval and the appropriation of land for planning purposes, it was anticipated that construction would commence in December 2022 and would complete before the end of 2024.

In response to questions from Cllr White, Cllr Mark Blake, Cllr Ibrahim,and Cllr Connor the following information was provided:

-       It was noted that construction had been significantly impacted by cost increases and interest rates and that this was causing significant pressure in the Housing Revenue Account (HRA).

-       It was explained that there would be future discussions about housebuilding and possible mitigations, including in the Medium Term Financial Strategy (MTFS) and that these may focus rent levels on a number of homes that already have Cabinet approval

-       It was confirmed that this report, however, sought authority for expenditure to bring the scheme forward at formula rent and further financial information was set out in the exempt report for Cabinet consideration. If any mitigations were to be brought forward, these would be proposed in the upcoming December MTFS paper.

-       It was explained that it was very important that the Housing Development Programme was affordable overall and it was ensured, as much as possible, that individual schemes were also affordable.

-       It was explained that there were two funding regimes for affordable housing delivery: the Building Council Homes for Londoners programme, which allowed both Formula Rent and London Affordable Rent to be provided as social housing products, and the 2021-26 Affordable Homes Programme, which specified that only formula rent would qualify as a social housing product and had a higher grant tariff. The different funding arrangements and scheme rules meant that there may be different approaches in different schemes.

-       It was confirmed that on projects starting on site from April 2023, London Affordable Rent would no longer be a rent level that local authorities could charge .

-       The Cabinet Member noted that the Council was proud of its Housing Delivery Programme. So far, the programme had been delivered with a small number of private for sale units. It was acknowledged that the current conditions were challenging but that it was important to protect the HRA and the manifesto promise to build homes.

-       In relation to queries about the quality of the build and increasing costs, it was confirmed that this was a fixed price contract with a clear specification. It was noted that, sometimes, opportunities for value engineering were considered but that this would not be pursued in a manner that would undermine the landscaping or quality of the scheme.

Following consideration of the exempt information, it was

RESOLVED

1.    To approve the appointment of the recommended contractor identified in the exempt part of the report to undertake the new build works to provide a total of forty one council homes and private for sale homes at Cranwood, 100 Woodside Avenue, N10 for a total contract sum as set out in the exempt part of this report and the client contingency sum set out in the exempt part of the report.

2.    To approve the appropriation of the land at Cranwood, 100 Woodside Avenue, N10 3JA (edged red in the plan attached at Appendix 1) currently held partly for general fund purposes (shown coloured red) and partly held for housing purposes (shown coloured blue in Appendix 3) for planning purposes under Section 122 of the Local Government Act 1972 as they are no longer required for the purpose for which they are currently held, and for the purpose of carrying out development as set out in paragraphs 5.6 to 5.32 of this report.

3.    To approve the use of the Council’s powers under Section 203 of the Housing and Planning Act 2016 to override easements and other rights of neighbouring properties infringed upon by the Cranwood, 100 Woodside Avenue N10 development, under planning permission Ref: HGY/2021/2727.

4.    To delegate to the Director of Placemaking and Housing, after consultation with the Director of Finance and the Cabinet Member for Council Housebuilding, Placemaking, and Development, authority to make payments of compensation as a result of any infringement arising from the development in respect of recommendation [3.1.3].

5.    To approve the appropriation of the land at Cranwood, 100 Woodside Avenue (edged red in the plans attached at Appendix 1) from planning purposes back to housing purposes under Section 19 of the Housing Act 1985, after practical completion of the development (which is anticipated to take place on or about 31 December 2024).

6.    To approve the Total Scheme Costs, including on costs, works, interest, contingency, and other costs to the value as set out in detail in the exempt part of the report.

7.    To approve the disposal of a total of nine open market sale units to be constructed and contained within the development at Cranwood and more particularly described in paragraph 5.10 for a minimum total sale price as set out in the exempt report and note that such disposals will only be implemented in the event that (if required) the consent of Secretary of State for each of the disposals has first been obtained; and

8.    To delegate authority to the Director of Placemaking and Housing, in consultation with the section 151 Officer and after consultation with the Cabinet Member for Finance and Local Investment and Cabinet Member for Council Housebuilding, Placemaking, and Development, to agree the timing, price, and the terms and conditions for each disposal to a formal valuation at the time of sale based on the minimum value stated in the exempt part of the report and legal documentations.

Reasons for decision

The site known as Cranwood former care home was approved by Cabinet on 9 July 2019 to be included in the Council housing delivery programme. This scheme was granted planning consent on 10 October and is ready to progress to construction This report therefore marks the third, and final, Member led decision to develop the site.

Following a formal competitive tender process, a contractor has been identified to undertake these works. These have been assessed through our usual process as outlined in the Exempt paper. This includes an independent assessment from a cost perspective by the Employer’s Agent. At tender stage, this involves cost benchmarking against the wider market and ensuring that the tenders are priced correctly against each other.

The appropriation of the site for planning purposes is required as it will allow the Council to use the powers contained in Section 203 to override easements and other third party rights of neighbouring properties and will prevent injunctions that could delay or prevent the Council’s proposed development. Section 203 converts the right to seek an injunction into a right to compensation. The site will need to be appropriated back from planning purposes to housing purposes on completion of the development to enable the Council to use the land for housing and let thirty two new Council homes at social rent, although nine private for sale homes will be disposed of on the open market.

The new development at Cranwood will allow the Council to redevelop an underutilised site, where the former Cranwood care home has been vacant for some time. The development offers a high quality scheme providing forty one homes, open space and landscaping, disabled parking and enhancements to the Parkland Park along Woodside Avenue. The development will help support delivery of the Borough Plan, Priority 1: “Our vision is for a safe, stable and affordable home for everyone, whatever their circumstances”.

During planning consultation stages, local stakeholders raised concerns about demolition works taking place during school term time. Demolition of the existing care home started on 22/08/22 and is due to complete on 14/11/22.

Alternative options considered

It would be possible not to develop this site for housing purposes. However, this option was rejected as it does not support the Council’s commitment to deliver a new generation of Council homes and would lose the opportunity to develop across the whole of the borough including wards in the West. In addition, not going ahead at this time would result in the loss of GLA grant funding under the Building Council Homes for Londoners Programme making the viability of any future scheme difficult.

This opportunity was procured via a competitive tender from the Cabinet Office backed consortium Westworks Procurement Ltd CONST2018DPS (Development and Construction DPS route) for pre-tendered works, services and supplies for the public sector, the recommended route for a contract of this value. An alternative option would have been to run a competitive tender via the Council’s LCP Major Works Framework, but this option was rejected due to a poor response following issuing a number of expressions of interest and because sufficient and suitable interest was not attracted via this framework.

The Council could continue with the scheme without appropriating the site for planning purposes, but this would risk the proposed development being delayed or stopped by potential third party claims. By utilising the powers under Section 203 of the Housing and Planning Act 2016 (HPA 2016), those who benefit from third party rights will not be able to seek an injunction. Making use of this power allows the Council to override these third rights and allows the third party to make a claim for compensation only. The Council recognises the potential rights of third parties and will pay compensation where a legal basis for such payments is established. The housing delivery team actively engaged with local residents about the development of these sites as they proceeded through the feasibility and design stages and any comments or objections raised were taken into consideration by Planning Committee in reaching its decision. For these reasons, this option was rejected.

The Council could decide not to appropriate the land for housing purposes upon practical completion of the building works. This option was rejected because it could prevent the Council from being able to offer up these homes for occupation as social housing thereby not supporting the delivery of much needed affordable homes.

The Council could decide to redesign the project and deliver it at a reduced specification in order to save on costs. This option has been rejected because, in a highly febrile construction market, there is no guarantee that a reduced specification would necessarily reduce the Council’s overall costs on this project. Any significant change to the specification would involve significant and costly changes to design. Amendments would need to be agreed through the planning process, and any significant changes would likely involve a return of the scheme to Committee. Given the material changes to the tender, it would also be likely to be retendered in a construction market where inflation is currently running at c.15%. Withdrawing the project at this stage would put the funding of this and other projects at risk, with more information set out in the exempt report.