Can the HCA save the housing sector?
The HCA is set to map out a rescue plan for fatally stalled housing schemes. Damian Arnold reports on what this means for architects
The Homes and Communities Agency (HCA) will today (27 February) confirm a rescue plan for housing projects that have foundered in the face of the banks’ credit freeze.
The AJ understands that six major regeneration schemes in London will be discussed by the HCA, the London Development Agency and the London Thames Gateway Development Corporation. The HCA, which has an annual budget of £17.2 billion, is expected to take on the development risk of these projects and accelerate the public funding to build the social housing elements first. The six selected schemes are expected to be made public early next week.
‘We are developing a process whereby we will take projects forward to support and fund,’ says an HCA spokeswoman. ‘We have a London board meeting and will be taking some projects to that. It’s going to be an ongoing thing.’
The identity of the six projects is a closely guarded secret, but one of them could be the Barking Riverside regeneration scheme, which will provide more than 10,000 homes. The scheme was originally a 50-50 joint venture between English Partnerships (now HCA) and Bellway Homes. The AJ understands that Bellway Homes is no longer an equal partner and that the HCA will take on the development risk. However, Bellway will remain on the project to deliver the homes. The HCA will also accelerate the social housing elements to get the scheme moving. Design for Homes director David Birkbeck predicts that the HCA will take the development risk on many projects in this way.
‘Developers can’t afford these regeneration schemes because they don’t go cash positive for three to five years,’ he says. ‘Developers are looking for stuff that is cash positive in the short term, because they don’t have finance beyond 12-24 months. I can see a model where the HCA will take the development risk, provide the capital and the developers will become contractors back to HCA. It will mean lower margins, but more short-term returns.’
The HCA is now in discussions with London Borough of Bexley to come up with a way forward for the Assael-designed Erith Western Gateway project to build more than 700 homes after the developer Crest Nicholson pulled out of the project last week.
The good news for architects is that this is just the beginning for the HCA, as it looks to support stalled housing-led projects all over the country.
The HCA has confirmed the acceleration of funding for the £150 million regeneration of the Park Hill flats in Sheffield after it emerged that developer Urban Splash, which recently shed 60 of its workforce of 280, could not provide finance in the short term.
The financing of the project has been re-phased to enable the HCA funding, which is supporting 200 rented social homes, to come through first. This will enable phase one to get started in the hope that Urban Splash will have funding in place at a later date.
HCA deputy chief Eamonn Boylan told AJ: ‘We are looking at how we can use our existing investment tools to support schemes. We will look at schemes across the country in consultation with local authority partners.’ As a result of the ‘front loading’ of social housing elements, architects will need to radically redesign schemes to provide the social housing portion in one block, rather than sprinkling it around the masterplan, says director of housing practice HTA, Ben Derbyshire.
‘A lot of schemes will need to be reconfigured,’ he says. ‘Those who said that social housing could not be built in separate blocks will have to think again. It’s a sacred cow that will have to be slaughtered.’
This is just the beginning for the HCA, as it looks to support stalled housing-led projects all over the country
Derbyshire predicts the other sacred cows that will have to be slaughtered in order to make the schemes economically viable are the stringent sustainability standards for all new homes, and moves to impose more generous space standards.
The HCA will only be able to support key strategic schemes. Other delayed projects could be saved by transferring them from ‘build-to-sell’ to ‘build-to-let’, says the British Property Federation (BPF), because there is an appetite from institutional investors for build-to-let. The BPF is calling for regulatory changes to the tax regime and planning laws to facilitate it.
‘We have been advocating homes for rent for a very long time,’ says BPF assistant director of planning Jonathan Seager. ‘It could be a way to build more affordable housing.’
Boylan adds: ‘Clearly the market place is becoming very different and we need to be as flexible as we can. What we are not looking to do is convert whole schemes into social rented schemes.’