Cabinet Member Delegated Decision 15 May 2015 Disposal of

Cabinet Member Delegated Decision
15 May 2015
Disposal of Council Land at China Walk Estate - Juxon Street & Sail Street, SE11 to
Pocket Living LLP to develop Intermediate Affordable Housing
Wards: Bishops
Portfolio: Councillor Paul McGlone, Deputy Leader (Finance and Investment)
Report Authorised by: Sue Foster, Strategic Director, Delivery
Contacts for enquiries:
Uzo Nwanze, Head of Asset Strategy (Transformation), tel: 020 7926 9929,
unwanze@lambeth.gov.uk
Pauline Foster, Housing Development Manager, tel: 020 7926 3475, pfoster@lambeth.gov.uk
Report summary
This report seeks authority to dispose of the Council’s freehold interest in the car park site at
Juxon Street and the garage block at Sail Street, China Walk Estate, to Pocket Living LLP, for a
proposed development comprising 35 x 1bed and 4 x 2bed and 28 x 1bed and 3 x 2 bed
intermediate affordable flats at Juxon and Sail Street respectively.
Finance summary
The site will be purchased by Pocket Living LLP at values which the Council has considered
with advice provided by Lambeth Smith Hampton, the Council’s external valuers. The valuation
opinion by Lambert Smith Hampton is included in the accompanying Pt. II exempt from
disclosure report. The disposal will generate a capital receipt for the Council.
A programme of environmental improvements to China Walk estate has been agreed with local
residents and the China Walk TRA requiring a total of £250k to be ring fenced for this purpose
from the capital receipt for both Juxon and Sail Street sites - £125k from the Sail Street receipt
and £125k from the Juxon Street receipt.
Recommendations
1. Approve the disposal of the land at Juxon Street and Sail Street to Pocket Living LLP,
subject to planning permission, for the construction and sale of intermediate affordable
housing, subject to the Heads of Terms summarised in Appendix – 2 of this report and the
valuation opinion detailed in the accompanying Part II exempt from disclosure report.
2. That £250k from the receipt of the sale is set aside for environmental improvements to the
China Walk estate as agreed with local residents and the China Walk TRA.
3. That the retention of the intermediate affordable housing in perpetuity is contractually
secured through a planning Section 106 Agreement.
4. That the Head of Asset Strategy (Transformation) is authorised to agree such other terms
as are in the best financial interest of the Council.
Reasons for Exemption from Disclosure
The accompanying Part II report is exempt from disclosure by virtue of the following paragraphs
of Schedule 12A to the Local Government Act 1972: “Information relating to the financial or
business affairs of a particular person (Including the authority holding the information).”
1.
Context
1.1
Lambeth is one of the most densely populated London boroughs and there is very
limited land available for new development. The scale of housing need and the demand
for homes across all tenures is high, and is projected to grow. According to Greater
London Authority (GLA) estimates, Lambeth’s population is expected to have grown by
around 17% and the number of households by nearly 19%, by 2026. To deal with this
growth the London Plan (July 2011) requires at least 11,950 additional dwellings in
Lambeth over the period 2011-21, with an annual target of at least 1,195.
The 2012 Housing Needs Assessment (HNA) indicates a relatively low requirement for
intermediate affordable housing (3%), as the households these products are aimed at
can generally afford to access private rented housing. However, intermediate affordable
housing plays an important role in ensuring mixed communities and providing a greater
range of housing options to our residents.
However, in terms of size and mix, the HNA indicates that the greatest overall
requirement is for smaller (1 and 2 bed units) units (39% and 32% respectively), 24% for
3-bed and 5% for 4-bed or larger. This reflects changing household composition, with
one person households expected to account for 71% of household growth from 2011.
1.2
It is the Council’s vision that “all of our residents live in a home they can afford, that is
safe and well managed and in a neighbourhood they are proud to live in” (Lambeth
Housing Strategy, 2012). This vision is reflected in the Lambeth Community Plan 2013,
where one of the key outcomes is that “Lambeth residents have more opportunities for
better quality homes.”
The Council is responding to this challenge and wishes to ensure that new homes are
built to accommodate Lambeth’s growing population, and is delivered at a range of
affordability levels.
It proposes to achieve this through a mixture of direct new build on Council land, estate
regeneration, a subsidy scheme for registered social providers in Lambeth, the purchase
of former Council homes lost through the Right to Buy including other innovative delivery
models such as that proposed in this report.
1.3
Pocket is a niche developer that provides intermediate affordable starter homes for the
‘squeezed middle’1 beds in the main. However Pocket have been granted planning
approval to deliver, 35 x 1 beds and 4 x 2 bed homes on the Juxon Street site and 28 x 1
beds and 3 x 2 bed homes on the Sail Street site that reflect the housing need of the
borough as part of the new homes programme.
2.0
Proposal and Reasons
2.1
Juxon Street Site
Site Area:
0.105 hectares (0.260 acres)
Sail Street Site
Site Area:
0.055 hectares (0.137 acres)
Following detailed local consultation by the Council and Pocket, a programme of
environmental improvements to the estate has been agreed with local residents and the
China Walk TRA for a maximum of £250k to be ring fenced for this purpose.
Proposals
2.1
The Council has been working in partnership with Pocket LLP, a niche developer who
specialises in building compact, homes for Londoners on small brownfield “infill” sites
that would not normally require much, if any, affordable housing from a mainstream
private developer, to deliver a programme of Affordable Home Ownership opportunities
in the borough. Pocket homes currently sell for a maximum £230,000 – well below the
average London house price of about £430,000 and are targeted at singles and couples
who are unable to buy on the open market but earn too much to qualify for social
housing. Pocket can only sell to people who meet the Mayor of London’s ‘eligibility
criteria’ which sets the maximum earnings allowed for purchasers.
2.2
Pocket has been awarded GLA funding for this programme, as part of the
‘Mayor’s Housing Covenant – homes for working Londoners’. This funding will be
used to deliver affordable housing on four initial sites in the borough. This programme is
not affected by the Mayor’s newly funded GLA Housing Strategy. Pocket produce
affordable homes, which are sold on average at 20% below local house prices, to
households whose annual gross income falls below the GLA affordability threshold of
£66,000pa for one and two bed accommodation. Pocket homes meet London Plan and
Council space standards.
2.3
It is proposed that Pocket LLP will acquire the freehold interest with vacant possession,
to redevelop both sites for 100% intermediate affordable housing as follows::


Juxon Street - 35No x 1 bedroom and 4No x 2bedroom ; and
Sail Street - 28No x 1 bedroom and 3No x 2bedroom
The Council has recently disposed of land at Wynne Road to Pocket LLP as part of this
programme and this proposed sale forms part of the proposal of the 4 initial sites in the
Pocket Programme.
2.4
As in the sale of the Wynne Road site, the homes will be intermediate affordable homes
in perpetuity, sold according to the following criteria:




2.5
A strict marketing criteria for the first sale
A strict marketing criteria for subsequent re-sales
The units must be marketed for a period of six months, however if an eligible
person can not be identified within six months the property can be let on the open
rental market; and
In respect of first round sales the price must not exceed the lower of:
 80% of the market value or
 a price equivalent to three and a half times any London Plan Upper Limit
applicable at time of sale
The Council’s independent valuation surveyors, Lambert Smith Hampton, provided a
valuation opinion assuming the following:
a) Assuming planning permission which was London and Local plan-compliant (in
other words, what the 'average' developer might bid for the sites, assuming a
mix of private and affordable flats, at densities and floor areas which would be
acceptable in principle at planning, i.e. 40% affordable housing and 60% market
sale;
b) Restricted valuation assuming 100% intermediate affordable housing using
Pocket’s scheme and on the basis of the assumptions within S106 Agreement
from 10 Wynne Road dated 10 June 2014; and
c) Assuming 100% affordable housing using the Pocket Scheme.
The supporting valuation opinion is attached as Appendix 1 in the accompanying exempt
from disclosure report.
2.6
Completion of the purchase and payment for the site will take place within 30 working
days of grant of a satisfactory planning consent. Pocket’s commitment in relation to the
site will lapse in the event that it has not received planning consent for the site by 31 st
March 2016.
2.7
Following completion and sale of the homes, Pocket commits to reinvest its net profits
(meaning the sale proceeds net of taxes and construction, sales and funding costs) and
the GLA funding for the sites (subject to GLA approval) in the development of further
sites in Lambeth. This commitment will continue in respect of each of the further sites
until the GLA funding is no longer available to be recycled, for up to 10 years.
3.0
Finance
The site will be purchased by Pocket Living LLP at values which the Council has
considered with advice provided by Lambeth Smith Hampton, the Council’s external
Valuers. The disposal will generate a capital receipt for the Council and the capital
receipt will be added to the Single Capital Pot, it is not being ring-fenced for further
housing provision.
However, the sites form part of the China Walk Estate and in consideration for its loss a
programme of environmental improvements to China Walk estate has been agreed with
local residents and the China Walk TRA requiring a maximum of £250k to be ring fenced
for this purpose from the capital receipt generated.
4.
Legal and Democracy
4.1
The Council has the power by Section 32 of the Housing Act 1985 (the ‘Act’), and not
otherwise, to dispose of land held under part 2 of the Housing Act 1985. Such a disposal
can be made in any manner, but cannot be made without the consent of the Secretary of
State.
4.2
The Secretary of State has issued the ‘General Housing Consents 2013’.General
consent A3.2 provides consent for the Council to dispose of vacant land and assets that
are not dwellings at any price determined by the Council.
4.3
Section 105 of the Housing Act 1985 requires the Council to maintain such
arrangements as it considers appropriate to consult those of its secure tenants who are
likely to be substantially affected by a matter of housing management to which this
section applies. A matter is one of housing management if, amongst other matters, in the
opinion of the Council, it relates to the management, of dwelling-houses let by the
authority under secure tenancies, and represents—
(a)
a new programme of maintenance, improvement or demolition, or
(b)
a change in the practice or policy of the authority,
and is likely to substantially to affect either its secure tenants as a whole or a group of
them.
4.4
Section 149 of the Equality Act 2010 sets out the public sector equality duty replacing
the previous duties in relation to race, sex and disability and extending the duty to all the
protected characteristics i.e. race, sex, disability, age, sexual orientation, religion or
belief, pregnancy or maternity, marriage or civil partnership and gender reassignment.
The public sector equality duty requires public authorities to have due regard to the need
to:



Eliminate unlawful discrimination, harassment and victimisation
Advance equality of opportunity and
Foster good relations between those who share a protected characteristic and
those who do not.
4.5
The Equality Duty must be complied with before and at the time that a particular policy is
under consideration or decision is taken – that is, in the development of policy options,
and in making a final decision. A public body cannot satisfy the Equality Duty by
justifying a decision after it has been taken
4.6
When disposing of land at an under-value, the Council they will be exercising a
discretion within the constraints of the duties referred to above and should therefore
have in mind the following principles of administrative law:•
a decision must be within the Council’s powers
•
all relevant information and consideration, including the Council’s fiduciary
duty to the Council Tax payer, must be taken into account
 all irrelevant considerations, including unauthorised purposes, must be
ignored
4.7
This proposed key decision was entered in the Forward Plan on 26 April 2013 and the
necessary 28 clear days notice will be given before the decision is taken. In addition, the
Council’s Constitution requires the report to be published on the website for five clear
days before the proposed decision is approved by the Cabinet Member. Any
representations received during this period must be considered by the decision-maker
before the decision is taken. A further period of five clear days - the call-in period – must
then elapse before the decision is enacted. If the decision is called-in during this period,
it cannot be enacted until the call-in has been considered and resolved.
5.
Consultation and co-production
5.1
Public consultation events were held on the 19th November 2013 where 56 people
attended and on the 4th February 2014 where 27 people attended. The local business
that neighbours the site was consulted on 5th December 2013 and 3rd February 2014.
The consultation events were organised for local people to meet the architects and
comment on the initial proposals. Ward Councillors were also invited to the consultation
events. A number of objections and members enquiries pertaining to the development
have been received, comments from residents at the consultation event have been taken
on board and the scheme adjusted quite substantially in response.
5.2
The proposals have evolved in consultation with residents and currently in consultation
with planning and design officers before it is developed into a full planning application.
5.3
A programme of environmental improvements to China Walk estate is being explored
with residents and the China Walk TRA who are still giving consideration to other
environmental improvements. The works agreed so far comprise:



Improvement to the existing playground.
Resurfacing of the estate roads and re-providing some parking spaces
Replace the low level barriers
6.
6.1
Risk management
The agreed purchase price has been informed by Lambeth Smith Hampton’s valuation of
the site. However, in the event of planning permission being granted for fewer/additional
habitable rooms compared to those contained within the base scheme, an overage and
underage has been agreed. This is set out in the Heads of Terms.
7.
Equalities impact assessment
7.1
No implications.
8.
Community safety
8.1
The Council is responsible for site security and retaining vacant possession until
exchange of sales contracts.
9.
Organisational implications
9.1
Environmental
The homes will be developed in accordance with planning and building regulations and
will meet Level 4 of Code for Sustainable Homes.
9.2
Staffing and accommodation
The Council is developing better access to affordable home ownership which includes
the Pocket module of intermediate affordable housing where the Council is not only able
to nominate local potential buyers to the homes before they are put on sale more widely,
but also has the potential to purchase the intermediate affordable unit before it is offered
for sale nationally.
9.3
Health
The homes will meet Joseph Rowntree Lifetime Homes standard; a set of 16 design
criteria that provide a model for building accessible and adaptable homes.
10.
Timetable for implementation
10.1
Timetable showing the key stages for implementing the recommendations:
#
Key Stage
Date
1
Report Agreed
April 2015
2
Contracts Exchanged
By April 2015
3
Sale Completed
By May 2015
Audit trail
Consultation
Department or
Organisation
Sue Foster, Strategic Director Delivery
Mike Pocock, Delivery
BGR
Director
Neil Vokes, Programme
Delivery
Director
Daniel Omisore, Major
Enabling
Projects Capital & Tax
Lesley Johnson Interim
Housing
Programme Manager
Name/Position
Uzo Nwanze, Asset Strategy
Greg Carson, Legal Services
Wayne Chandai, Democratic
Services
Councillor Paul McGlone
Date Sent
29.4.15
25.07.14
Date
Received
01.05.15
24.04.15
Comments in
para:
24.04.15
3
Throughout
25.07.14
27.07.14
Valuation and Asset
Management
Governance and
Democracy
Governance and
Democracy
Deputy Leader
Finance & investment
25.07.14
Throughout
30.06.14
Throughout
24.07.14
24.07.14
4.1 to 4.6
24.07.14
30.7.14
4
29.4.15
6.5.15
Throughout
Report history
Original discussion with Cabinet Member
Report deadline
Date final report sent
Report no.
Part II Exempt from Disclosure/confidential
accompanying report?
Key decision report
Date first appeared on forward plan
Key decision reasons
Background information
Appendices –
February 2013
N/A
N/A
N/A
Yes
Yes
26.04.13
2. Expenditure, income or savings in excess of
£500,000
- Better Homes Report
http://www.lambeth.gov.uk/moderngov/ieDecisio
nDetails.aspx?AIId=24045
The accompanying Part II appendices are exempt
from disclosure by virtue of the following paragraphs
of Schedule 12A to the Local Government Act 1972:
“Information relating to the financial or business
affairs of a particular person (Including the authority
holding the information).”
- Appraisal summary by Lambert Smith Hampton
- Site plan
I confirm I have consulted Finance, Legal, Democratic Services and the Procurement
Board and taken account of their advice and comments in completing the report for
approval:
Signature ______________________________________ Date ________________
Post
Uzo Nwanze, Head of Asset Strategy (Transformation),
I approve the above recommendations, having consulted relevant Cabinet Member(s):
Signature ______________________________________ Date ________________
Post Councillor Paul McGlone
Deputy Leader (Finance & Investment)
Any declarations of interest (or exemptions granted):
Issue
Interest declared