DD1484 Barking Town Centre Housing Zone – North Street and Kingsbridge

Type of decision: 
Director's decision
Code: 
DD1484
Date signed: 
24 March 2016
Decision by: 
David Lunts, Executive Director Housing and Land

Executive summary

This Director’s Decision seeks approval to:

•    sign off due diligence undertaken in respect of the North Street and Kingsbridge interventions that the GLA proposes to fund in the Barking Town Centre Housing Zone; and

•    enter into an Affordable Housing Grant Agreement with the London Borough of Barking and Dagenham to provide such funding.
 

Decision

That the Executive Director of Housing and Land, after consulting with the Deputy Mayor for Housing, Land and Property, is satisfied that the outcome of due diligence, detailed in this report, demonstrates it is appropriate for the GLA to contractually commit grant funding of £672,000 to the two interventions specified below within the Barking Town Centre Housing Zone.

 

Part 1: Non-confidential facts and advice

Introduction and background

1.1    The Barking Town Centre proposal was designated a Housing Zone by MD1457, and funding of £42.32 million was indicatively allocated to that zone (subject to the outcome of legal and financial due diligence) to unlock housing and regenerate the area.  
1.2    In October 2015, the GLA and the London Borough of Barking and Dagenham (LBBD) entered into an Overarching Borough Agreement (OBA) to record the indicative allocation of funding for the Barking Town Centre Housing Zone. LBBD will retain oversight of delivery across the Housing Zone by implementing governance arrangements outlined in the OBA with the GLA. 
1.3    Due diligence has now been undertaken in respect of two interventions within the Barking Town Centre Housing Zone, the conclusion of which is set out below.

Summary 
1.4    LBBD has requested GLA investment in the form of affordable housing grant to deliver 28 affordable homes by 31 July 2017 on two development sites. The North Street site is comprised of 14 Affordable Rent homes and the Kingsbridge site is comprised of 14 First Steps affordable home ownership units.  
1.5    GLA affordable housing grant will fund the gap evidenced by LBBD’s viability appraisals for both schemes.   

Proposition
1.6    The North Street and Kingsbridge schemes are comprised of 100% affordable housing and will be brought forward on council owned land. North Street is located in the northwest of the Barking Town Centre Housing Zone on a cleared site in front of Webber House between Whiting Avenue and North Street. Kingsbridge is the furthermost south scheme within the Housing Zone boundary and is located on the corner between Wheelers Cross and King Edwards Road (see Appendix 1 of this Director’s Decision for a site plan).

Funding
1.7    LBBD has requested a total of £672,000 in affordable housing grant. £384,000 (equating to £27,429 per home) and £288,000 (equating to £20,571 per home) of non-recoverable grant will be allocated to the North Street and Kingsbridge schemes respectively. This affordable housing grant will fund the gap evidenced by LBBD’s viability appraisals for the two schemes, which are not viable as entirely affordable housing schemes without non-recoverable grant funding.   

Appraisal
1.8    Project due diligence was undertaken by officers of the Housing and Land directorate applying the methodology used to assess affordable housing bids submitted to the GLA for funding via The Mayor’s Housing Covenant – 2015-18 Programme. This includes an assessment of value for money, strategic fit with GLA priorities and deliverability. 

Value for Money 
1.9    The value for money assessment takes into account the grant rate proposed for each project and judges this against the total scheme costs. On the basis of this assessment, the grant requested as a proportion of total scheme costs for both schemes is deemed to represent good value for money.
1.10    The grant rate per home for the North Street scheme proposal is £27,429, which is below the average grant rate for schemes of the same tenure funded through The Mayor’s Housing Covenant – 2015-18 Programme. 
1.11    With regard to the Kingsbridge scheme proposal, the grant rate per home of £20,571 equates to less than The Mayor’s Housing Covenant – 2015-18 Programme average for Affordable Home Ownership schemes. 

Strategic Fit    
1.12    The Barking Town Centre Housing Zone will contribute towards the implementation of the Mayor’s policies, as set out in the Mayor’s London Housing Strategy, where the overarching aim is to increase housing supply. The provision of housing, including maximising affordable housing delivery, is also prescribed in the Further Alterations to the London Plan March 2015 (e.g. Policy 3.3 and Policy 3.11). The Housing Zone Programme aims to increase housing supply by accelerating and unlocking housing development to deliver 50,000 homes to meet a variety of housing needs by 2025. The North Street and Kingsbridge schemes will directly contribute towards this objective, as well as support the aim to deliver 42,000 homes per annum prescribed by the Further Alterations to the London Plan March 2015.     

Deliverability
1.13    Both schemes are considered to be deliverable within the project milestones specified in section 1.14 of this Director’s Decision. Planning permission was granted for North Street on 8 February 2016. LBBD secured outline planning consent for Kingsbridge in October 2014 and full planning consent is expected to be achieved by 15 June 2016. Both schemes, which are to be developed on council owned land, are due to start on site by July 2016 and complete by July 2017.       
    
Project Milestones
1.14    The key project milestones are summarised as follows: 

Project

Planning Application Submission Date

Planning Approval Date 

Start on Site Date

Practical Completion Date

North Street

18 December 2015

8 February 2016

30 June 2016

31 July 2017

Kingsbridge

31 March 2016

15 June 2016

29 July 2016

31 July 2017

 

Governance
1.15    The GLA will contract with LBBD and this relationship will be managed on a reciprocal basis through quarterly meetings in order to ensure transparency. The relationship will be managed by a designated officer from the GLA’s Housing and Land directorate with oversight from the Housing and Land Senior Management Team. 


Stakeholders / Contractual Arrangements
1.16    The counterparty in respect of the North Street and Kingsbridge schemes is LBBD who will enter into a Housing Zone Affordable Housing Grant Agreement with the GLA. LBBD will secure planning consent and procure a contractor to undertake the works on both schemes.  

Conclusion
1.17    In summary, the assessment undertaken by officers of the Housing and Land directorate concluded that the North Street and Kingsbridge schemes meet the GLA’s requirements in terms of value for money, strategic fit with GLA priorities and deliverability. It determined the following: 
•    That the grant requested of £672,000 is an appropriate level of funding to provide to the schemes, which will deliver 14 Affordable Rent homes and 14 First Steps (Affordable Home Ownership) units by July 2017.

•    That the schemes strategically fit with key GLA priorities, including the aim to unlock and increase housing supply.

•    That the schemes are deliverable within the project milestones specified in section 1.14 of this Director’s Decision.  
 

 

Objectives and expected outcomes

2.1    The two schemes will deliver a total of 28 affordable homes by July 2017. North Street will deliver 14 Affordable Rent homes and Kingsbridge will deliver 14 First Steps (Affordable Home Ownership) units. 

 

Equality comments

3.1    Barking Town Centre Housing Zone will contribute towards the implementation of the Mayor’s policies as set out in the Mayor’s London Housing Strategy. In January 2014, the GLA published an integrated impact assessment (“IIA”), including an equalities impact assessment, of that strategy. The policies related to increasing housing supply, to which the North Street and Kingsbridge projects will contribute, were covered by the IIA for the Further Alterations to the London Plan. 
3.2    The IIA concluded that updating housing projections and targets would support the delivery of sufficient housing and may help to stabilise housing prices, thereby promoting equal opportunities throughout communities. Furthermore, the provision of housing, including maximising the delivery of affordable housing, would be in line with other policies of the Plan (e.g. Policy 3.5), ensuring that the needs of different groups are taken into account in the housing design.
3.3    The delivery of new and additional homes will help to implement Objectives 1, 2, 3 and 4 of the Mayor’s Equalities Framework “Equal Life Chances for All” (June 2014) through the creation of new homes, housing products and well-designed housing schemes.
3.4    The designation of a Housing Zone within an area is designed to identify a site or sites as an area for housing growth and delivery within London, often partnered with a series of funding streams and non-financial assistance to deliver these new homes, and therefore this decision will facilitate these goals and ultimately ensure that the needs of different groups are taken into account in the design and development of housing.
3.5    In order to access this funding, LBBD will be required to enter into a contract with the GLA to deliver the interventions specified in this Director’s Decision. With regard to project delivery, the contract places the following obligations on LBBD in respect of the Equality Act 2010:
•    LBBD will comply in all material respects with all relevant legislation relating to health and safety, equality and relevant employment matters, and will use reasonable endeavours to procure that all Borough Parties do likewise. 

•    LBBD confirms that it has, and is in full compliance with, a policy covering equal opportunities designed to ensure that discrimination prohibited by the Equality Act 2010 is avoided at all times and will provide a copy of that policy and evidence of the actual implementation of that policy upon request by the GLA.  
 

 

Other considerations

a)    key risks and issues

4.1    The main risk is that planning permission for Kingsbridge will not be achieved, or will be delayed.  This is largely mitigated by the fact that LBBD is fully committed to the scheme, and has significant experience with the planning process and of working with the GLA to deliver a large housing development programme.  

b)    links to Mayoral strategies and priorities

4.2    The purpose of the Housing Zones Programme is to increase housing supply by accelerating and unlocking development to deliver 50,000 homes by 2025. The North Street and Kingsbridge projects will directly contribute towards this goal as well as support the aim to deliver 42,000 homes per annum prescribed by the Further Alterations to the London Plan March 2015. 
 

Financial comments

5.1    As per MD1457, an area of Barking Town Centre was designated a Housing Zone and was allocated £42.32 million. 
5.2    This DD is to finalise the decision to allocate £672k to the two interventions specified.  
5.3    The Grant rate of £27,429 for assistance to construct an Affordable rented dwelling is well below the average grant rate of schemes funded through the Mayors Housing Covenant 2015-18 Programme. 
5.4    The Grant rate on the second scheme for Affordable Home Ownership (Shared), being £20,571 again is below the average grant rate. 
5.5    The site is very close to the centre and has good transport links; therefore the site is a good location for affordable rent and homeownership housing. 
5.6    This is a standard social housing grant, a process that the area teams are used to dealing with and therefore should be classed as a low level risk. 
5.7    If the properties are not constructed the grant will be repaid to the GLA. 
 

Planned delivery approach and next steps

Activity

Timeline

Completion of Contract

March 2016

Physical Start on site

June/July 2016

Practical Completion of development

July 2017

 

Appendices and supporting papers

Appendix 1 – Site Plan North Street and Kingsbridge (see signed decision form)