To receive a report on commissioned research into housing delivery models in other local authorities.

The committee considered a report on commissioned research into housing delivery models in other local authorities by Three Dragons.

The Chairperson introduced the officers and representatives from Three Dragons to present.

The principal points of the discussion are summarised below:

1. The Service Director, Economy & Growth noted that there was an item on delivery models around delivery of affordable housing around the county at October’s meeting. It was noted that a final report be brought back to the committee to review the key findings before final recommendations are made to Cabinet.

2. The Chairperson asked the representatives from Three Dragons what the possible sources of funding are that the council should be looking at to deliver the suggested pilot site for housing.

3. In response, Lin Cousins (Three Dragons) noted that with development companies, the other local authorities have used their own funding to start with on the basis that over time there will be a return.

4. In response to a question about how registered providers (RPs) can be helped who are under financial pressure and why are registered providers cautious about involvement in section 106 schemes, Lin Cousins noted that RPs are cautious about s106 schemes because they sometimes have issues around the types of units they are asked to pick up from the developers and because they are usually not eligible for any grant funding from Homes England. When they develop their own sites (100% affordable housing), they are then eligible for Homes England funding.

5. In response to a question about the impact of the Budget on Homes England spending plans, Lin Cousins noted that the direction of travel looks like there will be a priority given to social rent units rather than affordable rent units and there is more money for the tail-end of the current programme and an allowance for the next programme.

6. Laura Easton (Three Dragons) added that if the council were to go down the s106 route on one of those sites, talking to the RP early on would be useful to ensure that the council would be developing the type of units that they would want to take. 

7. The Interim Head of Housing Development noted that in terms of RPs being interested in s106 agreements, there are certain rural locations where they do not have resource and therefore struggle to manage and maintain those properties. In terms of type, they are reluctant to take on one-bedroom properties of which there is a demand for those types of properties in Herefordshire.

8. The Chairperson asked whether the council has come across any ways to encourage developers to build one-bedroom units.

9. In response, the Interim Head of Housing Development commented that one-bedroom units are problematic for developers and in terms of innovative solutions, the council is going for affordable market rent in locations where there is a planning application that has come in with an affordable housing requirement. However, the council is unable to get a RP to take those plots and therefore is letting the developer to rent them out in a different way rather than having to include an RP. 

10. The Chairperson asked which of the local authority delivery model examples was recommended for use as a pilot scheme.

11. In response, Lin Cousins suggested that a combination of short-term and long-term measures may be adopted including such as the council may want to begin with some modest interventions in getting involved in delivering sites such as the aforementioned dialogue with RPs. Additionally, a bundle of sites may be offered to RPs to make it more commercially viable for them.

12. In relation to the list of Herefordshire Council owned sites, the Interim Head of Housing Development noted that the list was reached by looking at all sites that were owned by the council which can be delivered in the short-term to get stock into the marketplace.

13. In response to a question on which site would be recommended in the short-term, the Interim Head of Housing Development suggested smaller sites such as Bromyard, Holme Lacy, Plough Lane, and parts of Merton Meadows with 100% rental properties with a mixture of market rent and affordable rent.

14. The Service Director, Economy & Growth caveated that potential developments on the list of council owned sites are subject to business cases, planning permission, and other processes first.

15. In response to a question on the timeline and what is needed in next year’s budget to get this started, the Interim Head of Housing Development noted that a number of sites are currently in the process of planning permission and viability studies.

16. In response to a question on how longer-term ambitions are realised, Lin Cousins suggested dialogue with other local authorities to explore in greater detail why they took the decisions they did and how they set about doing it.

17. In response to a question on what the council needs to do in relation to audit and governance, the Service Director, Economy & Growth acknowledged the housing problem that the county has that includes both a short-term and longer-term provision. The focus is now on how the structures are being created to help both in the short and long term.

18. Lin Cousins added that in the research carried out by Three Dragons, it was found that where joint ventures and development companies were set up well at the start, they do over the longer-term make a return to the local authority.

19. It was noted that another potential source of funding for housing could derive from pension funds including the Local Government Pension Scheme.

20. In relation to the suggestion of considering options to ameliorate the wait for phosphate credits, the Chairperson asked how the council could do this.

21. The Service Director, Economy & Growth responded that the council can set the criteria for which they allocate the credits out. At present, that has been addressing the backlog of planning applications that have been with the council for a number of years. In addressing nutrient neutrality, is a bigger issue of how the right type of housing is brought forward.

There was a short adjournment to enable committee members to consider potential recommendations. The meeting recommenced and the following resolutions were agreed by the committee.

Resolved: That Herefordshire Council to:

1. Progress at pace a pilot project to develop smaller sites owned by Herefordshire Council, subject to planning conditions and business plan.

2. Identify and begin the process of setting up a development company, using the lessons learned from other local authorities identified in the report.

3. Consider prioritising phosphate credits for developments with a higher percentage of social or affordable housing, such as those in the pilot project.

4. Explore Local Government Pension Scheme options for funding the delivery of affordable housing.

5. Report these recommendations to the council’s housing development working group.