Future Finance 31 May Presentations

Future of London FUTURE FINANCE 31st May 2011

HRA Reform

HRA Reform

Ken Jones Divisional Director of Housing Strategy

context • • • •

Council Housing Stock 19,200 33% non decent Housing debt free £20m negative subsidy under current HRA regime • no desire from tenants for LSVT • no opportunity to do meaningful business planning • heading for the rocks

Members’ and community’s aspirations • new build social rented council housing • accelerate estate renewal programme • decent homes elements almost irrelevant • general satisfaction with the Council as landlord

Council Housing: A Real Future • positive engagement with CLG (now HCA) from the start taking £281m debt • ability now to plan and be creative • real incentive to make efficiencies and generate income in HRA • adjustment to debt to discount estate renewal stock • increase borrowing facility

future shape • Council housing in LBBD on proper business lines – Housing Asset Management Strategy and 30 year Business Plan in production • key elements to HAMS  estate renewal taking out 3 estates  new build programme 850 affordable homes (inc 350 SR) bid made to HCA – using “Affordable Rent Product” to cross subsidise with Council land £1.3bn investment in existing homes over 30 years

Future of London FUTURE FINANCE 31st May 2011

HRA Reform

HRA REFORM Jim Saunders May 2011

ABOUT REGENTER 

Joint Venture – John Laing and Pinnacle Regeneration Group

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Primary investor in housing-led Regeneration

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Market Leader in Housing PFI

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In-house expertise

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Family supply chain option

6 St Andrew Street, London, EC4A 3AE

www.regenter.com

MARKET BACKGROUND 

Age of Austerity – Focus on economic rather than social infrastructure – Zero subsidy – Traditional PFI model dead – London – unique situation

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Fundamental Reform – Localism agenda – Split Market – Social Housing vs Affordable Housing

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Lack of housing supply & unmet demand – Need for large scale regeneration remains

6 St Andrew Street, London, EC4A 3AE

www.regenter.com

INVESTMENT BARRIERS– what we avoid 

Inefficient Procurements – Costly – Too lengthy

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Uncertainty – member/officer alignment

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Cookie cutter approach – market constraints requires innovation & flexibility

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Short Termism

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Unlevel Playing Field

6 St Andrew Street, London, EC4A 3AE

www.regenter.com

INVESTMENT ATTRACTIONS – what we seek 

Strategic Partnerships – play to Public/Private strengths – Value creation – place-making/transformation

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Proportionate “blended” returns – mixing institutional & developer risk returns – Asset “bundle” – including Land.

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Secure, long-term income streams – Sustained demand – Index linkage – Local Authority covenant

6 St Andrew Street, London, EC4A 3AE

www.regenter.com

HOW DOES HRA REFORM FIT IN? HRA Reform means for us: 

Fresh start – new market place.

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Local authority autonomy

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New scope for delivering complex transformational regeneration – off balance sheet project finance – strategic use of an alternative funding source where required

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Long term rent strategy

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Authority-backed, index-linked performance-related payment

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Opportunity to drive operational efficiencies

6 St Andrew Street, London, EC4A 3AE

www.regenter.com

OUR CONCLUSIONS A New “HRA Reform” Market has to be a good thing ......BUT we need to:  Keep it simple  Move quickly  Exploit London brand  Work together

6 St Andrew Street, London, EC4A 3AE

www.regenter.com

CONTACT DETAILS

Jim Saunders Managing Director Regenter Limited Mobile: 07976 407 743 Direct Dial: 0207 427 5273 jim.saunders@regenter.com

For information about the Future of London Programme please visit our website: www.futureoflondon.org.uk