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
Primary investor in housing-led Regeneration
Market Leader in Housing PFI
In-house expertise
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
Fundamental Reform – Localism agenda – Split Market – Social Housing vs Affordable Housing
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
Uncertainty – member/officer alignment
Cookie cutter approach – market constraints requires innovation & flexibility
Short Termism
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
Proportionate “blended” returns – mixing institutional & developer risk returns – Asset “bundle” – including Land.
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.
Local authority autonomy
New scope for delivering complex transformational regeneration – off balance sheet project finance – strategic use of an alternative funding source where required
Long term rent strategy
Authority-backed, index-linked performance-related payment
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