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Memorandum from Places for People (CRED 22)
Executive Summary
Places for People is one of the largest property development and management companies in the UK, with 59,871 homes either owned or managed in a mixture of different tenures. With 2,296 employees, it is a unique organisation that provides a diverse range of products and services to build high-quality, safe and sustainable communities.We acknowledge that the credit crunch has had a profound effect on everyone and that the housing sector has suffered in particular during the current economic conditions. We therefore welcome the measures announced by the Government on 2nd September and feel that they are a good start in tackling the problems faced by the industry. However, we feel that further action needs to be undertaken to ensure capacity is maintained in the house building sector.In our response to the inquiry, we set out our specific views on the measures announced recently as well as setting out further proposals:2nd September Government housing package· We feel that the £175,000 threshold for stamp duty exemption is too low to have a true impact on those regions where the affordability gap is greatest; we are also concerned that the time period set could have unintended consequences.· We recommend that the Government review the limit for exemption as well as the timescale.· We recommend that the Government make further investment available in HomeBuy Direct and similar schemes such as Ownhome and MyChoiceHomeBuy.· We recommend that the Government confirm how HomeBuy Direct will work in terms of sharing priority returns.· We believe that the mortgage rescue package will help a relatively small number of people compared to the total number facing repossessions.· We recommend that the Government promote a tripartite approach between itself, lenders and RSLs, with RSLs contributing to the mortgage rescue scheme mainly in terms of management capacity.· We welcome the £400m additional spending announced, but recommend that:o The Housing Corporation advance at least half of its £8.4bn programme in the next year to get the market going again. o The Government apply pressure to banks to provide lending to RSLs matching the Government funding.
Places for People's Proposals
We propose that action is taken in 4 areas:
· Creation of a housing fund from unsold stock bought from developers as joint-venture partners or at a discount. This could provide much-needed market rented and intermediate rented homes whilst smoothing volatility in the market, when economic conditions improve.
· Stimulating housing production and ensuring capacity is kept in the housing production system. We recommend that:
o Government request that bids are brought forward by RSLs and Housebuilders through the regular market engagement discussions with the Housing Corporation for gap funding schemes. o Government request RSLs and housebuilders bring forward proposals for Government equity investments into land on the condition that housing production is started on those sites. o Government use all forms of public investment to 'pump prime' housing production through the use of a gap funding model.
· Improving access to the housing market by:
o Extending the current equity loan schemes (Ownhome and My Choice Homebuy) to first-time buyers with a household income of more than £60,000 pa and existing homeowners who want to purchase a new property. o Advancing mid-rent products for people who want to live in and then purchase a newly constructed property, possibly on a limited shared-ownership model where Government provides a grant to allow people to pay a market rent which would count as a deposit if the tenant chose to buy their home. o Local authorities should be encouraged to provide mortgages and mortgage guarantees as part of stimulating housing markets in their area. o Insisting that UK retail banks to which the Government has recently provided security to recapitalise its balance sheets advance mortgages to those customers who want to purchase a newly constructed property (either initially or at a later date through a mid rent scheme) and who pass a reasonable affordability test.
· Allowing RSLs to raise private equity funding, over and above equity in individual scheme-based Special Purpose Vehicles (SPVs), to enhance their ability to increase housing production and acquire more strategic land holdings to respond to market upturn and to boost housing production.
1.0 Introduction
1.1 Places for People supports the
Government's emphasis on the development and delivery of sustainable,
mixed-tenure communities, which in itself is a key plank of the Government's
overarching sustainability strategy. We support the Government's ambitious
targets to increase the number of homes built in the
1.2 The recent credit crisis has caused profound problems for everyone, and the housing sector is suffering greatly. Construction levels have dropped off dramatically during 2008 with some estimates of between 80,000 and 100,000 newly constructed houses by the end of 2008/09. This trend is only set to worsen over the next three years at least with a strong possibility of annual production levels for new housing being below 60,000 houses per annum over that period.
1.3 The traditional response to economic downturns in the past has been for RSLs to sell stock; however, this policy is damaging to the long-term aim of creating sustainable, mixed-tenure communities and not desirable from a consumer/community perspective. We feel that the current crisis calls for something other than a traditional response.
1.4 Places for People believes that the Government's package of housing measures announced on 2nd September represents a good start. Clearly the Chancellor's announcement on 8th October of a £400bn rescue package for the British banking sector represents a huge commitment by the Government to underpinning the economy. Whilst we share the Government's hope that the measures announced for the banking sector will increase liquidity in the markets, in particular to individual households (both existing homeowners and first-time buyers), we also know that until similar structural measures are advanced for the housing market, it will not fundamentally increase housing production.
1.3 Therefore, Places for People's view is that despite the measures announced on 2nd September, the housing market is unlikely to return for between 3-5 years and the Government will not meet its ambitious housing targets of 3m new homes by 2020. In our view, the only way in which the Government can safeguard its housing targets is to explore a range of strategic investment options with RSLs and housebuilders.
1.4 Places for People recommends that the Government goes further. As outlined below, the Government needs to move from being a solely grant-funded regime to a strategic investor in large-scale development. This would be done by Government taking a 'pump priming' investment role in major strategic projects to kick-start production and with prospects of a long-term return to the public sector over the whole life of the development. We also recommend that the Government takes a similar position for financial access products.
1.5 Our specific views on the 2nd September package are set out in sections 2-5 below; sections 6-10 detail what the Government should do, in our view, to safeguard a supply of sustainable, mixed-tenure housing for the future.
2ND SEPTEMBER GOVERNMENT HOUSING PACKAGE
2.0 Stamp Duty
2.1 The Government announced that from 2nd September 2008 to 3rd September 2009, residential property transactions under £175,000 would be exempt from stamp duty. This represents a temporary increase of the limit for stamp duty exemption by £50,000 (from £125,000). The measure was clearly intended to encourage movement in the housing market, especially for first-time buyers. Whilst we welcome this temporary exemption in principle, we can see potential problems with the scheme.
2.2 Firstly, the temporary exemption will not necessarily help those
seeking larger, family-type housing in the South, as these properties are
likely to be priced above the £175,000 threshold. It is therefore debatable
what impact the measure will have in
2.3 We also see an unintended consequence of the period set out for the exemption. There is a danger that this may drive similar behaviour to when MIRAS was suspended in the late 1980s. Potentially, in the current housing climate, people will wait until the last possible moment before the September 2009 deadline to maximise the impact of the stamp duty concession in combination with lower house prices at that time. Moreover, we fear that the period set by the Government does not adequately cover the predicted length of the downturn we find ourselves in.
3.0 HomeBuy Direct
3.1 The HomeBuy Direct scheme is intended to help first-time buyers as well as developers who are struggling to sell completed units in the present market. In our view, it is a good initiative which builds on the Ownhome product, offered by Places for People and the Co-operative Bank. However, we feel that the scheme will require a significant amount of further investment, as outlined in section 9 below.
3.2 Since the product was announced, a new competition for HomeBuy Agents was launched on 24th October. The competition has widened the criteria, making it possible for local authorities and a range of other public and private companies to apply. We welcome any measures that make the HomeBuy Agent system more flexible.
3.3 We also understand that the Government will invest in the product up to a total of 15% of the equity. We would welcome confirmation from the Government on how the scheme will work in terms of sharing priority returns; we propose that the principles should be similar to those of Places for People's Ownhome product, developed in partnership with the Government and the Co-operative Bank.
4.0 Mortgage Rescue
4.1 The mortgage rescue package announced by the Government offers vulnerable homeowners who are faced with repossession a range of options to stay in their home, including shared equity, shared ownership and sale and rent back.
4.2 In addition, the Department of Work and Pensions (DWP) has announced new support measures to help vulnerable homeowners meet their mortgage payments. These measures focus on reforms to Income Support for Mortgage Interest (SMI), shortening the waiting period from 39 weeks to 13 weeks for new working age claims from April 2009 and increasing the capital limit for new working age claims to £175,000.
4.3 The Government has said that the mortgage rescue package will help up to 6,000 people, although the DWP measure could help to prevent further repossessions. Places for People feels that this is a relatively small number compared to the large number of homeowners currently in fear of repossession.
4.4 As the Government recognised in its statement on 22nd October (requesting the courts to only grant repossession if all other avenues have been exhausted), lenders can and should do more to prevent repossession. We feel that an ideal solution would be a tripartite partnership between lenders, Government and RSLs on the basis that RSLs will manage a portfolio jointly on behalf of the lenders and/or Government. We believe that RSLs should contribute to the scheme in terms of management capacity; they should be offered a choice on whether or not to invest in it, with the majority of investment coming from lenders themselves.
5.0 £400m additional spending
5.1 The Government has said that the decision to bring forward £400m from the 2010-11 affordable housing budget will deliver up to 5,500 additional social rented homes in a stagnant market. Whilst we welcome any additional spending on new social housing, we fear that this is unlikely to bring forward new schemes as the level of support will not cause housebuilders (including us) to change their development decisions.
5.2 We feel that whilst bringing forward £400m of spending is a good initiative in principle, the market will require a considerably bigger cash injection. In our view (as outlined in further detail below), the Housing Corporation is likely to have to advance at least half of its £8.4bn programme in the next year to give the Government a chance of getting the market going again.
5.3 Finally, and crucially, the success of the Government's cash injection also depends on whether the banks will provide funds to RSLs to match the Government funding. Once again, we stress the importance of lenders playing their part in starting up activity in the housing market.
WHAT DOES PLACES FOR PEOPLE PROPOSE?
6.0 Introduction
6.1 The current market conditions are fundamentally different to those in the 1970s and 1990s. The current problem is the illiquid financial market which is preventing would-be homeowners from securing a mortgage, coupled with a very difficult lending market, in which to find property development activity. Housing, especially affordable housing, remains in short supply and it is therefore necessary to stimulate housing production overall. Measures used in the past, such as purchasing unsold homes for use as social housing, will not ensure future house building production levels are maintained and are likely to lead to the creation of mono-tenure estates.
6.2 A
major effect of the current credit crisis is the significant reduction in
affordable housing built through s106 agreements. Historically, around 60-70%
of all social housing has been produced via s106 agreements, but as many
6.3 We believe that the Government can bring forward the £8.4bn funding allocated for housing between 2008 and 2011 to ensure that affordable housing is produced, sustainable mixed-tenure communities are developed, and an increased number of people are able to purchase part or all of their own home. We propose that action is taken in 4 areas:
1. Creation of a housing fund
2. Stimulating housing production and ensuring capacity is kept in the housing production system
3. Improving access to the housing market - a mid-market housing offer
4. Allowing RSLs to raise equity to boost housing production when the market returns
Details of our proposals are set out below.
7.0 Creation of a housing fund
7.1 There is a case for creating a fund to acquire existing properties that are unable to be sold for use as additional affordable housing supply in a range of tenures. Securing a return on housebuilder investment would also further increase their ability to increase supply, improve job security across the industry and have a positive effect on the economy.
7.2 Fundamentally the model is that housebuilders sell existing housing for sale to a fund as a joint-venture partner or at a discount. We expect real discounts to be between 20% and 40% against open-market value. Each group of properties will have a different value, calculated on an individual basis from the level of capital value that could be produced from the rental revenue stream. Housebuilders could be joint-venture partners by deferring their profit on development for 5-7 years as their contribution to the fund. The Homes and Communities Agency (HCA) would invest into the fund and the rest would be funded from equity investors. The attraction to private equity would be that churning stock in 5-7 years when capital values would have risen would create an opportunity to realise their investment. This may also have the attraction of creating a real base to introduce institutional investors into the private rented market - a long-term Government policy goal.
7.3 The structured delivery of more affordable rental products and a gradual release of those properties into a housing market upturn as and when it occurred would afford an effective way of smoothing volatility in the market. This fund could also engage with RSL investment. The fund would need a management agent. Places for People already has a market renting company called Blueroom with an asset value of £115m that could be a key part of the beginning of this fund and which could provide the management to it.
7.4 As a rough guide to how this might work, £200m from the HCA, plus £200m private equity could gear up to a fund of around £600m with the debt financed by rental income and shared ownership staircasing. The fund could include all forms of housing provision, from market rent through to shared ownership and support existing programmes of equity sharing/home ownership. There are existing proposals along these lines set out in greater detail that have already been made by CBRE and Places for People which need to be progressed quickly if this is to be an effective operation that delivers results.
8.0 Stimulating housing production and ensuring capacity is kept in the housing production system
8.1 Promoting investment in sites to stimulate housing production now will ensure that organisations can continue to develop homes during the housing market downturn and bring sites into housing production, where otherwise they would be delayed or mothballed. Taking such action will ensure capacity is retained in the industry so that when the housing market upturn arrives, the ability of the housing delivery system will have the capacity to return to production quickly.
8.2 Under the current grant funding system, a significant part of the housing sector is not going to be able to develop homes during the housing market downturn. Housebuilders (including RSLs) are mothballing schemes with the intention of bringing them back into production when the market picks up and the sites become economically viable.
Equity Funding Model
8.3 Places for People has developed an equity funding model which would enable RSLs to continue to develop homes during the downturn and increase housing production when the market returns. This equity funding model is applicable to RSL organisations and housebuilders.
8.4 Our approach proposes that the Government moves from being a solely grant funded regime to a strategic investor in large scale development. This would be done by Government taking an equity stake in major strategic projects to kick-start production and with prospects of a long-term return to the public sector over the whole life of the development.
8.5 While the majority of the proceeds from the new equity injection would be used to fund the working capital required for the development programme, a portion of the fund could be used to provide subsidy for social housing and home ownership products such as equity loans from the land and development proceeds.
8.6 For
example, Places for People is currently proposing a £50m equity investment by
the Government into its Brooklands site at Milton Keynes which will bring
forward the production of 2,500 family homes and a £20m equity investment in
Smiths Dock, a former shipyard site, in
Further details of this Equity Funding Model can be found in appendix 1.
Gap Funding Model
8.7 In addition to the use of equity investment, Places for People also proposes that the Government use all forms of public investment (e.g. existing social grant, releasing public land and transport infrastructure investment) to 'pump prime' housing production through the use of a gap funding model. The gap funding model aims to guarantee the provision of a higher number of affordable homes at a time when understandably housebuilders are restricting supply in difficult conditions. The model can be used on medium- and larger-sized projects and would use a similar level of grant funding to current levels.
8.8 This proposal would use some funds which are currently earmarked for social housing grant to invest as equity with a relatively modest margin (say 7%) for the partner developer, in return for a guaranteed output of affordable rented, affordable sale and market sale units in mixed-tenure developments. The funding would be invested at the outset of development so that the developer is able to fund starting housing production quickly. In addition, other forms of Government funding or subsidy such as releasing public land or investment in transport/education infrastructure either by central, regional or local government can also be used through this gap funding model.
8.9 This approach has a series of benefits to the Government:
· When market conditions are more favourable, the need for/amount of funding required for the gap funding would reduce. · Over the medium to long term, there will either be a lower level of funding required using the gap funding model compared to the current grant model or more units will be delivered for the current levels of investment. · By adopting the gap funding model, more of the funds would remain in circulation for the production of further housing. · Environmental benefits - as there would be less commercial pressure to deliver higher margins on the new build, this approach would also help the Government to facilitate the incorporation of 'greener' and more sustainable build requirements into the production and delivery of new units.
Bank lending
8.10 As set out in 5.3 above, we must stress the importance of sufficient funds being made available by banks to match Government funding and enable both RSLs and housebuilders to leverage the types of Government investment set out above.
9.0 Increasing access to the housing market through a range of products
9.1 Places for People also believes that the Government need to invest in products which encourage and facilitate home ownership; for example, investing in products such as equity share products and intermediate rent / 'try before you buy' products.
9.2 The diagram below illustrates how a range of financial products can help to address affordable housing issues (illustrative only): Equity Share Home Ownership Products 9.3 Two new Government-backed products were launched by the Housing Corporation in April. These were Ownhome and MyChoiceHomeBuy and aim to help thousands of first-time buyers to step on to the housing ladder. With both products, no deposit is required and when the property is sold, the equity loan provider will be entitled to a share of any increase in the value of the property. 9.4 Ownhome is available through Places for People and the Co-operative Bank and helps first-time buyers to get a foothold on the housing ladder by offering customers the opportunity to purchase an equity share of between 20 - 40% in their home. It also offers interest-free mortgages for a five-year period and an affordable level of interest from 1.75% for the next five-year period. (See www.ownhome.co.uk for more details).
9.5 MyChoiceHomeBuy, a product through the CHASE consortium of eight Housing Associations, enables applicants to apply for a mortgage with any lender they choose. The scheme provides them with up to 50% of the value of the property as an equity loan. The remainder would be funded through a conventional mortgage with a Financial Services Authority regulated lender. They would pay a low rate of 1.75% per annum on the equity loan funded by one of eight housing associations who are acting as equity loan providers. The rate they pay on the standard mortgage would depend on the deal selected through the mortgage providers.
Mid Rent / Try before you Buy
9.7 Places for People are currently offering a 'Try before you Buy' option on newly built properties. This product allows customers to rent a property for a period of up to two years and the money that has been paid in rent is then converted into a cash deposit if the renter decides to purchase the property.
9.8 A similar Government-backed model called 'Rent to HomeBuy' is also available to help first-time buyers into the market. This works in a similar way except that Government subsidises the market rent levels on the basis that the customer purchases the property through a Government sponsored HomeBuy scheme.
9.9 At the moment, the 'Rent to HomeBuy' product only applies to first-time buyers which a household income of less than £60,000. Places for People believe that the Government should do more to help existing buyers purchase new homes either by expanding this scheme or by working with RSLs to progress an intermediate rent scheme with at least a 20% Government subsidy which customers can then convert into a homeownership vehicle on the basis outlined in section 9.12.
Shared Ownership
9.10 Places for People has operated a shared ownership scheme for a number of years which allows a customer to purchase an initial share in their home of between 25-75%. The customer is then charged a rent of no more than 3% on the share of their home that they do not own.
9.11 This product has been one of our most successful and popular with first-time buyers. Recently, however, Places for People has experienced problems with banks not willing to advance mortgages to potential customers for shared ownership products which we are disappointed by given the amount of Government security that now pervades the banking system.
Rent Conversion Model
9.12 Places for People has also looked at a 'rent conversion' model which is aimed at helping social housing tenants to acquire an equity stake in their home. The product will support our aspirations to tackle the Government's tenure diversification and worklessness agenda in existing neighbourhoods by providing role models, retaining customers who are economically active and acting as an incentive for customers to progress into and remain in sustainable employment.
9.13 The model converts the weekly rent paid on a property into an equity stake in the home and as such would provide social housing tenants the ability to own part of their own home without incurring interest payments on the equity advanced.
9.14 The RSL/LA would benefit from this approach in two ways: firstly, they would make a return on the remaining equity when the property is sold at open market value at some point in the future and secondly, through such an agreement the owner would become responsible for all repairs to the property. Places for People are currently working with the Government to pilot this model.
Mortgage Guarantees
9.15 In addition to the above, Places for People would encourage the Government to get Local Authorities to issue mortgages and/or mortgage guarantees through powers it already has.
9.16 Under the 1957 Housing Act Local Authorities were granted the right to provide mortgages to their constituents. Through using these rights, the Government could in effect set up their own affordable mortgage products.
Mortgage availability
9.17 The
success of all of these initiatives depends on the capability and willingness
of the
9.18 Places for People therefore recommend that the Government uses its position to insist that the UK retail banks work with RSLs and housebuilders to ensure that mortgages are available customers (first time buyers or existing homeowners) who want to purchase a new house either initially or in the case of rent before purchasing products at a later date.
10.0 Allowing RSLs to raise equity to boost housing production when the market returns
10.1 In order for policy objectives on housing to be met, Places for People believes that a framework which allows organisations to both develop and manage housing with a long-term focus and investment approach to finance, design and whole-place management is necessary.
10.2 Places for People believe that the best way to increase RSLs' house building capacity is to enable RSLs to raise private equity funding, over and above equity in individual scheme-based Special Purpose Vehicles (SPVs), to enhance their ability to increase housing production and acquire more strategic land holdings to respond to market upturn and to boost housing production.
Details of this proposal are set out below:
Equity Funding Proposition
10.3 RSLs are debt funded organisations and whilst RSLs can access equity through SPVs on specific schemes, the scale of production necessary to meet Government targets would mean that there would have to be so many SPVs that they would be prohibitively expensive to run as separate operations.
10.4 A more flexible equity finance model is required which allows RSLs to employ equity funding techniques to enable them to develop and manage the housing and areas in the long term. For this to work, the Government needs to allow not-for-dividend housing associations to register the Group as a commercial entity so that they are able to raise finance in the same way as private sector property companies and housebuilders. This does not mean that RSLs would be able to float on the stock exchange; we promote a system on the basis of special project finance.
10.5 Through the use of longer-term equity financing, the housing sector will have the confidence to continue building during difficult economic times and RSLs would be able to invest in a number of schemes at any one time which would assist RSLs to take longer-term positions on land and development opportunities to achieve sustainable communities.
10.6 Equity funding would not only enable additional investment to be raised without over-exposing the RSL gearing ratios, but would also introduce a higher level of discipline in the management of these organisations in order to create the necessary surplus levels to repay that investment.
10.7 By using longer-term equity finance, the Government would not only be providing an effective mechanism to encourage a steady stream of housing production by bridging the 'gap' between lower profits in the short term and the returns available in the longer term, but it would also enable its own public investment to grow as opposed to the current situation where the grant-aid subsidy is effectively written off.
10.8 There are four principal benefits of allowing RSLs and other social housing organisations to access equity funding:
1) It can be a better way of funding larger, more complex schemes. A debt-based approach cannot readily accommodate the significant costs of major land assembly, infrastructure and remediation involved in large, complex schemes. These costs "front-load" the capital costs of schemes and exacerbate the problem of carrying the cost of debt funding in the short term. It will therefore provide a level playing field with other private sector organisations.
2) It enables a longer term view to be taken. By using a traditional debt based approach, projects typically incur losses in the short/medium term before generating a return as the outstanding debt reduces over time. Equity funding encourages a longer-term view, taking into account long-term capital value appreciation as well as operating profit. Importantly, equity is not an annual cost to a project and gets repaid when a return on the investment can be realised.
3) The initial burden on a project is not as great. Whilst the overall cost of equity may be greater than debt due to the higher risks associated with it, the longer term approach means that annual debt servicing costs currently paid could free up resources for activities and investment that will add value to the community and bolster the longer term value.
4) Government would have an effective vehicle to capture some of the capital growth in its (equity) investment where is a return to be had which is currently a missed opportunity to increase funding for new schemes.
10.9 The following two diagrams show Places for People's current business profile and a model of our proposed capital structure which illustrates the way in which we would suggest that these equity funding arrangements work.
10.10 Through the proposed capital structure equity finance can be invested in a number of schemes at any one time and it also enables us to prepare for the housing market upturn when there will be interest in equity investment in large-scale place making.
10.11 Within this structure:
· The RSL part of the business would remain fully regulated by the Tenant Services Authority exactly in line with the proposals set out in the Housing and Regeneration Bill. · The commercial elements of the Group would operate on commercial terms and be able to cross-subsidise the RSL part of the business and also produce its housing and other services. · The Group would own both parts of the Group but would not itself be an RSL in order to allow it to access equity across the Group.
Diagram 1: · Places for People's RSL structure supports its strong credit rating and offers low cost debt - regulated entity, essential service provider, underpinned by public sector cash flow through housing benefit. · Limitations in terms of ability to increase development capacity via RSL business model. · Limitations on ability to attract external equity investment.
· Places for People can inject fresh equity into the NewCo alongside Private Equity provider and raise debt on the basis of a standalone entity whose credit profile is enhanced by its [50%] shareholder (Places for People) having the right or contractual agreement to acquire its affordable housing developments. · Structure retains key strengths of existing model whilst offering the flexibility and increased capacity. · Offers a structure which fits within existing / proposed regulatory framework.
Appendix 1: Equity Funding Model
The principal features of the equity funding model are:
· Equity investment (from Pension Funds, Banks and also by the (Housing Corporation and Housing and Communities Agencies) into a fund to be used to invest in land and housing development · the fund is used to purchase land, the development of that land and potentially the investment in affordable housing including equity loans; · both the Government and private sector investors receive a level of return from the fund in line with the proportion of investment; · parties can withdraw their funding and any surpluses at agreed times during the course of the project (e.g. land appropriation, development completion or after first phase of equity loans); · at the completion of the project or after 25 years the fund is wound up, assets transferred accordingly and surpluses are distributed pro-rata.
The benefits of this equity funding approach to both the Government and partners are:
· Government is making a strategic investments and will therefore make a return on its investment which it can take as financial or in the terms of housing/social return · Government can work with/influence the private sector to underpin delivery of more homes · It incentivises the creation of mixed, sustainable communities · It delivers higher standards of design and sustainability · It provides ready made funding stream for affordable housing products.
Our proposal therefore is to offer an equity stake within major strategic projects with prospects of a good long-term return to the public sector potentially over the whole life of the development within a partnership structure based upon:
· Value capture · Shared risk & reward · Pump priming of infrastructure primary and social and coordination of its delivery across all sectors · Long-term return on investment not short just short term profits
While the majority of the proceeds from the new equity injection would be used to fund the working capital required for the development programme, clearly a portion of the fund could be used to provide subsidy for social housing and home ownership products such as equity loans from the land and development proceeds in a more efficient manner than current Government grant does.
Appendix 2: About Places for People Places for People is one of the largest property development and management companies in the UK, with 59,871 homes either owned or managed in a mixture of different tenures. With 2,296 employees, it is a unique organisation that provides a diverse range of products and services to build quality, safe and sustainable communities.In 2005/6, Places for People had a £255m turnover and a not-for-dividend profit of £11.4m. During 2005/06, we built 1,250 new homes and had a £2.3 billion asset base. In addition we achieved a full set of green lights in our last Housing Corporation Assessment (October 2005).Places for People regards itself as a housing and regeneration organisation that puts people first. We provide solutions that not only cover a range of different housing tenures but also offer a range of support services including affordable childcare, elderly care and financial services - all the things that contribute to making neighbourhoods of choice; prosperous, popular and truly sustainable.Places for People currently has 44,600 affordable rented properties, 4,800 properties available for market rent and some 9,000 properties where we retain a freehold stake as part of either shared ownership or 'right to buy' arrangements in a number of developments throughout the UK. Our portfolio is designed to 'Create neighbourhoods of choice for all' and covers the following broad mix of products:
· Places for People Neighbourhoods - investment, regeneration and placemaking · Places for People Homes - neighbourhood and property management · Places for People Individual Support - support for independent living · Places for People Property Services - in-house maintenance services · Places for People Development - master planning and building new developments · Places for People Financial Services - financial products for customers · Places for Children - early years childcare · Emblem Homes and Blueroom Properties - lifestyle homes for sale and rent
We want all our neighbourhoods to be places where people are proud to live. To do this, our developments need a mix of homes, easy access to shops, schools, healthcare and leisure activities, safe public spaces, good transport links and job opportunities.
When we create new places for people to live we plan a mix of tenures and house types designed for communities that have people from different social backgrounds. All of our homes whether for sale or for rent are designed and built to the same high standards with the same specification making different tenures indistinguishable.
October 2008
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