Housing and Planning Bill

Written evidence submitted by Leathermarket Joint Management Board (the JMB) (HPB 11)

Housing and Planning Bill

Request:

For the Secretary of State to allow the community-led organisation to keep right to buy and high values sales income, conditional on the income being re-invested in new homes.

Summary

The JMB:

· Has mobilised local leadership, resources and energy to utilise the opportunities opened up by the 2011 Localism Act

· Utilised the Housing Revenue Account self-financing provisions, to become the country’s only self-financing tenant managed organisation

· Is one of the best performing social housing organisations, in terms of rent collection and re-letting empty homes

· Used the Community Right to Build provisions to start its new build programme

· Is uniquely able to deliver new homes for local people

· Is ambitious to do more, but impacted upon by current legislative proposals

· Is seeking innovative solutions to underpin future success

Background

Leathermarket Joint Management Board (the JMB) is a resident managed organisation based in Bermondsey, South London. The JMB manages 1,100 tenants and 400 leaseholders. The JMB was formed in 1996 and operates under a management agreement with the landlord, Southwark Council. As required by the Right to Manage regulations the JMB holds a continuation ballot every five years. In the last ballot 78% of tenants voted, with 92% of voters expressing their support for the JMB.

Using the provisions of the 2011 Localism Act in 2013 the JMB became the country’s only self financing tenant management organisation. Under the agreement reached with Southwark Council and whole heartedly endorsed by the DCLG, the JMB retains its rent and leaseholder income. The JMB uses its income to provide services, deliver major works, buy back essential services from Southwark Council and pay off the residual debt on its properties over a thirty year period. The autonomy granted by the Localism Act has allowed the JMB directors to agree a 30 year financial and major works plan. During the last Parliament two Government Ministers visited to celebrate what they described as a great example of localism in action.

New build homes

Self financing has given the JMB the self-confidence, status and financial muscle to start a new build programme. Being a local, trusted community organisation the JMB can unlock hidden homes sites that would not be available to a large housing association, local authority or developer.

The JMB identified a garage site (on the Kipling estate) for new homes, set aside £300,000 of its reserves, set up a community vehicle, the Leathermarket Community Benefit Society (CBS) and appointed community regeneration specialists, igloo, to provide professional expertise. The GLA provided £337,000 Community Right to Build funding for feasibility and design work. Southwark agreed to transfer the land to the Leathermarket CBS on a 125 year lease and provide £9m to pay for construction. The JMB now has a planning application for 27 new homes being considered and is about to appoint a contractor. The community is very excited about the prospect of work starting immediately after Christmas.

Ambitious Plans

The CBS has even more ambitious plans including the demolition of the JMB’s own office to provide a site for 30 homes and the demolition of an old nursery school to provide 35 homes. The CBS’s most ambitious plan is to demolish Peveril House at the Bricklayers Arms, in the Old Kent Road Opportunity area and build 120 homes. Peveril House contains 41 flats built in the late 1960’s using non-traditional construction methods and it now has a limited life. Many of the residents are elderly and will only move within the JMB area, therefore during the decant period the JMB will need access to empty properties generated within its management area.

The CBS knows that in the current environment it has to find creative funding solutions. Fortunately this is igloo’s area of expertise. The CBS has the capacity and the land to increase the supply of affordable housing.

Local Autonomy

To benefit from greater financial and decision making autonomy the JMB has taken on a level of risk and responsibility that in the social housing world is normally associated with a local authority or housing association that operates with larger budgets.

The above achievements and plans are based on strong finances. The landlord, Southwark Council, is likely to define empty homes as high value assets. The JMB has a void turn-around of 4% per year. The JMB’s unusual status means that it loses the income, but does not benefit from the receipts.

The second financial challenge is that the JMB’s Business Plan was predicated on the assumption that rents would increase by inflation plus 1%, however for the next four years rent will fall by 1%.

The JMB’s Business Plan strategy is to keep operational costs to a minimum, to maximise expenditure tackling a major repair backlog and build new homes.

To continue to deliver on its ambitious plans, in the context of the proposed legislation, the JMB needs to progress further down the path of localism and take on the ownership of its stock and the receipts that can be generated.

November 2015

Prepared 10th November 2015