Side by side

Councils can now build new homes themselves and deliver mixed tenure schemes to encourage social cohesion. Some authorities are now establishing special purpose vehicles in order to do this.

An SPV is a separate legal entity from the authority, and can be structured so that it is - either initially, or long-term - controlled by the council, or jointly owned with a private sector partner or developing housing association (the local housing company model). Typical features are:

• The council sets up an SPV into which it transfers housing sites.
• The SPV applies to the Homes and Communities Agency for national affordable housing programme funding to enable it to deliver development.
• The council may set up a panel of contractors under a framework agreement (typically lasting up to four years), which enables it to call off building contracts for individual sites in the area.
• Schemes could include the full range of affordable housing tenures, open market housing and even commercial units.
• Profits achieved by the sale of non-affordable housing can be recycled into further developments.

In due course the council could sell shares/equity in the SPV to private sector investors. However, this is dependent on establishing an appropriate constitution on day one.

While the SPV route requires planning at the outset, it can offer not only control over delivery, for now, but the ability to attract private sector investment, for the future - and the ability for councils to spearhead the creation of vibrant, truly mixed communities.

Anne Bowden is a partner at Pinsent Masons

Have your say

You must sign in to make a comment