Take-off time for council housing companies?

Last month, the Social Housing Green Paper muddied the waters by stating that “local authorities should deliver new affordable housing through their HRA” unless they have transferred their stock or the HRA cannot sustain new development.

So are council-owned housing companies really about to take off? And if so, when?

“Brick by Brick was always going to be a play at scale,” says Colm Lacey, managing director and chief executive of the independent development-focused housing company that was launched by Croydon Council in south London in 2015.

“But it is also a play at realising the value of small sites, from which other developers have run a mile,” he says, adding: “And to build the capacity to do that takes time.”

The challenge, he says, has been creating a development company from scratch that can deliver a mix of tenures in significant numbers across a diverse portfolio of sites.

The first year was about developing a corporate structure, identifying development sites and securing funding. The second year involved winning planning consent for Brick by Brick’s first batch of sites, which are predicted to be finished early next year.

It has meant building the capacity to coordinate batches of up to 28 planning applications in one go, locking in architects and a construction supply chain attuned to working across multiple micro-sites, and using modern construction approaches such as offsite panelling systems.

We are building #new & #affordable homes. Our #Shrublands #development in Shirley, #Croydon, is 100% affordable rent. Comprising of 26 generous homes with dual aspect and big balconies.

Register for a Brick by Brick home t.co/ggtWbCxeqG & keep up to date #homesforLDN pic.twitter.com/2i5I2UCPrL

— Brick by Brick (@bxbdevelopment)

We are building #new & #affordable homes. Our #Shrublands #development in Shirley, #Croydon, is 100% affordable rent. Comprising of 26 generous homes with dual aspect and big balconies.

Register for a Brick by Brick home https://t.co/ggtWbCxeqG & keep up to date #homesforLDN pic.twitter.com/2i5I2UCPrL

— Brick by Brick (@bxbdevelopment) September 8, 2018

A tweet by Croydon Council’s company Brick by Brick

“We have planning consent for about 40 schemes, and we are on site for around 12 of those, and in the early stages on another 12,” says Mr Lacy.

“Our first completions are due in January and will deliver aroun 700 units, and we have consent for another 700 that we haven’t started yet.

"Our intention is deliver 500 units a year in perpetuity, and in doing so we’re moving towards delivering 20% of Croydon’s GLA housing target,” he adds.

Of those homes 50% will be affordable, half of which will be for rent and half shared ownership.

And, Mr Lacey says, Brick by Brick is already making its presence felt among planners and other developers.

Previously, Croydon has achieved about 16% affordable homes through developments. “We’re achieving three times that in our planned developments,” says Mr Lacey, “so it’s grist to the council planner’s mill to demand those sorts of numbers from other developers.”

Making the sums add up is key for housing companies that are all too aware they are backed by public money and driven by political will.

In Barking and Dagenham in east London, Be First, a standalone council-owned development and regeneration company that was launched last year, has been revisiting the figures on 44 development sites that it inherited from the council on gaining its independence.

By introducing innovative building techniques, acquiring adjacent sites, and drilling down on the density of each development, Be First believes it can deliver an additional 400 homes during the next five years from legacy projects alone.

For Pat Hayes, Be First’s managing director, the process was the first step in the company’s mission to bring “commercial acumen and enterprise to accelerate development and to help build over 50,000 much-needed homes in Barking and Dagenham”.

But Be First’s vision for regeneration far exceeds housing, seeking to rejuvenate the borough’s economic and cultural ambitions.

One landmark scheme seeks to breathe new life into Barking town centre, delivering 400 mixed-tenure homes, retail and commercial units, improved access and public space.

Another plan aims to build London’s largest film and TV studios for 25 years opposite Dagenham East Station. Along with a film-based visitor centre and a leisure, food and beverage offering, Be First says it will generate up to 7,000 new jobs.

Making the sums add up is key for housing companies

To help meet these ambitions, the council has outsourced its planning function to Be First, both for the housing company’s schemes and for other developers, through a nascent commercial arm that will work on a consultancy basis.

Be First says the deal ensures absolute rigidity in terms of responsibility on planning decisions, but the outsourced planning function offers the borough greater agility when encouraging investment, allowing it to work in a more concentrated way with developers in the pre-planning process to accelerate development.

Giving a hint of what is perhaps to come, Mr Hayes says: “We are evidence of a more confident, expansive municipalism, reminiscent of the early days of the local authorities, when imaginative and urgent measures were needed to address the failure of the market to deliver quality homes.”

Not all local authorities have taken on the role of a pure developer, as Brick by Brick has, or the wider regeneration strategy being employed by Be First. Many countrywide are building to manage rented properties long term.