The blocks on the former Euro House site between the Wealdstone Brook and Fifth Way
Monday's Cabinet will be asked to approve plans for the Council to make an arrangement for the purchase of a lease at three of the blocks that will be built on the former Euro House warehouse site in Wembley Park. The Council claim success in having negotiated an improvement on the amount of affordable housing available and that at social rent. in blocks D and E above It is partly financed by the Council managing 46 lettings at market rent in Block A.
The housing mix has also changed with more family sized accomodation:
The main provisions are below. I have highlighted some of the possible risks.
This report seeks permission to negotiate and
thereafter purchase a mix of affordable units in Blocks D and E and market
units in Block A forming part of a development of Euro House, Fulton Road
Wembley HA9 0TF. The Council will enter into an underlease for up to 60 years
of Blocks A, D and E, from an Asset Special Purpose Vehicle (ASPV) who will have
entered into a 999 year
headlease with the freeholder. The freeholder is Crown Wembley LP. The Council will have an option with ASPV to acquire the headlease for a peppercorn upon the expiration of the 60 year underlease. The site will be developed by a developer called Regal London. The scheme is due to start in September 2022 with an estimated practical completion date of Q4 2025 for the affordable rented homes
To finance the purchase of this block, the Council will take a lease of up to 60 years from the ASPV, with rents set at current day social rents and indexed at CPI plus 1% subject to a cap of 5% and a floor of 1%. Upon completion of the underlease, a reversionary 939-year lease will be granted at nil rent or peppercorn
The total cost of the lease based on a term of up to 60 years is circa £128M. The social rented units will sit within the Housing Revenue Account and the Council will utilise the most effective mechanism to manage the market rented units. There has not been an opportunity to purchase these units or vary the tenure and size mix through a traditional financing mechanism.
The proposed scheme provides a target of 252 affordable units and 46 market units to be delivered through the lease. To ensure the scheme is financially viable, the Director of Finance in consultation with the Lead Member for Finance and the Operational Director of Property and Assets will negotiate the optimal unit mix that supports the increased delivery of the affordable units from the original proposal. This may result in a variation in the affordable unit and market unit mix from the target mix described in section 3.4 above.
With the proposed target scheme converting 34 market units to social rented units, this will enable the Council to claim £100k per unit for the additionality provided by the scheme and £28k per unit for the remaining 218 affordable units. The total grant claim expected to fund this development is £9.5M.
It has been assumed that the Council will receive 100% Stamp Duty Land Tax (SDLT) relief based on the assumption that:
a) The Council is deemed to be a relevant housing provider that is controlled by its tenants; and
b) The application of GLA grant receipts meets the requirements of a qualifying public subsidy.
These assumptions will need to be fully tested with the Council’s tax advisors and HMRC. Failure to secure the SDLT exemption noted above would increase the cost of the scheme.