Council Housing and Common Sense – Brent’s reply

 Guest post by Philip Grant in personal capacity

 

Earlier this month I sent a letter to Brent Council’s Leader and Chief Executive headed “Council Housing and Common Sense”, which was published as a guest blog. It set out my view that the Council has become too complicated in the way it seeks to provide the new Council homes that many local people need. 

 

My letter focused on two Cabinet decisions in the past six months. One was to spend at least around £48m of borrowed money to buy 155 leasehold flats in a 26-storey tower block, yet to be built on the former Alperton Bus Garage site. These would not be acquired directly from the developer, Telford Homes, but from an unidentified “Asset Special Purpose Vehicle”.

 

The block in Alperton where the 155 leasehold flats will be built.

 

The second decision was to allow a private developer to buy 152 of the 250 homes that Brent Council will be building on land that it owns at Cecil Avenue in Wembley, and sell them for profit, rather than using all 250 of those homes as affordable housing for local people who need them.

 

What the High Road frontage of Brent’s Cecil Avenue development will look like.

 

I have received a reply to my letter, from Brent Council’s Director of Finance, and this is what he has written:-

 

‘Dear Mr Grant,

 

The Council continues to increase the delivery of affordable housing for our residents through self-delivery, via the use of S106 agreements with developers and working in partnership with Registered Providers. To maximise the delivery, the Council utilises GLA subsidy to support scheme viability but this is becoming increasingly challenging. This means the Council has to explore more complex ways of delivery, one of which has been the Alperton Bus Garage Development.   

 

The development at the Alperton Bus Garage site provides a unique opportunity to purchase the affordable units in the wider development as part of a lease structure. The original proposal contained a tenure mix of 57 shared ownership units and 97 rented. By entering into this lease structure, it allows the Council to convert the shared ownership units into more affordable rented units. In this specific development, without the involvement of the Council a Registered Provider is unlikely to be able to offer the most affordable rented product due to viability limitations so the acquisition will further Brent’s key priority of providing homes that are most affordable. The lease option demonstrates value for money against our average development cost across our New Council Homes Programme of £280k per home, which includes both leasehold and freehold tenures.

 

The acquisition of the homes takes place through a lease structure that includes both the development and lease agreements. These areas of the report are exempt as they contain the following category of exempt information as specified in Paragraph 3, Schedule 12A of the Local Government Act 1972, namely: “Information relating to the financial or business affairs of any particular person (including the authority holding that information)".

 

The Council has undertaken due diligence with regards to the SDLT exemption for the acquisition and assumes the Council will receive the exemption given the Council is deemed to be the relevant housing provider that is controlled by its tenants and the application of GLA grant receipts meets the requirement of a qualifying public subsidy. Until this has been confirmed by HMRC on acquisition, the potential cost needs to be highlighted as a factor of the scheme’s viability. 

 

The Cecil Avenue site is part of a wider development in the Wembley Housing Zones Programme and includes the adjacent site Ujima House. This site is intended to deliver 100% affordable housing and a target of 50% across both sites. The development will also include workspace to support job creation and economic growth, community space, highway and public realm improvements and new publicly accessible open space. The Council needs to ensure the entire programme is financially viable within the GLA grant available hence the requirement for a mixed tenure development in order to subsidise the delivery of the affordable elements. The application of the funding structure available for the Alperton Bus Garage site cannot be applied to improve viability in the Wembley Housing Zone Programme to provide more affordable housing within the existing development.

 

As evidenced, the Council is committed to seek all opportunities to deliver more affordable housing within the financial viability constraints to ensure the optimum housing mix can be provided for our residents.

Regards

 

Minesh Patel

Director of Finance’

 

The main messages in this reply seem to be that the Council has to use more complex methods of funding, in order to make its Council housing schemes viable, but because this involves information relating to the Council’s financial affairs, they don’t have to explain the details to us. So much for openness and transparency!

 

 

The reply does not mention the shadowy “Asset Special Purchase Vehicle” for the Alperton acquisition, simply referring to ‘a lease structure that includes both the development and lease agreements’, which we are not allowed to know about, because that is ‘exempt information’.

 

 

The response over the Cecil Avenue homes may sound familiar. Some of it appears to be from the same source as Cllr. Butt’s recent reply to me. At least one sentence is identical, and must have been “copied and pasted”!

 

 

Parody Brent Council publicity photo for its Cecil Avenue development.

 

I still do not understand why the Cecil Avenue development, on land the Council already owns, can only be viable if just 37 of the 250 homes (just under 15%!) are made available to Council tenants at affordable rents. And why 152 of them (over 60%) have to be for the contractor, who Brent will pay to build them, to purchase for a fixed price and sell at a profit. I will continue to question that, as best I can.

 

 

Philip Grant.

Dear Brent Council – Council Housing and Common Sense

 Guest post by Philip Grant in a personal capacity

 

An entry from Brent Council’s latest Forward Plan

 

Dear Brent Council,

 

I think that you’ve become too complicated in the way you seek to provide the new Council homes that many local people need. 

 

Take, for example, your decision (at last November’s Cabinet meeting) to buy a block of flats at the former Alperton Bus Garage site. The developer, Telford Homes, was given planning permission to build three tower blocks there, on condition that one of them, block C - containing 155 of the 461 flats proposed in their application, would be as “affordable housing”. 

 

South-west elevation drawing from the planning application documents (block B outlined at the back)

 

Normally, when a private developer agrees a large-scale affordable housing offer, they do so in partnership with a housing association which will provide those homes. But here, it is Brent Council who have stepped in to acquire them. And the Council is not buying them direct from Telford Homes. It is proposed that they will be acquired from an Asset Special Purpose Vehicle (“ASPV”). Who or what is an ASPV?

 

That would be explained in the report that Cabinet members made their decision on, wouldn’t it? If it was, the explanation was in one of the (now all too common) exempt appendices. Looking at the minutes of the meeting, all the Lead Member for Resources, Cllr. McLennan, said about the ASPV was simply a repeat of the Officer’s report :

 

Opening section of the November 2021 Cabinet Report

 

The report to the meeting was not from the Director of Housing, but the Director of Finance. No questions were asked about why the Council was not buying the flats direct from the developer, who the beneficial owner of the intermediary ASVP was, and why it would not be a straight 999-year lease. Cabinet members seemed more intent on congratulating the Council, its finance team (and themselves?) for the proposal they were about to “rubber stamp”:

 

‘In expressing their support for the proposal, Cabinet highlighted the opportunity the scheme provided to further increase the supply of affordable social housing within the borough based on a leasing model which was felt to represent good value for money.  Officers were thanked for their efforts in securing the necessary terms ….’

 

But how ‘good value’ was this ‘leasing model’? The Council would be taking an initial 50-year lease on 155 homes in a 26-storey tower block (55 x 1-bed, 49 x 2-bed, 46 x 3-bed [5 person] and 5 x 4-bed [6 person] flats). The report from the Director of Finance said:

 

‘Officers have been in discussion with the ASPV regarding the possibility of purchasing these homes. An offer has been on a purchase price of circa £48M via private treaty on a 50 year leasing arrangement, which means an average of £280K for each home.’

 

The report then goes on to say:

 

‘The target average development cost under the New Council Homes Programme (NCHP) is £280K per home. As such, the leasing model represents good value for money.’

 

It appears from this that the cost per home for the leasehold flats at the Alperton Bus Garage site would be no better than the development cost for freehold homes on one of Brent Council’s own housing projects, over which the Council would have much better control. 

 

And the £280k per home figure is dependent on the deal to buy leasehold flats from an ASVP (which only has an option to acquire them from the developer) qualifying for a £4.3m grant from the GLA, and that the Council would qualify for 100% Stamp Duty Land Tax relief on its leasehold purchase, which is not certain:

 

‘These assumptions will need to be fully tested along with the Council’s tax advisors and HMRC. Failure to secure the SDLT exemption noted above would increase the cost of the scheme by circa £1.9M.’

 

Why is Brent Council getting into such a complex and potentially risky deal? If it has £48m available to spend on new Council homes, why not spend it on building those homes on a vacant site it already owns, and for which it has had full planning consent since February 2021?

 

Diagrammatic view of Brent’s Cecil Avenue housing scheme. (From an April 2021 Council document)

 

I am referring to the Cecil Avenue site, part of Brent’s Wembley Housing Zone, which I have been writing about since August 2021. As can be seen from the image above, this development is not a tower block (maximum height 9-storeys), it will have an internal garden square and includes family-sized maisonettes with their own private gardens. Surely that would provide better new Council homes for Brent people in housing need?

 

At the moment, following a Cabinet decision six months ago, it is proposed that 152 of the 250 homes to be built at Cecil Avenue (including 20 family-sized homes) would be for a developer partner to sell at a profit. In an article last month, I asked why Senior Council Officers and a small number of Cabinet members (with the rest not questioning it) were appearing to favour developers over Brent residents in need of a decent Council home? We are all still waiting for an answer!

 

I’ve set out the question and the evidence behind it. Now here is my advice. Avoid the ASPV! Ditch the developer! Get on and use the money you were willing to spend on 155 homes in a leasehold tower block in Alperton, and instead build all 250 of the homes at Cecil Avenue (including the 152 you planned to “give away” to a developer) as affordable rented Council homes. You know that is good, plain common sense.

 

Yours sincerely,

Philip Grant.

 

P.S. My consultancy fee for this sound advice is the same as usual - £zero!

Brent Council to purchase leasehold on 155 units in Alperton Bus Garage development at average of £280k per home

 

The Brent Cabinet this morning is set to approve purchase of a 50 year lease on 155 out of the 461 units in the  Telford Homes Alperton Bus Garage development on the corner of Ealing Road and Bridgewater Road:

To finance the purchase of this block, the Council will take a lease of 50 years from the  Asset Special Putchase Vehicle (ASPV), with rents set a current day social rents and indexed at CPI plus 1%. Upon completion of the 50-year lease, a reversionary 949-year lease will be granted a nil rent or peppercorn. 

 

 

The developer will grant the Council a 50-year lease with a 949 reversion at a peppercorn rent on completion of the contract for the 155 affordable homes. The developer will continue to insure the premises during the construction and until completion of the contract. 

 

 

Officers have been in discussion with the ASPV regarding the possibility of purchasing these homes. An offer has been on a purchase price of circa £48M via private treaty on a 50 year leasing arrangement, which means an average of £280K for each home (including a GLA grant).

The Cabinet Meeting can be watched on-line at 10am this morning HERE

Family Fun Day ay at Alperton Bus Garage on Saturday as it says farewell to make way for 28 storey block

 

The new Minavil House in Alperton rises and rises but a taller development is to come on the Alperton Bus Garage site

 

A 26 storey giant rises on the site previously occupied by Minavil House (below)

I would not deny that Minavil House (opposite Alperton Bus station) was ripe for development - but from 2 storeys to 26 is a mighty leap and a trip to Alperton today revealed its impact on the local rail and street scene. The original Minavil House became derelict and was damaged by a fire in 2018. The developer R55 was one of several  invited to a three course dinner with the Leader of Brent Council and some council officers by property PR agency Terrapin Communications back in 2017. Questions were asked about the hospitality event and Cllr Butt answered. LINK 

 

R55 is also responsible for the 255 Ealing Road development and The Workshop (Willesden) development near Dollis Hill - a development that is much bigger than the name would suggest. LINK

Questions were raised at the planning stage about the height of the building at the time and how it fitted in with the local landscape. In fact its height was later cited as a justiification for a 28 storey building almost opposite on the site of Alperton bus garage.

 

Minavil House from Alperton Station

From Bridgewater Road

The illustration below gives the height of the various towers in progress or planned:

Alperton High School bottom right and Alperton Station

 

On the way to Alperton on the 297 bus I took a photograph (below)  of the building locally known as the 'Twin Towers', named 'Uncle' by its  owner and on the site of the former Chesterfield House at the junction of Park Lane and Wembley High Road. It shows the visual impact of such a building from  suburban Wembley Park Drive. The tallest tower is 26 storeys.