South Kilburn Regeneration viability troubles should be on the Scrutiny Committee agenda tonight

 A number of factors have combined to threaten the financial viability of regeneration schemes across Brent and London including the requirements of the Building Safety Act (second staircases post-Grenfell), inflation, higher interest rates, supply chain issues and labour shortages.

In South Kilburn the Deloittes Viability Assessment provides a case study for the Hereford House and Exeter Court site.

Overall more housing is proposed but a lower proportion is social housing

 

51% affordable by habitable room

Build costs

GDV = Gross Development Vale

RLV = Residual Land Value 

Deloitte conclude:

Viability in planning is a fundamental principle of development, ensuring that the site is only pursued if it can an appropriate land value and adequate developer’s profit. The Residual Land Value (RLV) must be compared against a Benchmark Land Value (BLV) to determine whether there is enough surplus within the scheme to accommodate affordable housing, and / or other S106 obligations.

Viability in planning is achieved when the Residual Land Value (RLV) surpasses the Benchmark Land Value (BLV), indicating that the site can generate sufficient profit for the developer and meet the landowner's value expectations, thereby enabling the release of the land for development. The BLV represents the minimum price that a landowner would anticipate for their land.

In this instance, even if the Council (as applicant) was prepared to accept a BLV of zero (on the grounds that the Site is helping to facilitate a wider regeneration programme), the RLV still presents significant deficit.

Notwithstanding this outcome, the applicant, as a majority landowner remains committed to delivering a successful scheme, with 51% affordable housing (by habitable room number) to be offered at social rent.

Considering this and its role in facilitating regeneration, the applicant is proposing an affordable housing offer which is greater than the amount the scheme can afford. 

 So Brent Council is faced with the problem of finding a way of delivering the scheme as set out in the tables above when the viability assessment suggests that no developer will take it on. Scrutiny councillors will doubtless be concerned about a possible reduction in the social rent offer.

Viability assessments with be required on other regeneration sites across South Kilburn and the rest of Brent threatening to lower the amount of social housing overall. In South Kilburn it could mean (I hope councillors ask the question) that all the displaced council tenants will no longer be housed as promised.

The recent South Kilburn Tenant Steering Group received updates on the various South Kilburn sites and I highlight below the number of social rent homes proposed  out of the total number of homes proposed. The paragraph on Hereford and Exeter seems optimistic in light of the above:

Peel

In total, the Peel scheme is delivering 308 homes including 46 social rent homes for existing South Kilburn tenants and 98 shared ownership homes. 39 of the social rent homes have already been completed and let. The lower than usual number of social rent homes relates to the scheme financing the new Health Centre. However, the Council has now secured an additional four family homes for social rent in Phase 4.

NWCC Development

Countryside are progressing with the NWCC scheme (Neville, Winterleys, Carlton House and Carlton Hall), which will provide 225 new homes including 95 social rent homes for existing South Kilburn tenants. 40 of the social rent homes are 3 and 4 bedroom properties. Demolition works were completed in January with piling works for the new buildings are getting underway.

Craik, Crone and Zangwill

A planning application for the Craik, Crone & Zangwill (CCZ Site) had been submitted to the Council but was being reworked to comply with subsequent GLA guidance on fire safety requiring a second staircase. A mixed tenure scheme of 252 new homes is proposed, 104 of which would be for social rent to existing South Kilburn tenants. Two thirds of the social rent homes will be family sized to meet identified needs. New commercial and workspace, public realm improvements and infrastructure facilities are also proposed. The project has been paused whilst more strategic aspects of the programme are addressed.

Masefield, Wordsworth and Dickens

On the Masefield, Wordsworth & Dickens site, the proposed scheme includes new homes, a new primary school and enhanced green space. It is proposed that 146 homes would be built on the site in addition to the new school. 40% of the homes would be for social rent to existing South Kilburn tenants including 15 four bedroom houses. The South Kilburn Open Space will also be redesigned with new facilities within the scheme. The Planning submission is pending while the team work on funding mechanisms to deliver the school ahead of the rest of the development and examine opportunities to maximise housing on the site.

Austen and Blake

Proposals for the Austen & Blake site are intended to include new community facilities alongside new homes for social rent and private sale. The scheme would also reinstate Percy Road through to Malvern Road. It is anticipated that the site would deliver around 200 new homes in total. The team are currently considering options to combine delivery with the neighbouring Masefield, Wordsworth and Dickens site.

Neville, Winterleys, Carlton House & Carlton Hall

As reported, Countryside are onsite as the Developer Partner for the scheme at 1-8 Neville House, 1-64 Winterleys, 113-128 Carlton House and Carlton Hall (NWCC Site). 225 homes are proposed for the site, 95 of which will be for social rent to South Kilburn tenants with a significant number of family sized homes. It is proposed that the first 72 homes for social rent would be completed by early 2026.

Hereford & Exeter

The Hereford & Exeter scheme is intended to deliver 250 homes, 109 of which will be for social rent for existing council tenants in South Kilburn and a new open space. A new planning application has been submitted following redesign work to meet GLA guidance on fire safety requiring a second staircase on taller buildings. This should be the next phase onsite in construction by 2025.

 There was a Q&A at the same session that will be of interest to the tenants:

 

Questions were asked as follows:

Q – Is there any progress with the Queens Park/Cullen House site ?
A – The Council is continuing to negotiate the purchase of the former Falcon pub in order to facilitate the design of a revised scheme and subsequent planning application.

Q – What are the Council doing about squatting and break ins at Blake Court ?
A – The Council are trying to work with the police to prevent squatting and securing empty properties where possible. Residents should contact the Council on 020 8937 2143 or email at Housingmanagement@brent.gov.uk regarding instances of squatting or break ins to empty properties. If there is a threat of injury, the police should be contacted on 999.

Q – Are empty homes in John Ratcliffe House going to be refurbished and relet ?
A _ The Council is letting empty flats in later phase blocks as temporary accommodation to save costs and improve security. However, these tenants will not have the right to permanent rehousing in South Kilburn.

Q – Why is the rent going up when we live in such poor conditions at Dickens House ?
A – Rents are being increased across the borough at RPI plus 1% in line with Government guidance in common with other social landlords. The Council are actively looking at options to move tenants from Dickens and Austen House.

Q – Why has rehousing priority for Craik and Crone Court tenants been changed ?
A – Tenants in Dickens & Austen House and Blake Court are now being prioritised due to the need to vacate the site for redevelopment.

Q – Who will be prioritised for the new homes at NWCC and Granville ?
A – Tenants in Dickens & Austen House and Blake Court are currently being prioritised for all available homes. However, any surplus new homes will be offered to tenants in subsequent phases.

Q – Are new build flats fitted with baths or shower ?
A – They normally have a shower within the bath but separate showers or wet rooms are provided for tenants with specific identified needs through an Occupational Therapist.

Q – When will tenants in William Dunbar House be rehoused ?
A – William Dunbar House is in the final phase of the programme, the block is not due to be redeveloped for some years.

 

Brent Council to contribute infrastructure costs for next South Kilburn development phase to ensure viability

Today's Cabinet will be asked to approve procurement for the next phases of the South Kilburn regeneration project. It includes a plan for  Brent Council funding  (via Strategic Community Infrastructure Levy) of infrastructure to make the project more attractive to developers:

Within the NWCC project, there is a high level of affordable housing (54% by habitable room) which may have an impact on the overall viability of the scheme. 

Therefore,it is proposed,to make the procurement more attractive to potential developer partners, the Council will contribute to the infrastructure/public realm costs. The infrastructure and public realm costs relate to the external works,which include soft and hard landscaping, and infrastructure works including drainage, utilities and services (electricity, gas, water and telecoms). 

A cost plan was prepared by the Council’s cost consultant, Deloittes. This proposed contribution will in turn support the overall viability of the scheme, which will lead to the Council receiving the desired quantum of affordable housing and envisaged outcomes and wider benefits.

The Councils Capital Investment Panel, in April 2020, supported £4.9mfrom the capital pipeline for infrastructure and public realm projects for the external works, from Strategic Community Infrastructure Levy funding.

The Council plans to dispose of some of ther sites on a long lease and say, 'there is potential capital receipts and future overage payments from the private units'.

The proposed rents for the affordable units managed by Brent Housing are set out:

 Of particular importance to existing tenants is the allocation  of the new housing:

The new affordable homes in NWCC and later developments are available to existing South Kilburn Council tenants currently living in properties due for demolition as part of the South Kilburn regeneration programme.

As with all schemes that are part of the South Kilburn regeneration programme, full consideration is and will continue to be given to residents and leaseholders with protected characteristics, particularly people with disabilities and / or other types of vulnerabilities due to older age, childcare and/or caring responsibilities, socio-economic status (single parents and large families). The Council will/has ensured that the options put forward to tenants and leaseholders provide reasonable and affordable alternatives that enable them to remain in the area and maintain their family and community ties, as per Article 1 of the First Protocol and Article 8 of the European Convention on Human Rights. The re- housing team provides help to secure tenants through the moving process, additional support and services to those who require it.