Building a new generation of council homes (Harrogate Borough Council)

Housing Advisers Programme case study 

2018/19 cohort

Our aim was to accelerate development whilst maintaining high standards of design, sustainability and build. To do so, we had to rethink development processes to ensure we were efficient and effective. 

We had many of the necessary skills, but not all. We invested in a new Housing Growth Team to lead on site identification and securing planning permissions before passing on to the In-House Construction Team. We lacked expertise however, particularly around the commercial aspects of property development including partnering, management of cash flows, profit/loss forecasting, construction accounting and cost control. 

We consider that our project has been a success. The formation of a new ‘Growth Team’, enhancement of skills and the purchase and use of appraisal software, combined with a suite of standard house types have ensured that we are more efficient and qualified to make decisions on development for both the HRA and the Housing Company. We are already accelerating development, whilst providing confidence to senior leaders that development risk and cost is thoroughly appraised. 

We will share these lessons across a new, North Yorkshire Council as we move towards LGR.  

Housing Issues 

Whilst Harrogate is regarded as a relatively affluent district, many of the local jobs are in low paid service industries such as hospitality, retail and care.  

The ratio of housing price to workplace-based earnings in the district exceeds the average for England and is significantly above the Yorkshire and Humber regional average. This makes Harrogate the most unaffordable place to buy a property in the north of England. 

As a local authority, we are fortunate to have our own in-house construction team for new build homes.  Although we have skills in construction, we identified a lack of knowledge, skills and expertise in the wider ‘development’ process, namely cost control and cash flow forecasting.   

Whilst the HRA holds numerous, parcels of land that can be developed, these are invariably small (1 -3 dwellings), difficult to access with high remediation costs (often small garage sites) with easement issues and claimed rights of way to resolve. Many are in remote, rural areas. These are not sites that are attractive to the private sector, but given that our Waiting List totals almost 1800 households and our stock has been more than halved over the years, it is important that we seize every opportunity to make best use of our landholdings. We now have a process that enables us to progress sites with confidence.  

The current and ongoing Covid issues have significantly affected the way we initially wanted to utilise the funding.  It was our intention to gather a broad understanding of all aspects of developing residential housing from some of our registered provider colleagues, culminating in the hosting of a “lessons learnt” seminar.   We had agreement in principle for some of our management board, finance staff and operational teams to spend day-to-day working with our partners, learning everything from site identification and financial requirements to sales and marketing strategies.  Unfortunately, we have not been able to achieve this. 

To this end, and in line with the funding stream ‘building council homes programme,’ we consulted with IDEA and opted to use the remaining funding to aid our understanding of getting sites from vacant land to build out.  To do this we utilised the knowledge and skills from the private sector, namely architects and planning specialists.   

In addition to our own HRA sites, we are now actively pursuing small sites that have unimplemented planning permission, looking to deliver affordable housing on these stalled sites via our Housing Company.  Often these sites have approval for five large homes (to avoid affordable housing contributions). Our intention is to reappraise each site, increasing density where possible and delivering sites with a wider mix of housing, including affordable housing (sale and rent). Though in its infancy, this project is yielding results.  

As a council we identified where we could look to supplement our existing knowledge with expertise from the private sector, namely around unit designs. We worked closely with a local firm of architects to design a suite of 16 housing units that we can apply to any site we may wish to develop.  In the design of these units we worked closely with our in-house maintenance and building control team to ensure that any designs would be welcomed by planners but also aid future ongoing maintenance.  Our suite of units has been designed to build resilience in the home to adapt for future legislative changes. 

We supplemented our suite of units with the acquisition of viability appraisal software.  This software allows us to check the viability of any development prior to spending any money or wasting resources whilst providing confidence to senior managers that the developments undertaken are viable and that full account has been taken of factors. 

Our ultimate goal was to develop a clear, structured approach to development.  The acquisition of viability software allows us to determine, in a timely manner with little resource expenditure, if a development is workable.  Having a professional suite of unit types allows us to design out multiple versions of a development without the need to spend budgets on architects’ / planners’ fees for each design, with the aim to maximize the yield of each development. 

Whilst we are in the early stages of our new approach, we have already seen benefits.  Sites have been appraised and approval sought on the back of viability work and it is hoped our new suite of units will lead to smoother transition through planning.  Our long-term intended outcome is to see development time decrease from site identification to start on site with a reduced overall cost of development.  We anticipate seeing reduced abortive costs linked to development (failed planning applications, architects’ fees etc.) and positive benefits that come from standardized unit types.

We will continue to build on what we have achieved to date and look to enhance our house building further.  We are actively pursuing stalled planning permissions with a view to delivering these ourselves.  Furthermore, we will use our learned knowledge and understanding to aid the improved delivery of the council’s private housing company, the purpose of which is to raise revenue to return to the council. This will be ever more important as we become part of a new, bigger authority. 

Having a suite of homes ‘off the shelf’ is vital to achieve timely results, saving the need to appoint an architect for each site. All teams involved are familiar with the homes and we have a good idea about the costs involved before we begin on site.  The use of viability software allows senior managers to make decisions in confidence, appreciating that all aspects have been considered and risk has been minimised.

Jim Robinson, Valuation Surveyor and Intermediate Housing Officer. [email protected]  

Process map