Our 'Public-Private Partnerships: Driving Growth, Building Resilience' good practice guide supports councils to establish more effective public-private partnerships, with case studies of partnerships which have delivered high impact outcomes. One example is Luton Street, where Westminster Council entered into a joint venture with Linkcity to deliver hundreds of new homes.
Project overview
Luton Street is a mixed tenure housing scheme across two sites, with sports and leisure community space, including extensive public realm.
In 2019, Westminster City Council entered into a joint venture (JV) and funding agreement with Linkcity, development arm of the Bouygues UK group, to deliver 171 new homes, across two sites, including 62 homes for intermediate and social rent in a prime London location at Luton Street in Westminster. Luton Street is part of the first phase of the wider Church Street regeneration programme. The scheme will also deliver a community centre with Sports England compliant facilities and extensive public realm.
The scheme had stalled following a slowdown in the central London housing market and Westminster City Council stepped in to ensure the scheme continued to be delivered at pace.
The JV was structured as a Limited Liability Partnership, giving the council and Linkcity the flexibility to manage the project and retain control over their risk exposure. The council also provided financial support through a development loan to the JV on commercial terms, which provided the certainty required to ensure the project was delivered during the post-Brexit market uncertainty whilst also generating an income stream for the council.
Westminster City Council also acted as the ‘off-taker’ for the long-term ownership of affordable housing. The social rent homes are retained by the council within the HRA, and the intermediate homes will be acquired by the council’s wholly owned subsidiary, Westminster Builds.
These interventions, coupled with an underwrite from Westminster to acquire the homes if the sales price fell below an agreed floor, ensured that the scheme was delivered swiftly. The homes are now on site, due for completion in Autumn 2022, with a healthy pipeline of pre-sales being achieved.
Westminster City Council invested in the JV through its wholly owned development company, Westminster Builds, which is now reviewing further opportunities for investment both directly and with partners across the Borough.
Key points of learning
Councils have many tools at their disposal to support delivery, including acting as a partner and/or funder for a scheme. Using a council’s financial and wider covenant strength can ensure that schemes can deliver outcomes in a timely manner.
Where a council performs multiple roles on a transaction, it is important to separate the duties and responsibilities of each role. For example, the role of Westminster City Council as lender was distinct from the role of its wholly owned company as a member of the JV. Conflating these different roles can lead to conflicts of interest. Therefore, it is key that documentation and governance reflect the different drivers, controls and processes.