Sutton is an outer London council that has retained its stock, delivering management via its Sutton Housing Partnership arms-length management organisation (ALMO).
Sutton is an outer London council that has retained its stock, delivering management via its Sutton Housing Partnership arms-length management organisation (ALMO). It has around 5,900 rented homes and 1,500 leasehold properties. It is on site building 93 new homes via the HRA, will acquire about 96 private sector homes and Sutton Living, the council development company, will deliver further new build. The latter will use general fund and HRA land to deliver a variety of tenures, including affordable housing for rent and market rent, complementing the HRA-funded building programme as the council has reached its limit as a result of current Government restrictions.
Context
The borough has rising house prices brought about by proximity to the City of London and there is high demand for affordable housing. The council has a large-scale regeneration project in partnership with a housing association, but private developers have shown limited interest in building on council-owned small sites. The council’s ALMO has been remodelled to improve services and deliver efficiency savings in the existing stock. This will help to free up some resources for new build. The council has an ongoing regeneration programme and has completed some estate remodelling. However, the draft London Plan envisages much higher housing targets in outer London boroughs: this will be a challenge in Sutton.
Council housebuilding
Sutton has a three-strand approach to improving affordable supply. It is already on site at three locations building 93 units of new council housing, which will replace a care home, youth club, bungalows and garages previously identified as unfit for purpose.
A number of further small council-owned sites have been identified, and these will be developed by Sutton Living.
The third strand is acquisition of former RTB and other open market properties. The council estimates it will be able to buy back at least 19 units per year, totalling about 96 in the first five years of the programme. The programme got underway in September 2017 and so far 33 properties have either been acquired or are in the process of being acquired. These will be used as non-secure temporary accommodation for families.
Funding
Sutton Council has HRA borrowing headroom of just under £15 million. It received special additional borrowing power of £5 million through the local growth fund (LGF), which has made a considerable difference. RTB receipts will also be used – but cannot be used alongside LGF borrowing. Government rules also prevent use of RTB receipts in the funding mix for one site as this is replacing existing sheltered housing. Commuted Section 106 sums are also used.
Sutton Living is able to access general fund borrowing for its programme.
The acquisitions programme will be financed from the general fund, bringing these homes into use as temporary housing.
Challenges
Government restrictions on HRA borrowing, coupled with rent loss from the one per cent cut, are forcing the council to curtail its council housing new build programme. Building cost inflation is also creating challenging conditions.
RTB receipts and their use pose further difficulties. Councils must return quarterly accounts on replacement housing built, and spend the income within three years or face penalties. Only a portion of receipts can be used. In addition, receipts cannot be used alongside Homes England or Greater London Authority grant. All of these issues present Sutton with problems to varying degrees – relaxing the rules would help get developments underway.
Using infill sites on existing estates can be a sensitive matter. Local residents often feel protective of these areas and may use them informally. Sutton believes that the best way to address this is by drawing on communities’ sense of place in offering environmental improvements in the areas as part of the new build package.
The revitalised RTB is reducing the stock significantly. In 2014/15, 75 homes were sold, compared with only two in 2011/12.
Benefits and opportunities
Sutton’s ALMO has been through some difficulties but is now in much better shape. The council is working closely with Sutton Housing Partnership on the HRA building programme as the ALMO will manage the new homes. It could potentially also take on management of the affordable homes built via Sutton Living.
Design: the new HRA and non-HRA housing will be built to high design standards, following an initiative by the ruling Liberal Democrat administration. They insisted that, despite extra costs, the longer term benefits would be worthwhile in terms of less costly repairs, better comfort and appearance and durability, as well as producing a long-term asset. In addition, they felt it was important to existing local communities that any new developments should be of very high quality.
Homelessness: another council company, Encompass, which is a staff-led initiative, provides the housing needs and homelessness service along with some adult services such as putting in place care packages after social services assessment. It will work in partnership with the council on the acquired stock for temporary accommodation, which in turn will save general fund costs and avoid out-of-borough placements.
Development process
General fund sites undergo options appraisal to determine their best use. The council has software to support the decision-making process, factoring in for example the value of nominations as well as land valuations, to produce a score and costing. The latest housing needs study was used to underpin choices on types of provision. The council procured architects to lead on site capacity, design and housing types. Modular construction is being considered on some sites: this is considered to be no cheaper than traditional build but much quicker in the construction phase.