Page 1 of 30 WEST OF SCOTLAND HOUSING ASSOCIATION DEVELOPMENT STRATEGY 2016 TO 2021 TABLE OF CONTENTS 1. EXECUTIVE SUMMARY ................................................................................................2 CONTEXT FOR THE DEVELOPMENT STRATEGY ...........................................................4 2. The Association’s Vision, Values and Strategic Objectives ...........................................4 3. Strategic Context ...........................................................................................................4 DEVELOPMENT STRATEGY .............................................................................................7 4. Objectives, Principles and Policies ................................................................................7 5. The Association’s Development Programme ................................................................7 6. Where We Will Build: The Association’s Priorities ....................................................... 10 7. Asset Management: A Whole Organisation Approach ................................................12 8. Assessing Need and Future Demand for New Housing ..............................................14 9. Type and Quality of Housing ....................................................................................... 16 10. Types of Tenure ........................................................................................................19 11. Procurement and Community Benefits ......................................................................21 DELIVERING THE DEVELOPMENT STRATEGY ............................................................. 22 12. Governance...............................................................................................................22 13. Development Team Capacity .................................................................................... 24 14. Financial Management and Funding .........................................................................25 15. Cross-Team Working and Project Appraisals............................................................ 27 16. Risk Management .....................................................................................................29 17. Reviewing the Development Strategy .......................................................................30
Transcript
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WEST OF SCOTLAND HOUSING ASSOCIATION DEVELOPMENT STRATEGY 2016 TO 2021
17. Reviewing the Development Strategy ....................................................................... 30
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EXECUTIVE SUMMARY 1.1 This document describes West of Scotland Housing Association’s Development
Strategy for the 5-year period 2016/17 to 2020/21, and looks ahead to the years after
2021. The Strategy sets out our plans for the future, and what we will do to achieve
these.
1.2 West of Scotland is a regional housing association with more than 50 years experience
of developing and managing affordable housing, and supporting the communities we
work in. The Association currently owns and manages around 3,400 homes in six local
authority areas (Glasgow; South, East and North Ayrshire; and South and North
Lanarkshire).
1.3 The Development Strategy has a single overriding objective:
To provide quality, safe and affordable homes that people are proud to call
their own, in neighbourhoods that help communities thrive
We will address this objective in a way that supports the strategic objectives described in the Association’s Business Plan, notably:
To actively manage our assets and develop new homes to meet local needs
To contribute to the Association’s strategy of planned growth over the next five years
To work with others to improve tenants’ lives
To be well governed and financially strong.
1.4 The Development Strategy is based on the following principles and policies:
DEVELOPMENT STRATEGY SUMMARY
Standards for New Housing
1) The Association will build new housing that provides future residents with quality, affordable homes in attractive neighbourhoods.
2) The Association will set and meet standards that produce quality, energy efficient homes that are sustainable in the long-term.
Key Stakeholders and Partnerships
3) The Association will build on and enhance our relationships with local authorities and the Scottish Government. We will also work with private developers, on sites designated for mixed development under a local authority’s affordable housing policy.
4) The Association will carry out community engagement activities for all of its development projects, and seek tenant feedback about their new homes.
Where the Association Will Build
5) The Association will prioritise developing in the local authority areas of Glasgow, South Ayrshire and South Lanarkshire. These are areas where we already have a significant presence as a landlord, well-established partnership working with the local authority, and good prospects of securing support and funding for new
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DEVELOPMENT STRATEGY SUMMARY
development projects.
6) The Association’s development programme will reflect local planning and housing strategy requirements. The programme will be demand-led and we will generally build only where there is a demonstrable need and demand for new housing.
The application of this principle may be different for regeneration projects that seek to meet the needs of existing residents and to stimulate new external demand.
7) If we are building close to existing West of Scotland housing, the Association will consider how the new housing would support our wider asset management strategy. We will also consider how we would manage new housing, and whether a new project would help us to achieve efficiencies in the delivery of our services.
What the Association Will Build
8) The Association’s top priority will be to provide affordable social rented housing. We will aim to meet a range of needs including housing for people with a disability or other physical impairment. We will “future proof” the design of new homes where possible, to incorporate features that will assist people who may at a future date develop common major degenerative conditions such as dementia.
9) The Association will consider providing mid market rent or shared equity housing if local markets would support this and any risks to the Association can be managed effectively.
Procurement and Community Benefits
10) The Association will adopt procurement methods that produce optimum value for money and facilitate the delivery of community benefits.
Financial Capacity
11) The Association will always ensure that the provision of new homes is financially viable and fundable, will meet Business Plan and funders’ requirements, and will not impact adversely on the future interests of our tenants or the Association itself.
12) The Association will maintain close relationships with our funders and regulators, and ensure that our development activity does not compromise covenants with the Association’s lenders.
Governance and Delivery of the Development Programme
13) The Association will ensure that the Development and Investment Sub Committee provides leadership and close scrutiny for our development activities.
14) The Association will ensure our development team has the resources needed to deliver the development programme, and that the various staff teams who contribute to the planning and delivery of the programme work closely together.
Risk Management
15) The Association will be proactive in assessing and managing the risks associated with our development role. This will extend to the development function as a whole and the risks associated with individual projects.
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CONTEXT FOR THE DEVELOPMENT STRATEGY
2. The Association’s Vision, Values and Strategic Objectives
2.1 The Association’s vision, values and strategic objectives for the future are as follows:
Vision
We go further to provide housing you call home
Values Objectives
To support our customers and communities by:
Being adaptable and flexible in meeting their needs
Empowering and providing opportunities to help them grow
Creating a sense of belonging
Engaging and connecting with others who can help
Deliver outstanding service to customers in all our communities
Actively manage our assets and develop new homes to meet local needs
Be the best we can be for our customers
Work with others to improve tenants’ lives
Be well governed and financially strong
2.2 The development programme will make a major contribution to the Association’s
overall strategy of improvement and growth. In taking the programme forward, the
Association’s overriding aim will be to provide quality, safe and affordable homes
that people are proud to call their own, in neighbourhoods that help
communities thrive.
3. Strategic Context
3.1 Planning and implementing the Development Strategy depends on a wide range of internal and external factors. The most important internal factors for us to manage include:
Achieving a close fit between the development programme and the Association’s wider asset management strategy.
Raising the additional funding needed for delivery of the development programme.
Maintaining positive relationships with our local authority partners, the Scottish Government, funders and regulators.
Making sure that we build the right types of houses in the right places.
Making sure that the development programme does not compromise the interests of existing tenants or our ability to invest in their homes and services.
Having the right staff resources in place to deliver the development programme, as well as excellent communication and joint working between staff teams across the Association.
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3.2 The external environment in which the Association works is equally important.
While this is a time of great opportunity for social housing providers seeking to build
new homes, there are also some significant challenges and risks to be navigated.
Opportunities Challenges and Risks
Scottish Government Funding
National target of 50,000 affordable homes
in the 5 years to 2021, with £3 billion of
Scottish Government funding promised in
this period
Grant benchmarks per house increased to
up to £74,000 per unit based on a 3 person
dwelling
Greater flexibility in approving projects
above the benchmark, if there are abnormal
costs
Strong competition for resources in some
areas (from councils and other RSLs)
Uncertainty about affordable housing
funding levels and subsidy benchmarks
after 2021
Access to Suitable Land
Local authority initiatives to dispose of land in
their ownership for affordable housing
Variable impact - new council house
building has first call on sites in some local
authority areas.
Land availability is challenging for all RSLs
Section 75 sites controlled by private
developers, who may delay development if
market conditions are not right for them
Partnerships with Local Authorities
Local housing strategies, local development
plans and SHIPs provide transparency
about priorities and aid partnership working
Good appetite on the part of local
authorities to engage with the Association
about development opportunities
The Association’s offer to local authorities
may include nomination rights to a
proportion of the completed housing
The Association owns housing in six local
authority areas. Prioritisation is essential,
for the purposes of new developments.
Welfare Reform
UK Government looks set to abandon
Housing Benefit caps proposed for
introduction in 2019
Core Welfare Reform policies will reduce
household incomes and increase rent
arrears which in turn could affect the
Association’s capacity to service debt for
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Opportunities Challenges and Risks
new housing
The Long View
Thoughtful design can help in “future
proofing” new accommodation so that it is
accessible and adaptable as residents’
needs change
Ageing population and the challenges this
is already presenting
Forecast growth in single person
households
Emerging Scottish Government
requirement for 80% of domestic heat to
be from renewable sources by 2032
Status and impact of this target on social
landlords is not yet clear – but potentially
significant for developments currently
being planned and for future investment
needed in existing housing
Entry to New Markets
Mid market rent housing (MMR) can help
meet needs for affordable housing, if
targeted at suitable areas and sites
Approval of some new build projects may
be conditional on providing MMR
The Association does not have previous
experience in providing MMR housing
and needs to reach a strategic decision
on its future involvement
Economic Factors
There continues to be good demand in the
Scottish construction sector for house
building contracts
Inflation is rising
Weakness of the pound is likely to
produce inflation above headline rates for
imported goods and services, including
construction materials and components.
Following a period of relative stability, the
Scottish Government has reported that
tender prices for social housing in
Scotland have risen significantly since the
start of 2017
Brexit is producing economic uncertainty
that will continue for some time to come.
3.3 The Development Strategy describes how we will respond to this strategic context, to ensure our ambitions can be realised in an effective and sustainable way.
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DEVELOPMENT STRATEGY
4. Objectives, Principles and Policies 4.1 The objectives for the Development Strategy are set out in the Executive Summary
at the beginning of this document, along with the principles and policies that will
underpin the Strategy. This part of the Development Strategy elaborates on those
principles and policies.
5. The Association’s Development Programme
Main Development Programme to 2020/21
5.1 The Association’s Board has set a target of completing 100 new housing units per
annum, for the 5-year period from 2016/17 to 2020/21. This matches the timeframe
the Scottish Government has set for funding and achieving its 50,000 new affordable
homes target.
5.2 The Association’s target will be averaged out, to achieve 500 completed new homes
over the whole of the 5-year period. The projected number of completions in
WSHA’s planned programme currently stands at 475 units.
5.3 The box below provides a snapshot of the main development programme (i.e.
projects we are committed to build in the period to 2020/21) at the time of preparing
the Development Strategy. Key dates, costs and outputs may change as individual
projects proceed towards going on site. Similarly, projects can be removed or, with
the agreement of the Board, be added to the main development programme.
Sites in approved programme and due to
complete 2017/18 to 2020/21
Earls Green, Troon Phase 1
Earls Green, Troon Phase 2
Symington, Ayrshire
Uddingston Gas Works
Fielden Street, Glasgow
Port Dundas, Glasgow
Dalmarnock Nursery, Glasgow
Dalmarnock Station, Glasgow
Greenan Phase 2, Ayrshire
Rolls Royce site, East Kilbride
MAIN DEVELOPMENT PROGRAMME TO 2020/21
Pipeline Programme
5.4 To maintain forward momentum, the Association will develop a pipeline programme
62 62
132
101
0 0 0
100
0
20
40
60
80
100
120
140
2017/18 2018/19 2019/20 2020/21
Projectedcomple ons(no.ofunits)2016/17to2020/21
SocialRent MMR
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of projects, covering sites that may have the potential to go on site from April 2021
onwards.
5.5 The pipeline programme at the time of approving the Development Strategy is shown
in the box below. These projects all have the status of “works in progress” and they
may or may not become part of the main programme over time. We will look to add
further projects to the pipeline, as opportunities become available.
5.6 The possibility of slippage in the main programme means that the pipeline
programme must remain fluid with the potential to respond to changes in
circumstances, as long as the Association is in a position to fulfil any commitments it
may be required to make.
5.7 Pipeline projects can be promoted to the main programme with the approval of the
Board in the following circumstances:
If any of the projects in the main development programme are delayed or cannot
proceed at all, the Association may substitute another project from the pipeline
programme.
If the Association is offered additional grant funding for the programme to
2020/21, a pipeline project(s) may be accelerated. In all such cases, it must be
demonstrated that the Association can fund the non grant-funded development
costs within the necessary timescales. This may relate to existing or planned
funding, as long as funds will be in place by the anticipated contract acceptance
date.
Programme Aims Beyond 2021
5.8 For the period beyond 2021, the Association’s wish is to maintain the development
programme at least at current levels, i.e. an average of 100 completed units per
annum. However, planning the post-2021 programme with greater certainty will
depend on:
The outcome of the Association’s efforts to secure additional finance (expected in
2018)
Glasgow
Duke Street
South Lanarkshire
St. Andrews Church Site, Hamilton
South Ayrshire
Dalmilling Primary School, Ayr
A.S. Homes Site, Symington
South-East Ayr (Corton) Phase 1, Ayr
South-East Ayr (Corton) Phase 2, Ayr
Greenan Phase 3, Ayr
Holmston, Ayr
Craigie Campus, Ayr
North-East Troon Phase 2
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Future funding levels for affordable housing at national level after 2021
The associated Resource Planning Assumptions provided to local authorities, and
the priorities that councils will set when they have this information.
5.9 In practice, we expect there to be an ongoing dialogue with the Scottish Government
and local authorities about the post-2021 programme, and the Association will
continue to progress feasibility studies, site acquisitions (if grant-funded) and other
preparatory work.
5.10 The Association’s general policy is that the following conditions should be met for the
purchase of development sites in the pipeline programme:
There is an explicit commitment to the project from the local authority and the
grant provider (either the Scottish Government or Glasgow City Council)
The grant provider will fund the acquisition costs
The project forms part of the development programme approved annually by the
Board, or is otherwise approved by the Board during the course of the year.
Any proposals that do not meet all of these criteria must be supported by the
Corporate Management Team and, if so, referred to the Board for approval.
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6. Where We Will Build: The Association’s Priorities
Context
6.1 The Association has revitalised its strategic relationships with local authorities, and
this has been invaluable in helping to form a clear view about our future priorities and
the identification of suitable sites.
The Association’s Geographical Priorities
6.2 The geographical priorities for the main development programme to 2020/21 have
already been set. The programme contains a diverse set of projects in the Glasgow,
South Ayrshire and South Lanarkshire local authority areas.
6.3 These three priority areas will also apply to the Association’s pipeline programme,
and to any additional development opportunities that may arise.
6.4 The Association’s priorities reflect:
Our long-standing partnership working with all three local authorities.
Future funding prospects.
The presence of opportunities in areas where the Association already owns
housing, as well as in new areas where there is housing need and demand to be
met.
Scope to achieve efficiencies in the management of our services.
Glasgow
6.5 In Glasgow, the Association will be open to development opportunities throughout
the city. We will give particular priority to potential opportunities in:
Clyde Gateway
Glasgow Inner East, which is set to benefit form major infrastructure investment
as part of the Glasgow City Deal
Port Dundas/Craighall
South Lanarkshire
6.6 In South Lanarkshire, the Association will give priority to opportunities that may arise
in the East Kilbride and Hamilton Housing Market Areas (HMA).
6.7 Opportunities in both HMAs are likely to include sites that the Association would
purchase and develop in its own right, and sites where the Association would provide
affordable housing on section 75 sites owned by a private developer.1
1
These are sites where the local authority is seeking an affordable housing contribution under section 75 of the Town
and Country Planning (Scotland) Act 1997
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South Ayrshire
6.8 In South Ayrshire, the Association will focus its future interest on the towns of Ayr,
Prestwick and Troon and other locations in the Ayr Urban HMA. These areas all
have a demonstrable shortage of affordable housing.
6.9 We expect that opportunities will generally take the form of section 75 projects.
Opportunities may also arise as part of the Council’s town centre action plans.
Other Areas
6.10 The preceding paragraphs describe the Association’s priorities, but do not preclude
consideration being given to other sites, or to sites in other local authority areas. Any
sites in this category will be the exception rather than the rule and the DISC would
receive a business case report prior to site acquisition.
Opportunities for Joint Working
6.11 The Association has a strong track record in planning and delivering new housing
projects. Where appropriate, we are also open to partnership working with other
organisations, including local authorities, other RSLs and private developers. When
considering such arrangements, the Association will apply sound business testing on
prospective partner organisations. This will include risk assessment and due
diligence tests.
6.12 In addition to partnership working on the build process, the Association will also be open to partnership working on future management of new housing. In particular, the Association has entered into nomination agreements with South Ayrshire Council whereby the Council nominates prospective tenants for 50% of the Association’s new lets and re-lets. The Association is also a partner in the Common Housing Register in South Lanarkshire ensuring all residents in the area have equal access to the Association’s property.
Other Factors Influencing Site Selection
6.13 In addition to geographical location, a number of other factors will influence site
selection. These include:
Access to funding
The availability, location and cost of land
Scope to meet planning requirements
Formation of partnerships with private developers, for section 75 sites
Financial viability
Potential to meet our overriding objective of providing future residents with
quality, affordable homes in attractive neighborhoods.
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7. Asset Management: A Whole Organisation Approach
Context
7.1 The purpose of asset management is to get the most out of the Association’s assets,
to help improve the quality of our homes and services.
7.2 The Association’s asset management approach involves a wide range of activities,
as shown in the following diagram. The aim is to ensure that each area of activity is
compatible with the others and with the Association’s overall asset management
goals.
7.3 At a strategic level, two current issues will have a substantial impact on the
Association’s future asset management strategy, and on the overall balance of
funding needed for investment in existing homes and new homes.
Firstly, the Association is carrying out a 100% stock condition survey (SCS), to
be completed by the end of 2017.
The SCS results will allow us to update our asset management and investment
strategies, and the related plans for future funding. Major repairs are currently
funded from revenue income rather than borrowing, and the SCS results will tell
Asset Management
activities
Rent Policy and reviews
Development Programme
Stock performance
appraisal
Demand and sustainability
Options appraisal
Retention or disposal on
rounded business
case
Stock condition surveys
Strategies for investment
and procurement
Risk strategy
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us whether this will continue to be sustainable.
The Association will also use the SCS results and existing data on stock
performance, to consider the introduction of a disposal strategy. This would allow
for disposals of small clusters of stock that are performing poorly, subject to
Board approval of a business case.
Secondly, the Association has begun to develop options for the future of two
hostel properties that have reached the end of their useful life. Remodelling
these hostels is likely to require significant levels of future funding, and similar
issues are likely to arise as we begin the process of examining the future of the
Association’s sheltered housing.
Assessing Asset Management Issues for New Developments
7.4 As well as meeting new housing needs, development proposals must always:
Demonstrate a close fit with the Association’s overall strategy for our existing
homes
Complement other aspects of the asset management approach.
7.5 This will often be a matter of judgement, and conclusions should be reached
involving all relevant directorates and staff teams, as part of the pre-acquisition
appraisal process. The Association’s Property Director will ensure that suitable
procedures are in place to guide joint working and will intervene as required if this is
necessary to support decision making.
7.6 On a practical level, the Association will take account of the following asset
management issues when identifying sites and developing project proposals, again
as part of the pre-acquisition appraisal process:
The location and performance of existing housing owned by the Association, and any
future plans for investment or possible disposal
Need and demand for the proposed housing (see section 8)
How new housing would be managed and whether this would ensure that future
customers receive a high quality service; that the Association can provide services
efficiently and effectively; and the possible scope to achieve efficiencies in the
management of the new and existing housing.
The value that any new housing would add to the Association’s overall asset base.
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8. Assessing Need and Future Demand for New Housing
8.1 Prior to purchasing individual sites, the Association will make an evidence-based assessment of the anticipated need and demand for the housing to be provided.
8.2 The key questions to be addressed are as follows:
Are we assured that we will be building the right type of homes and in a place that people want to live?
Are we assured that a new build project will not displace demand for existing housing owned by the Association and other social landlords?
How does the site fit with our wider asset management strategy for any West of Scotland stock in or near to the project area?
What do we know about the profile of the local community and the characteristics of the people who may make up our future customer base?
If we intend to provide mid market rent or low cost home ownership housing, what do we know about the local market in relation to product, price and transaction levels?
8.3 The following box shows the range of information we will use to arrive at these judgements:
Specification for Assessing Housing Demand
1) Confirm the proposed development is compatible with overall asset management
strategy (for sites in existing WSHA stock areas)
Review asset management strategy with relevant colleagues to confirm stock
performance and future plans (e.g. retain; retain and invest; demolish; demolish/replace;
dispose of)
2) Assess demand for social housing in the project area
Strategic information
Local Housing Strategy, Housing Needs and Demand Assessment (HNDA) and any
area strategies produced by the local authority
Rental comparisons and local house prices
Discussion with the local authority, who may be able to assist with sourcing of relevant
data
Operational information (for sites in or close to WSHA letting areas)
Housing list for the letting area (numbers overall and for different house sizes/types)
Pressure ratio (ratio of housing applications to housing stock in the letting area)
Stock turnover (total re-lets in last 3 years as a % of WSHA stock in the letting area)
Average waiting time for applicants seeking to be re-housed
Identification of any house sizes and types that are in over-supply or under-supply, more
difficult to let etc.
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Specification for Assessing Housing Demand
Discussion with Housing Services Manager and Housing Officer, to help interpret the
data results
Other operational information
If a site is outside the Association’s letting areas or the number of cases is small:
Seek similar letting information from the local authority and/or other RSLs
Also seek common housing register data from the local authority, where applicable
3) Identify Demographic Trends and Community/Future Customer Profile
Generate Community Insight report for the project area to establish:
Population: profiles relating to age, household type and ethnicity, plus past trends in
local population profile and future local authority level projections
Deprivation data (SIMD overall ranking and domain level data on income, employment,
education and health deprivation)
Working age benefit claimants
Prevalence data for disability, older people and other vulnerable groups
Housing tenure and types
Overcrowding
General health and limiting long-term illness
Economic activity
Access to car ownership.
4) Market Appraisals for Other Tenures
House prices: Rightmove website
Private rents, time to let and letting volumes: Citylets website
Register of interested WSHA residents established, and publicised in newsletter articles
and mailings, and
Market appraisals by reputable local estate or lettings agents, where appropriate
8.4 The Development Team will have lead responsibility for completing the demand
assessment as part of the pre-acquisition appraisal, and for carrying out any
subsequent updates that are needed (e.g. to update house price or private rental
data). In doing this, the Development Team will liaise with the Housing and
Customer Services Team regarding any help needed with sourcing data. Both teams
will discuss the demand assessment before approval is sought from the
Development and Investment Sub Committee to purchase the site.
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9. Type and Quality of Housing
Outcomes to be achieved
9.1 The Association will develop new housing to achieve the following outcomes:
Good design
Good space standards
Built to last
Accessible and adaptable
Energy efficient
Good quality external open space
Affordable to residents in relation to the costs of living in the home
Reductions in environmental impact achieved by the Association and our contractors during the construction process, for example in relation to waste management, treatment of hazardous waste, responsible use of energy and water, and recycling and reuse of materials where feasible.
Housing
9.2 The Association is committed to building new homes that are accessible and
adaptable, to meet a range of needs including situations where tenants’ needs
change over time. This is the essence of the Housing for Varying Needs design
standards that all new grant-funded affordable housing in Scotland must meet.
9.3 While we will often provide specialist housing (such as housing suitable for
wheelchair users), we will do this in integrated developments that have been
designed to produce a range of house types, rather than standalone specialist
housing developments.
9.4 The Association’s approach will be guided by available data (notably the Local
Housing Strategy) and the priorities of local authorities and other partners. The
Association will consider how we can contribute to meeting the needs of an ageing
population. While most older people will continue to live in existing rather than new
homes, we are keen that the design of new homes should be future proofed where
possible. The adoption of accessible and adaptable design standards is part of our
approach, along with other initiatives such as the possible use of dementia-friendly
design principles in our new homes to benefit sufferers who are below retirement age
as well those in older age groups.
9.5 The Association will also investigate opportunities to support younger people through
the provision of shared accommodation; flexible tenancies; tenure diversification;
housing for older people; and the provision of family size homes in areas of high
demand and size imbalances within the Association’s housing stock.
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Design and Quality Standards
9.6 The Association’s Design Guide describes the standards and specifications we aim
to achieve in new projects. The Association’s Development and Investment Sub
Committee has approved a summary version of the Design Guide which is an
evolving document that will be kept under regular review by the Development and
Maintenance teams.
9.7 The Association must also meet the mandatory standards set by funding
agencies, namely:
Scottish Government
Housing for Varying Needs design standards (relating to general needs, amenity and
wheelchair housing)
Secure by Design (Gold Standard)
Current Building Regulations, including “Silver Level” Sustainability Aspects 1 to 8
Where achievable within available funding, the Association will aim to meet the higher,
non-mandatory “Greener Standards” set by the Scottish Government.
Grant recipients are also expected to make reference to Scottish Government design
and place making policies when projects are being designed.
Glasgow City Council
For projects in Glasgow, the Association will meet the “Glasgow Standard” published by
the City Council. This incorporates the standards set for Scottish Government funding and
usefully draws these together in a single document.
9.8 The Association will be open to opportunities for improvement or innovation that are
consistent with the principles described at 9.1, for example design features that are
suitable for people with particular needs or in relation to energy efficiency features
that will help to reduce fuel poverty.
9.9 The Association is currently investigating the adoption of a Passivhaus design
solution for the Dalmarnock Nursery Site in Glasgow. We will evaluate the outcomes
achieved (in relation to costs and quality, carbon reduction, tenant energy cost
savings, and tenant experience) and use this information to consider the wider
application of Passivhaus.
9.10 The Development and Investment Sub Committee will be responsible for approving
the Association’s policy on any proposed approaches that would involve a significant
departure from the Association’s Design Guide and other development policies.
9.11 The Association will regularly scan the external environment, to identify any
developments that could have a significant impact on physical standards in future. It
is likely that the greatest area of future change will be in relation to energy efficiency.
The Scottish Government’s draft Climate Change Plan for the period 2017 to 2032
proposes that 80% of domestic heat should come from low carbon, renewable
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sources by 2032. Whereas gas central heating is currently the system of choice for
social landlords building new homes, the draft Climate Change Plan points the way
to low carbon solutions becoming the norm within a relatively short space of time for
both existing and new housing in future.
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10. Types of Tenure
10.1 The Association will embark on its first ventures into providing Mid Market Rent
(MMR) housing during the period of the Development Strategy. The main
development programme includes two mixed tenure sites that include MMR housing,
both in Glasgow, at Port Dundas and Dalmarnock Station. The inclusion of MMR
housing is a condition of Glasgow City Council support, and reflects the high priority
given to MMR in the Council’s Local Housing Strategy and SHIP.
10.2 The Association’s initial consideration of MMR has identified a number of opportunities as well as a number of issues requiring further consideration as we develop proposals. These are summarised below.
Possible Opportunities Issues to Consider in Developing MMR
Research for Glasgow City Council
(2012) identified a potential MMR
market in Glasgow of between 24,000
to 28,000 households
Private renting has increased rapidly in
Glasgow and will continue to do so as a
result of demographic factors
MMR will provide more affordable and
better managed private lets
MMR may be attractive to households
who do not have priority for social
housing
MMR may assist households who are
priced out of good quality private renting
Rent levels for MMR are pitched below
Local Housing Allowance (LHA) level
and local market rates. This is likely to
stimulate demand for MMR.
Qualifying criteria can be set in relation
to new tenant incomes, including
flexibility for disabled households
Working tenants whose circumstances
change are generally entitled to help
with their rent, although this is more
limited for single people under 35 with
no dependents
WSHA housing management and
property maintenance expertise is
readily transferable
Assessment of demand and rent levels
required for each individual MMR site
Establishment of a subsidiary organisation
to manage MMR homes will be necessary
Some differences in WSHA procedures/
standards may be needed
For example, tenant selection and letting;
provision of white goods/floor coverings/
blinds; tenancy agreement and related
procedures; tenancy deposit scheme; pre-
termination visits; repossession
procedures.
Cost base may need to be refined as
properties are let and come into
management
2014 PRS legislation will remove the “no
fault” ground for ending private tenancies
Staff training will be needed for WSHA
staff managing MMR properties
MMR tenants may seek a different type of
service, e.g. more internet-based options
Welfare Reform measures may create
additional affordability or tenancy
sustainment issues, for tenants who lose
their jobs (especially those under 35 with
no dependents)
Rental income must be sufficient to cover
WSHA’s development and funding costs
Voids, arrears, bad debts may exceed
those projected
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10.3 It is likely that the preferred arrangement will be for the Association to develop and
own MMR housing. A subsidiary company will be needed to allow the new housing to
be let on a mid market rent basis, since the Association cannot do this itself because
of its charitable status.
10.4 Detailed planning will be needed to put practical arrangements in place.
Before and during the development period, the key tasks would be likely to
include:
1) Complete a market analysis for the two sites identified
2) Discuss fallback options with Glasgow City Council, if there is insufficient demand to let
the properties on either site on a MMR basis (i.e. conversion to social rent)
3) Establish the subsidiary company, by constituting it and preparing its business plan
4) Subsidiary enters into lease with the Association for the MMR homes
5) Establish service sharing arrangements (the subsidiary would collect rent, and would
pay the Association for providing management, maintenance and other services)
During the first year of operating, the priorities of the MMR subsidiary would be
likely to include:
1) Let all MMR units to applicants who meet the agreed targeting criteria, and provide
tenancy management and property maintenance services
2) Set up suitable service monitoring and benchmarking systems
3) Establish policies and procedures for the effective running of the subsidiary
4) Set up tax efficiency structures with the Association as the parent organisation, to ensure
that VAT is not payable on transactions between the Association and the subsidiary.
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11. Procurement and Community Benefits
11.1 The Association will manage procurement for development contracts in accordance
with the West of Scotland Procurement Strategy and all applicable legislation. The
Public Contracts (Scotland) Regulations 2015, Procurement (Scotland) Regulations
2016 and the Procurement Reform (Scotland) Act 2014 are of particular importance,
with the 2015 Regulations implementing the EU Public Sector Procurement Directive
2014/24/EU.
11.2 The Association has established framework agreements for both development
contractors and consultants. Our usual approach where the Association owns the
development site is to have a competitive tender process involving contractors who
are on the framework. The Association will continue to examine opportunities to
obtain the best value in procurement, as our experience of using the frameworks
grows.
11.3 We follow a different approach for section 75 sites that are owned by a private
developer. Opportunities for partnership working are typically brought to the
Association by the local authority and based on a design and build contract with the
developer. Before contract acceptance, the Association specifies its requirements
using its Design Guide and other standards such as Housing for Varying Needs and
Secure by Design, and negotiates with the developer. The Association’s Employer’s
Agent assesses the tender price from the developer and carries out monthly
inspections and issues valuations when the project has gone on site.
11.4 We will impose a community benefit requirement in all development contracts. This
requirement will not be limited to those equal to or greater than £4million (or any
revised threshold) and will apply to contacts of a lower value. Any community benefit
requirement will be proportionate to the contract value.
11.5 Community benefit requirements for development contracts will normally place the
contractor under an obligation to provide employment and/or training opportunities as
part of the build. In such cases, the Association’s Community and Support Services
team will publicise opportunities to local residents and refer interested residents to
the contractor.
11.6 The Association may also consider other types of community benefits, such as a
contractor carrying out works or improvements to a facility that benefits the
Association’s tenants.
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DELIVERING THE DEVELOPMENT STRATEGY
12. Governance
12.1 The Association’s development activities are carried out under authority from the
Board and under the supervision and control of the Development and Investment
Sub Committee (DISC).
12.2 The following matters are reserved to the Board for decision:
Approving the Development Strategy
Annual approval of the proposed development programme, as part of the Association’s Business Plan
Approving entry to the development programme for pipeline projects not included in the programme previously approved by the Board
All other matters that have not been delegated to DISC or any other Sub Committee.
12.3 The Board shall be advised in these responsibilities by DISC, as required.
12.4 DISC has delegated authority to progress projects that are in the main programme
approved by the Board. This includes approving projects at site acquisition and
tender stages. DISC’s delegated authority to act includes the following matters:
DISC Remit and Delegated Authority: Summary
1) Monitor performance against the key objectives, principles and policies described in the Development Strategy
2) Monitor progress of the development programme overall and of individual projects, including budgets and expenditure
3) Review project details, to cover those matters specified in the Sub Committee’s remit
4) Approve the purchase of land for development
5) Approve the appointment of consultants and contractors
6) Ensure all appointments and contract awards are carried out in accordance with the Association’s Procurement Policy and Procedures
7) Approve individual projects at site acquisition and tender approval stage, for projects that form part of the approved development programme approved by the Board
8) Approve the Association’s development policies, and any pilot or innovation initiatives that relate to individual projects
9) Assess the monitoring and reporting of risks associated with the Development Strategy and programme
10) Obtain external assurance periodically – or as required - as to the adequacy of internal
procedures and controls relating to the Association’s development activities; and
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DISC Remit and Delegated Authority: Summary
commission professional advice as necessary to fulfilling the Sub Committee’s remit.
11) Review project outcomes post-completion – including achievement of quality standards,
resident feedback on new homes and defects, and any lessons learned from the project.
12.5 The Association will seek to ensure that the membership of the Board and DISC
includes people who have relevant skills and experience. All DISC members will be
required to undertake learning activities appropriate to the Sub Committee’s
responsibilities, to help them fulfil their role.
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13. Development Team Capacity
13.1 The Association has strengthened the Development Team with the appointment of
our Development Manager. As part of our succession planning process, we have
also appointed an additional Development Officer to support our development
activity.
13.2 We will review the structure of the team in response to the forthcoming retirement of
our Senior Development Officer, and to take account of the increased scale of
programme the team will be managing in the period ahead.
13.3 In addition, during 2017/18, the Association will seek to appoint an experienced
Property Director to lead and support the delivery of our property and development
functions.
13.4 In addition to planning and managing the development programme, the Development
Team shall be responsible for ensuring that the necessary policies and procedures
are in place to guide the Association’s work and articulate its standards and policies.
The main documents currently in place are the Design Guide and the Development
Procedures Manual. The Development Team shall continue its work in this area, by
preparing further development polices and presenting these to DISC for approval.
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14. Financial Management and Funding The Association’s Business Plan
14.1 The financial strategy for enabling delivery of the development and other investment
programmes is set out in the Association’s Business Plan. To ensure long-term
sustainability, the financial strategy is supported by 5-year and 30-year projections;
regular reviews of business plan assumptions; sensitivity analysis; and cashflow
analysis and forecasts.
Financial Requirements for the Development Programme and Projects
14.2 The Association will ensure that the following requirements are met for all individual
development projects and for the development programme as a whole:
The Association will maintain funder and regulator confidence in our current financial
management and future planning. We will meet regularly with funders and the Scottish
Housing Regulator, and will ensure that funding covenants are met at all times.
The Association will secure grants from the Scottish Government and, for our
development programme in Glasgow, from Glasgow City Council.
At pre-acquisition and cost plan stages for individual projects, Finance and Corporate
Services will examine the indicative cashflow and confirm whether the project can be
funded from existing or projected facilities.
At tender stage (or equivalent), Finance and Corporate Services will conduct a full
financial assessment of the project to ensure that each of the following tests are met
before contract acceptance for construction works:
The project is financially viable on a standalone basis, based on the testing method
set by the Director of Finance and Corporate Services and approved by DISC.
If the viability tests are not met and it is still intended to proceed with a project, a
business case must be presented for approval by the Board.
The Association has the necessary cashflow to meet development period costs as
they become payable.
Development period and long-term private funding is in place (e.g. through loan
facilities or bond finance), for the portion of project costs that is not grant-funded.
The Association’s future cashflows will enable all future financing costs to be met as
they become due for repayment.
Rent Levels and Affordability
14.3 The Association is committed to ensuring that rents for new properties are affordable
to our tenants. We introduced a new rent setting policy in April 2017 which sets rents
by property size (number of bedrooms and type). The policy is progressive in that
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rent levels are the same for new build and older stock, with no premium payable for
new build properties.
14.4 The Association will use a number of methods to test its rent levels for new build
properties:
The SFHA affordability tool
Comparison with Scottish Government benchmark rents
Local comparisons across the local authority areas where the Association has stock.
Future Funding Requirements and Strategy
14.5 The Association’s main development programme to 2020/21 has an estimated value
of circa £60 million. It is currently estimated that around two-thirds of programme
costs will be met from grants and the Association’s existing borrowing facility, and
that an additional injection of private finance will be needed around mid-2019 to
enable delivery of the remainder of the development programme to 2020/21.
14.6 The Association has significant borrowing capacity and our major lenders have been
supportive of our development plans. To take matters forward, the Association has
recently appointed expert treasury advisers to review the options that are potentially
available in terms of the amount and type of funding that will best meet the
Association’s needs, and to then help us secure the necessary funding. We expect
this process to be completed in the second half of 2018.
14.7 The Association’s two main priorities are:
To raise the funding needed to complete the projects in the main development
programme that are scheduled to complete by 2020/21, and
To raise the necessary funding for investment in the Association’s existing stock.
14.8 For the second of these priorities, the Association’s most recent Stock Condition
Survey is due for completion towards the end of 2017 and will inform future
investment in our existing housing. Future options are being reviewed for two hostel
properties that are in urgent need of substantial remodelling. The Association is
likely to seek grant funding for the remodelling work, but may also need to fund part
of the costs itself.
14.9 We may also seek funding to support some of the current pipeline projects that are
due for approval from 2021/22 onwards. This would support continuity in the
development programme, and avoid the “stop start” effect that often affects capital
programmes.
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15. Cross-Team Working and Project Appraisals
Overview of Key Stages
15.1 While the Development Team plays the lead role in planning and delivering the
development programme, input from other directorates and teams is essential at the
appropriate times. Making this happen requires excellent communication and clear
processes.
15.2 Team roles and responsibilities at the key stages of the development process are as
