REPORT FOR FAITH IN AFFORDABLE HOUSING - SCOPING A STRATEGIC PARTNERSHIP
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REPORT FOR FAITH IN AFFORDABLE HOUSING SCOPING A STRATEGIC PARTNERSHIP Housing Justice Cymru funded by the Nationwide Foundation
CONTENTS
INTRODUCTION 4
SECTION 1 – FAITH IN AFFORDABLE HOUSING WALES
1 EXECUTIVE SUMMARY WALES 5
2 METHODOLOGY 8
3 HOUSING NEED IN WALES
3.1 Housing demand 9
3.2 Future Generations Commissioner 9
3.3 Housing aspirations of the Government 10
4 THE SUPPLY OF LAND FOR AFFORDABLE HOUSING
4.1 Background 12
4.2 Land supply for affordable housing 12
5 LAND OPPORTUNUTIES
5.1 Background 15
5.2 Is the enabled land value for money? 16
6 ENABLING NEW SITES
6.1 Background 17
6.2 The added value of Housing Justice Cymru 18
7 A STRATEGIC HOUSING PARTNERSHIP FOR
THE FAITH IN AFFORDABLE HOUSING PROGRAMME
7.1 Background on a strategic partnership 20
7.2 The Greater Manchester Housing Partnership 22
7.3 Rejecting a strategic housing partnership 22
7.4 Finding the right relationship 23
8 A NEW OPERATING MODEL
8.1 A new operating model 25
8.2 Procurement frameworks in housing 25
8.3 Identifying framework partners 25
8.4 Scale and size of the framework 28
8.5 How long should the framework term be? 29
8.6 Continuous improvement 30
8.7 A self-funded future 30
8.8 T
ime table for implementation 32
9 RECOMMENDATIONS
9.1 Recommendations for the Welsh Government 34
9.2 Recommendations for housing associations 34
9.3 Recommendations for Housing Justice Cymru 35
2 REPORT FOR FAITH IN AFFORDABLE HOUSING
SECTION 2 – FAITH IN AFFORDABLE HOUSING ENGLAND
1 BACKGROUND 36
2 TRANSFER OF LEARNING FROM WALES TO ENGLAND 37
3 A NEW DIRECTION OF TRAVEL FOR FIAH IN ENGLAND
3.1 A regional approach 39
3.2 Faith and community led housing in
Manchester or Birmingham 39
3.3 Increasing the provison of housing for
homeless households 41
3.4 An alternative growth model for FIAH 42
4 DIRECTION OF TRAVEL ROAD MAP 44
ANNEX 1 LIST OF PARTICIPANTS 46
ANNEX 2 DEFINITIONS 47
AUTHORS
Mike Owen – Perran Consulting Ltd
Katie Howells – Associate of Perran Consulting ltd
Emily Powell and Caroline O’Flaherty – Partners at Hugh James
Steve Partridge – Savills
SCOPING A STRATEGIC PARTNERSHIP 3
INTRODUCTION
A
lmost 10 years ago the Archbishop This report looks at how this work can
of Canterbury challenged housing be built upon with an aim of creating more
associations and churches to affordable homes for rent with an ever
work together as partners to build more greater social value.
affordable housing. In doing this he Section one of this report focuses on
cited their ‘common heritage’. Since the Wales. Initially the proposal was to develop
Archbishop made this call, the housing a model for a ‘strategic partnership’
crisis has intensified and the need for between a limited number of housing
collaboration has never been clearer. organisations and Housing Justice Cymru.
Despite the huge efforts made during After consultation with the Welsh housing
the Covid 19 pandemic to house homeless sector, the strategy has shifted and a
people, the tensions in the housing system new style of ‘housing framework’ is now
remain and people are once again sleeping recommended.
on the streets of England and Wales. Housing associations and local
Housing Justice has set out a vision of authorities will be invited to join an open
a society where everyone has access to framework, from which a limited number of
a home that truly meets their needs. This organisations will be chosen to work more
means a secure and genuinely affordable closely with Housing Justice Cymru.
home, in a neighbourhood where an Section two of the report looks at
individual can access work and services England and whether the success of the
that enable them to flourish. programme in Wales can be replicated.
Responding to this challenge, Housing There are a significant issues to overcome
Justice Cymru has worked with faith groups before a roll out of the Faith in Affordable
across Wales over the last five years, Housing model could be implemented in
helping them to turn their underutilised England. The report makes a number of
land and buildings into 357 new affordable recommendations on how these hurdles
homes. can be overcome.
4 REPORT FOR FAITH IN AFFORDABLE HOUSING
FAITH IN AFFORDABLE
SECTION 1 HOUSING WALES
1.0 EXECUTIVE SUMMARY WALES
The initial brief from Housing Justice In Wales the amount of public land made
Cymru (HJC) was to scope and report on available for the building of affordable
the potential for a strategic partnership housing has been steadily reducing.
with Welsh housing associations. After Wales is now following the pattern in
consultation with stakeholders it became England with more of the land for building
clear that a strategic partnership was not affordable housing coming via the planning
the right method to achieve the desired process or through the open market.
goals. The work then focused on scoping The land supply enabled by the FiAH
a framework relationship between HJC programme has frequently been sold at
and Welsh housing associations which sub market rates and without competition.
could also allow Welsh local authorities One senior housing association figure in
the opportunity to join. See page 6 for an Wales described the opportunity to buy
explanation of the difference between a land pre-market as “very valuable” and
strategic partnership and a framework. the opportunity to buy discounted land as
“golden”. A Chief Executive of a developing
BACKGROUND ON housing association in England could not
DEMAND AND SUPPLY OF remember the last time their organisation
AFFORDABLE HOUSING IN had purchased land without competition,
WALES AND THE ROLE OF never mind at a discount.
HOUSING JUSTICE CYMRU The affordable housing programme that
Housing Justice was established by they have helped to enable is significant
faith groups to support households and it saves both housing associations and
and individuals without access to the Welsh Government money in the lower
accommodation through the provision land costs reducing the total scheme cost
of emergency housing. Housing Justice of building new housing.
provides over 170 night shelters in England The question in Wales is not “is there
and Wales. Housing Justice campaigns a need for more social housing?” It is,
to end homelessness and for the need instead, “how can supply increase to match
for more social housing. Many Welsh the housing need?” All sources of land are
churches have begun to seek solutions for important. There is a place for large scale
their 4,500 underutilised buildings and development schemes for social housing,
churches. The Faith in Affordable Housing but there is a need for small schemes in the
(FiAH) programme was created to convert heart of existing communities. The FiAH
this over provision of buildings and land programme should therefore be recognised
into affordable housing for rent. Working as an important contributor to meeting the
with churches and faith groups of all Welsh Governments targets on affordable
denominations, the programme worked to and in particular social rented housing.
make the Christian value of compassion for The costs of the enabling role played by
the homeless an important factor in any HJC are currently funded by a grant from
decisions on disposing of surplus land and the Nationwide Foundation.
buildings.
SCOPING A STRATEGIC PARTNERSHIP 5
CONSTRAINTS OF THE
CURRENT OPERATING
MODEL
Stakeholders identified a number
of inefficiencies in the current FiAH
programme. It is mostly based on
small scale sites and HJC works with a
large number of associations and local
authorities across Wales. The model
offers no opportunity for scaling up the
programme by identifying new sites
as there is no income being generated
by HJC. There are no opportunities for
economies of scale and the model locks in ▲ An example of a FiAH family house in
additional costs through inefficiency and Llantilio Crossenny.
administration.
skills, competence and experience, explaining
A NEW ‘FRAMEWORK’ how they will undertake the work, the added
MODEL FOR THE SELECTION value they will bring to the process and
OF DEVELOPMENT their proposed costs. After consultation
PARTNERS with partners at Hugh James, Wales leading
To maximise the benefits of the FiAH legal specialists, the form of framework is
programme a strategic partnership between being proposed and this is set out in Section
Welsh housing associations and HJC, was 8. This report provides assurance that this
initially considered. However, within the framework model can be delivered, that it
housing sector there are a lot of structures will meet the expectations of transparency
that are termed ‘strategic partnerships’ desired by the housing sector and will be
and as a consequence the term carried a robust if it is challenged.
lot of baggage. Stakeholders who were Establishing the ‘framework’ proposed
consulted in the drafting of this report here will require a competition between
were enthusiastic about the opportunities willing housing organisations using the
presented but felt that a ‘strategic following two-part assessment process.
partnership’ was not therefore the right
definition for the outcomes desired. PART ONE – Assessment of whether an
The report now recommends the organisation has the skills, competence,
creation of a ‘framework’ to bring the resources and experience to deliver the
benefits of working with a narrower group proposed programme.
of developers into the FiAH programme.
The framework model was discussed with PART TWO – What additional benefits can
Welsh housing associations and received a they bring to the programme? Housing
substantial level of support and when asked organisations will be asked to offer
all, subject to the expected queries and several additional benefits from including
clarifications, expected their organisations regeneration training, commitments on
to seriously consider applying. rent, housing management, Housing First1
Framework tenders are a form of or a range of other imaginative offers
competition where different organisations that will improve the outcomes from the
submit a tender proposal setting out their programme.
1. Housing First- the provision of a stable, independent home along with intensive personalised support and case
management to homeless people with multiple and complex needs.
6 REPORT FOR FAITH IN AFFORDABLE HOUSING
There are a number of inefficiencies
in the current system as
the programme is mostly based on
small scale sites.
The FiAH programme currently works that the programme factors in sufficient
exclusively with the regulated housing flexibility to allow for some regional or
sector in Wales and it is recommended that specialist lots within the tender process.
this continues. Faith stakeholders identified In designing a new framework it is
several factors in deciding who they would recommended to use the three new
prefer to work with and in particular they social housing zones being considered by
focused on the perpetuity of the housing; Welsh Government as part of their social
that housing was a core business for the housing grant programme. In respect of
provider and (critically) that they were the FiAH model, this report recommends
subject to Regulation. that each zone has a minimum of one
Notwithstanding, the growth of housing housing organisation and maximum of two
providers outside of the regulated sector organisations and that the total number
in England and the potential financial of partners in the framework is no greater
resources they can bring, this report than 6.
recommends that for this tender period HJC also has identified a strategic aim
HJC continue to work with the Welsh of creating more affordable housing for
associations and local authorities who young people, who disproportionately
meet the above criteria. It is believed there are the group without adequate housing.
are between 30 to 40 regulated housing To encourage more provision for this
organisations in Wales which are currently group the evaluation assessment for
building or who are planning to build the framework should reward those
affordable housing for rent. organisations that propose working
The total number of homes enabled arrangements with specialist providers,
through the FiAH programme to date is such as Llamau2, to help meet the housing
357 (includes completions and pipeline needs of young people.
schemes) and Section 5 identifies the With the right financial support from
potential for a much bigger programme. the Welsh Government and the Welsh
It is recommended that the number of housing sector it is believed the new
development partners is scaled to match the framework model could be operational by
potential programme. It is recommended June 2021.
2. Llamau-a specialist charity working with young people and vulnerable women who experience homelessness.
SCOPING A STRATEGIC PARTNERSHIP 7
2. METHODOLOGY
The objective of this report was to explore
the potential for a housing partnership and
consider whether a similar model could
work in England. The scope of this exercise
was to:
• Evaluate the key factors necessary for
the strategic partnerships to operate
successfully
• Outline the working structure of a
strategic partnership model including
financial and legal considerations around
procurement, operating model and
financing models
• Outline a timeline and programme of ▲ The Bishop of Llandaff visiting new homes
milestones for establishing the strategic
in Porth.
partnership
• Outline a monitoring and evaluation
framework for the strategic partnerships This was never intended to be an academic
• Assess the advantages, benefits and study and the report moves from testing
risks of adopting a strategic partnership a model with stakeholders to designing a
model model on the basis of their feedback.
• Identify the potential barriers to the A key feature of this project was to co-
creation of strategic partnerships and produce an operational framework with the
their subsequent implementation and very stakeholders who would implement it
operation in practice.
• Consider the issues, lessons and criteria As the report progressed, interest in the
necessary to apply the model in England idea grew and people contacted us with
including a literature review and research a desire to be part of the process. People
into a limited number of case examples also contacted us and wanted to meet and
of current strategic partnerships in discuss ideas with community led housing
England organisations and faith groups.
• Include stakeholder engagement with
organisations representing housing
associations (Community Housing Cymru
(CHC), National Housing Federation
(NHF), local authorities (WLGA and
LGA), church denominations, and ‘not for
profit’ housing delivery bodies
8 REPORT FOR FAITH IN AFFORDABLE HOUSING
3. HOUSING NEED IN WALES
3.1 HOUSING DEMAND paint an equally bleak picture. In 2018 a
survey of 20 of the 22 Local Authorities
There is a demand for a significant increase found that at least 60,569 households
in all types of new homes in Wales over were on housing waiting lists. Pressure
the next five years. The most recent Welsh has further increased on the Government
Government Report into Housing Need and housing providers during the Covid-19
makes the following key points:- pandemic to provide homes for those
• During the first five years (2019/20 to previously homeless. This is creating a new
2023/24), it is estimated that between level of immediate need and inevitably
6,200 and 8,300 additional housing units placing further strain on local authority
will be required annually, with a central waiting lists.
estimate of 7,400. These figures include Julie James, the Minister for Housing
an annual average of 1,100 additional and Local Government, commenting on
housing units to clear those in existing the progress made in housing people
unmet need over the first five years without homes during the pandemic, has
• The additional annual housing need said “we have housed over 850 people who
estimate of 7,400 is split into 3,900 were sleeping rough and just over 2200
additional market housing units (52% of people in total in emergency temporary
the additional housing need) and 3,500 accommodation who were in very volatile,
additional affordable housing units (48% unsuitable accommodation, sofa surfing
of the additional housing need) over the and people who didn’t really have anywhere
next five years (2019/20 to 2023/24). else to go but weren’t on the street.” This
The Welsh Government’s latest central is really positive but more permanent
estimate of housing need is for an accommodation needs to be developed if
additional 114,000 homes across Wales move-on models like Housing First are to
up to 2038. The central estimate of make an impact.
housing need does not represent a formal Further research is now underway
Government target for the number of new to better understand housing need in
homes required to be built in Wales, but Wales following recommendations by
does provide clear evidence of the level of the Independent Review of Affordable
housing need to be addressed. Housing Supply.
The Future Generations Report 2020
provides some worrying evidence of unmet
housing need in Wales, including: 3.2 FUTURE GENERATIONS
• Over 21,000 households faced or COMMISSIONER
experienced homelessness in Wales in
2018 The Future Generations Commissioner
• 2,139 households were in temporary for Wales has identified that having a
accommodation in Wales, of which 837 good quality home that meets their needs
were families as a vital part of a person’s wellbeing.
The housing waiting lists across Wales Further, The Future Generations report
SCOPING A STRATEGIC PARTNERSHIP 9
2020 makes a compelling case that poor-
quality housing is strongly associated
with inequality, poverty and limited life
chances. The Commissioner recognised the
importance of housing and how housing
related problems are affecting more people
than ever before. Ever increasing housing
need compared to supply is compounded
by the poor quality of the existing stock
in Wales – which is some of the oldest
housing stock in Europe. The report
outlines how 90% of this stock is predicted
to remain in use in 2050.
The report argues that increasing the
supply of affordable, adequate, low carbon
homes within cohesive communities
must remain a policy priority in the long-
term. The report supports new innovative
solutions to bring empty buildings back
into use and to bring forward available land
for development.
3.3 HOUSING ASPIRATIONS
OF THE GOVERNMENT
The Minister for Housing and Local
▲ New houses built on the St Lukes Church
Government has ambitious plans for
in Porth.
housing in Wales and this is echoed in its
National Strategy Prosperity for All. It
identifies housing as one of the main five
priority areas which can make the greatest to support the delivery and improvement
potential contribution to long-term of social housing, bringing the total budget
prosperity and well-being. The objective for social housing grants to £223m. The
of this strategy is for everyone to live in a plan to build affordable housing has
home that meets their needs and supports included a programme of innovative
a healthy, successful and prosperous life. housing; setting new thresholds for offsite
Good quality homes are the bedrock of manufacture and eco standards, rural and
communities and enable individuals and cooperative housing.
families to flourish in all aspects of their The Minister for Housing and Local
lives. Government has committed to permanently
In order to ensure the delivery of this house those people without access to
national strategy, the Government has accommodation that were supported
committed to delivering 20,000 affordable through the Covid-19 pandemic and has
homes over the period 2016-21; with a more also campaigned for access to housing
ambitious target expected for the next five to be recognised as a Human Right and
years. The Government has provided an has committed to working towards this in
additional £133m in the most recent budget principle.
10 REPORT FOR FAITH IN AFFORDABLE HOUSINGCOMMENT
Whatever source material or methodology is used to measure whether there is a future
demand for affordable housing in Wales it is unquestionable that there is a demand, which
will not be meet without an increase in supply.
The Welsh Government has demonstrated a commitment to developing more homes
by providing additional capital resources. Welsh Government is also using a range of
different levers to increase the supply of affordable housing including; higher grant
rates than elsewhere in the UK and by targeting grants for innovation, co-ops and rural
schemes.
Senior staff in the Welsh Government’s Housing Division have also participated in the
production of this report.
The Minister for Housing and Local
Government has ambitious plans
for housing in Wales and this
is echoed in their National Strategy
Prosperity for All.
SCOPING A STRATEGIC PARTNERSHIP 114. THE SUPPLY OF LAND FOR
AFFORDABLE HOUSING IN WALES
4.1 BACKGROUND 4.2 LAND SUPPLY FOR
AFFORDABLE HOUSING
The Independent Review of the Supply of
Affordable Housing included an extensive The development of affordable housing
review of the funding of affordable housing. in Wales has been following the English
The Welsh Government has responded experience for a number of years with
to that review with changes to its grant the procurement of land from the open
and funding mechanism in an attempt to market becoming an ever bigger part of
increase the numbers of homes delivered delivering the new build social housing
through their programmes. This report does programme. The table below is from Welsh
not comment on the funding mechanisms Government statistics.
but concentrates on the supply of land Historically, local authorities and other
available for affordable housing. public bodies sometimes sell land direct
to Welsh housing associations without
competition. They do so to support the
authorities strategic housing enabling role.
On occasions, land has been provided free
Source of Land Supply 2016/7 2017/8 2018/9
Total number Expressed as a Total number Expressed as a Total number Expressed as a
of homes % of the total of homes % of the total of homes % of the total
programme programme programme
Additional housing 932 37% 773 33% 604 23%
delivered through the
planning process
Land made available from 689 27% 531 23% 650 25%
public sources
Rural exception sites 33 1% 49 2% 52 2%
Land delivered through 892 35% 963 42% 1286 50%
other sources
Total new build housing 2,546 100% 2,316 100% 2,592 100%
programme.
12 REPORT FOR FAITH IN AFFORDABLE HOUSING▲ Architects Impressions of the housing proposed at Northop Flintshire.
for very expensive schemes like hostels acquisition now occurs almost entirely
or at sub market land values for social through the open market. Reviewing the
rent housing3, affordable rents and mixed Brownfield Register of Land4 in a number of
tenure. areas, the amount of public land available is
Bringing public sector land forward for relatively low across England. For example
development has not been an easy process in Bristol it is only 14.5% of the total land
and frequently has a long lead in time. In on the register. Reflecting greater public
England, the One Public Estate programme land availability in the North of England,
was established in 2013 to regenerate and the figure for Leeds is 39.6%.
make better use of the public estate in Land acquired through the planning
England. Yet by 7 March 2018 only 303 process still remains significant5,
homes had been built. Further housing accounting for over 23% of new social
developments were in the pipeline and housing delivered in 2018/19 in Wales and
other outcomes had been achieved. This 49% in England. The National Housing
demonstrates how difficult it is to get the Federation in England believes that this
whole public sector to follow one objective source of new build development will
and release land for housing. reduce further as result of the recent UK
The declining availability of local Government announcement on deferral of
authority and public sector land to support the Section 106 commitments in England.
social housing was recognised by the By 2018/9, almost half of the land used
Housing and Local Government Minister for building affordable housing in Wales
Julie James who made this statement came from the following sources:
to the Senedd following the Affordable • Procurement through competitive
Housing Supply Review “the public sector bidding in the open market
needs to be more sophisticated in the way • A direct purchase between a housing
we use public land to support the widest association and a vendor, facilitated by a
range of objectives than simply generating land or estate agent. A site with planning
the highest capital receipt.” or outline planning permission will of
In England, consultees reported that course command a higher sale value and
in most new build development land with it a higher agents fee
3. Land value discounts tend to be higher where social rent housing is to be developed than where affordable rent and
mixed tenure housing is to be provided.
4. Brownfield land registers provide up-to-date information on sites that local authorities consider to be appropriate for
residential development.
5. Land acquired through the planning process is also a competitive process between housing associations and
occasionally a competition between housing associations and not for profit organisations.
SCOPING A STRATEGIC PARTNERSHIP 13• Housing associations directly employing The other small but important
their own land agents find land that contributor to the supply of land for
they can then buy direct from the affordable housing is through rural
owner. Larger housing associations will exception sites. As the name suggests,
frequently employ a number of land these should be an exception to normal
agents to ensure a forward supply of planning guidance. The majority of Local
land for their development programme Development Plans6 in Wales include
• A house builder/developer bringing a a policy on rural exceptional sites. The
proposed housing scheme direct to a number of properties delivered through this
housing association with either outline route is relatively small, at no more than 50
or full planning permission and then per year, as it requires legislation, specific
seeking to dispose of the site linked to guidance, policy commitments in Local
a contract for the developer to build out Development Plans and a considerable
the homes amount of activity from both planners and
Rural Enablers working for local authorities
This is increasingly common form of and the Welsh Government. The need
land procurement and ultimately new for this level of public expenditure to
build development. Prime sites are achieve 50 additional properties clearly
often developed direct for market sale demonstrates how hard it is to build
and this model frequently operates housing and in particular build social
counter cyclical to the market. When housing in rural areas.
house sales in the private sector slow
down developers then look to this
model to build out potential sites.
Conversely, as more private sector
developers build out sites for the
open market there are greater gains
in affordable housing through the
planning system.
The majority of local development
plans in Wales include a policy on
rural exceptional sites.
6. Local Development Plan - Since 2004 each local planning authority in Wales has been required to produce a Local
Development Plan that sets out each local planning authority’s proposals for future development and use of land in their
area.
14 REPORT FOR FAITH IN AFFORDABLE HOUSING5. LAND OPPORTUNITIES
5.1 BACKGROUND
Churches and faith groups own
approximately 4500 buildings in Wales
(churches and community buildings).
Many will be well used with thriving
congregations and active community
organisations. However, a number are being
considered for redevelopment for a variety
of reasons:
• Reduced congregations and the
rationalisation of churches to operate
over a wider area. Figures are difficult to
quantify but it is estimated that between
▲A
community hall in Merthyr Tydfil being
10 and 20 churches a week have been
considered for affordable housing.
closing in Wales
• Community Buildings may be under used
or need significant repairs potential development opportunities. It
• Churches and community buildings may is also important to consider that land
be energy inefficient and need to be and buildings owned by the churches and
replaced with new and easier to maintain faith groups are frequently in areas where
buildings housing is most needed. In the context of
This direction of travel has been enabling rural housing, the buildings and
accelerated by the global COVID-19 church halls in these areas are all located
pandemic. The restrictions on worship, inside the settlement boundaries and
weddings and funerals have all had an therefore avoid the cost and complexity
effect on the income and viability of of turning a green field site into new build
churches. Church services have moved housing. Sites developed in urban areas
online and, like town centre offices, the have also been part of the renaissance of
rationale for having an expensive to towns and cities, transforming empty and
operate church building is diminishing. occasionally derelict buildings into high
Community buildings and church halls have quality housing. Local Planning Authorities
also suffered as result of the pandemic. recognised the importance of community
Clubs and activities that have used the consultation in bringing forward
venues and paid rent, such as toddler and rural exception sites. As community
OAP groups and yoga and keep fit classes organisations, churches can be a positive
ceased to do so for a substantial part of force in the planning process. If their
this year. Many have not reopened and members support the proposed change of
some may never do so. use it helps reduce the friction of that can
Even the disposal of 10% of the land occur when building social housing in some
holdings of churches could free up 450 communities.
SCOPING A STRATEGIC PARTNERSHIP 155.2 IS THE ENABLED LAND requirements an independent valuer must
VALUE FOR MONEY? support the valuation. However, this does
not have to be via a tender or a full market
When a faith group follow their social offer. This allows a consideration of best
conscience and sell land based on a value.
valuation rather than open market tender
it has a financial benefit to both the In 2017/18, Welsh housing associations
Government and the housing association. spent £56.8m on land acquisitions.
Excluding the fact that without this support With Welsh Government social
the housing might not be built, and even housing grants averaging 58% of
with the Welsh Government’s move scheme scheme costs this means that the
specific a viability grant rate7, the viability Welsh Government contributed
of the scheme is always improved by the around £32m towards the cost of land
sub market valuation and sale of land. acquisition.
To comply with Charity Commission
Benefits to the Government of land sales Benefits to Housing Associations of land
based on a valuation rather than open sales based on valuations rather than
market disposal open market disposal
A direct saving of social housing grant as A lower cost scheme means that housing
a result of the lower land price in the total associations are using less of their capital
scheme cost to support a scheme. As a consequence,
less revenue is required to service debt
Unused grant can be used to provide Lower volumes of borrowing mean lower
additional social housing interest cover
Savings on future Housing Benefit on Negotiated sales reduce risk and the cost
the lower social rent compared to higher of tendering that includes all abortive
market rent preliminary works
7. A
viability grant rate is one designed to meet the gap funding between a schemes cost and the net present value of
future rent income.
16 REPORT FOR FAITH IN AFFORDABLE HOUSING6. ENABLING NEW SITES
6.1 BACKGROUND PHASE TWO
AN INITIAL ASSESSMENT
A number of churches and faith groups • HJC will undertake an initial assessment
in Wales have positive policies where the of the opportunity. This will include a site
support for providing affordable housing visit to assess physical condition of the
is seen as a ‘Christian duty’. At a national property and a Land Registry search to
level, most denominations now have strong ascertain the nature of any covenants,
and supportive principles, but as one restrictions or reversion clauses
church asset manager put it “people might • HJC will give examples of other
be Christians but they do not always show successful schemes and appraise
Christian values when it comes to wanting the group of probable Charity
social housing in the neighbourhood on Commissioners views of the proposals
land they own”. • A short technical assessment in terms
HJC currently operate in this space of planning policy context, ecology and
between national Governments flood risk
and national faith bodies and local • Finally, a meeting will be held with the
denominations making a positive choice church to discuss whether it is to be a
to dispose of assets to support affordable simple disposal or whether the church
housing. The text below provides a requires a retained interest in the
summary of the five phases of this work. completed development
COMMENT
PHASE ONE HJC could undertake better financial
IDENTIFYING THE viability assessments if they created an
OPPORTUNITIES appraisal model which had access to Welsh
• An approach is made by a church Government data from social housing grant
denomination or their appointed agent/ submissions.
advisor as to a potential opportunity
• HJC itself identifies a potential opportunity
for discussion with a denomination PHASE THREE
LOCAL AUTHORITY LIAISON
COMMENT • HJC works with the local authority to
Site identification is an area where HJC identify housing need and any specialist
needs more resources, including field staff requirements that the authority may
and publicity, are needed to ensure a faith have for a site
group thinking about asset management • HJC review funding opportunities
consider a sale for affordable housing. from Welsh Government with the local
Creating closer links at this stage with authority
the Welsh Government Enabling Team
could produce additional benefits.
SCOPING A STRATEGIC PARTNERSHIP 17COMMENT 6.2 THE ADDED VALUE
In rural areas, the phase 3 work of liaising OF HOUSING JUSTICE
with local authority is a role that could be CYMRU
undertaken by the Welsh Government’s
Rural Enabling Team.
The process of building affordable housing
on faith owned land is complex. The focus
groups identified several reasons why the
PHASE FOUR role of HJC has been uniquely important in
IDENTIFICATION OF A enabling social housing:
DEVELOPMENT PARTNER • Honest broker – HJC is seen as honest
• HJC will ask the local authority to broker between the housing associations
identify which housing association to and the faith group
work with or whether the authority • Faith to faith relationship – It has been
wishes to build on the site themselves easier for HJC to present a faith based
• If there is no local authority view on a rationale that the provision of land for
specific developing housing association social housing is a Christian duty than a
then HJC identifies a suitable developing non-faith based organisation could
housing association to develop the • Continuous commitment to affordable
opportunity, following a standard housing – HJC has been unwavering in
protocol that it has developed its commitment to social housing and
• HJC propose the scheme to the housing have been able to steer faith groups
association and manage relations towards this outcome and away from
between the faith group and the housing straight commercial disposal
association • Success of other schemes – HJC has
a track record of successful schemes
COMMENT across Wales providing proof that well
It is recommended to replace this stage managed and well designed social
of the process with partners from the rented housing can be provided
framework being used to appraise the
opportunity. If the new operation model
proposed in this report is adopted the
organisation chosen to develop the scheme
could carry out the appraisal.
PHASE FIVE
CONTINUED LIAISON WITH
FAITH GROUP
• HJC continues to work with the faith
group until the scheme is completed
COMMENT
In rural areas this liaison role could be taken
on by the Welsh Government Enabling
Team keeping in contact with the group
through the planning and development
phase.
18 REPORT FOR FAITH IN AFFORDABLE HOUSINGCOMMENT
Affordable housing sites on land owned by faith groups will not bridge the gap between
declining public sector provision and the need for housing in Wales. They can however,
make an important contribution to the affordable housing supply by enabling sites in
critical rural locations and in towns and city centres with limited land supply.
Developing housing through the Faith in Affordable Housing Programme is good value
for money for the Welsh Government as it brings forward housing sites outside of a
competitive market and frequently at sub market values. One senior housing association
figure described the opportunity to buy land pre-market as “very valuable” and the
opportunity to buy discounted land as “golden”.
It is very difficult to perceive the role played by HJC in enabling affordable housing land
supply being undertaken by a statutory body or a beneficiary of the land sales.
RECOMMENDATIONS
• Work is undertaken to identify the scale and potential of available land owned by faith
groups in Wales
• A closer working relationship is developed between the Welsh Government’s Enabling
Programme and the work of Housing Justice Cymru
• Expand the number of properties delivered through the Faith in Affordable Housing
Programme will require investment via marketing to faith groups and direct contact
outreach work
SCOPING A STRATEGIC PARTNERSHIP 197. A STRATEGIC HOUSING PARTNERSHIP
FOR THE FAITH IN AFFORDABLE
HOUSING PROGRAMME
7.1 BACKGROUND standards and/or community clauses in the
ON A STRATEGIC contract.
PARTNERSHIP Conversely stretching the affordable
housing target upwards has the potential
The intention of this report was to explore to reduce either the capital receipt to the
the potential for a strategic partnership vendor or reduce the added social value
between housing associations and clauses included in the disposal. Pushing
HJC. And to assess whether a strategic for greater levels of social value through
partnership could deliver greater social management standards and conditions,
benefits. Developing affordable housing is through constraints on rent levels or
a three way balance. If the vendor seeks to social clauses in contracts can reduce
increase the capital receipt from the sale either the capital receipt to the vendor or
this means either reducing the number of the potential number of affordable units
affordable homes or lowering the social developed.
value requirements on management, design
Capping
rent levels,
defining higher
build standards
or including other
social value
conditions
01
02 03
Number of Capital receipt
affordable homes from the land
developed sale
20 REPORT FOR FAITH IN AFFORDABLE HOUSINGThere is no opportunity for
economies of scale and
model locks in additional cost.
The approach of HJC and the FiAH • There is limited potential to smooth
programme to date has been successful out the cost of higher risk and more
with 357 homes developed or in the expensive sites where there are
future pipeline. However the potential for infrastructure, service and other
additional sites and greater social value was constraints with other easier to develop
one of the drivers for the commissioning schemes
of this scoping report to review and help • There is limited opportunity to
create a strategic partnership that allowed develop economies of scale within this
this project to work at a larger scale. programme. Welsh housing associations
There are a number of inefficiencies in have of course the potential to improve
the current system as the programme is the economies of scale by blending
mostly based on small scale sites and HJC site opportunities with other parts of
works with a large number of associations their development programme. But HJC
and local authorities across Wales. The allocates opportunities based on the
model offers no opportunity for scaling up advice of the relevant local authority,
the programme by identifying new sites as rather than other development activity
there is no income being generated by HJC. of a potential partner. There is also no
There is no opportunity for economies data available on whether economies of
of scale and the model locks in additional scale materialised (and who benefited
costs through relearning, inefficiency and from them) through blending this
administration. programme with other development
In talking to stakeholders this we found activity
weaknesses in the current programme: • There is limited potential for shared
• Developing partners had no certainty learning and the potential for the
of a future new build programme. creation of standard or model
No organisations involved could documents is limited
therefore predict their treasury • Administratively this multiple developer
management funding needs from sites model is cumbersome as each scheme
enabled through this programme. It requires new relationships, fresh
was considered an addition to the dialogue and the management of
programme and was not factored into expectation of both vendor and the
borrowing acquiring developer
• HJC gains no income in the current
Most organisations that are building model meaning there are no resources to
affordable housing schemes know identify new opportunities and expand
that the retention of skilled people the programme. This further reduces
with the right skills presents a high the economies of scale that could be
risk due to a shortage of the right obtained by a bigger programme
people. This risk is easier to mitigate • A more experienced group of developers
with a pipeline of schemes to develop. can help mitigate the risk of a challenge
from the Charity Commissioners
SCOPING A STRATEGIC PARTNERSHIP 21• Working with experienced partners company in which some, but not all of
can help dampen the expectations of the GMHP, have invested to deliver more
landowners on land value and help to complex development opportunities
ensure that the faith aspirations remain that might be too big for individual
in the commercial mix organisations. The scale of the GMHP with
28 members and a combined development
programme of over 8,000 homes a year is
7.2 T
HE GREATER similar in scale to the whole Welsh housing
MANCHESTER association sector. Parallels can also be
HOUSING drawn between the political relationship
PARTNERSHIPS between the GMHP and elected regional
city Mayors and the existing relationship
One of the most important and widely between Welsh associations and the
acclaimed strategic housing partnerships devolved housing administration in Wales.
in UK Housing is the Greater Manchester The GMHP development company model
Housing Partnership (GMHP). Most did have potential to resolve some of the
strategic partnerships are project or issues in the FiAH programme operating
location specific. However, the GMHP model, but through further discussions with
is of a similar scale to the whole Welsh stakeholders in Wales it was rejected for a
housing association sector. It was therefore number of reasons including:
important to consider whether this model • Any development company would
could work in Wales and remove some of require extensive confidence building
the inefficiencies in the current operational between partners (this was achieved
model of the FiAH programme. This is through the wider GMHP before the joint
not intended as a full review of the merits development company was established)
or the successes of the GMHP but just • Being seen as too complex a model for
whether it could be adapted to work in the potential benefits
Wales for HJC. • Might, depending on the nature of
In considering the GMHP it needs to the strategic partnership and the loan
be recognised that there are a number agreements, require both Funder and
of different levels, connections and Regulatory approval both of which
relationships within this strategic housing would be time consuming, require legal
partnership. The wider GMHP is a coalition advice and funder approval – adding
of like-minded housing organisations, cost and risk
public authorities and elected political
leaders in Greater Manchester which have
agreed common values and goals through 7.3 REJECTING A
a Memorandum of Understanding. This STRATEGIC HOUSING
common commitment has supported and PARTNERSHIP
nurtured positive relations and mutual
understanding, particularly around In housing, the term ‘strategic partnership’
regeneration and training. The members carries a lot of baggage as it is a ‘catch-all’
pay an annual fee and with this revenue term for a wide variety of relationships. Its
employed workers to research for and use stretches from a joint venture company
service the partnership. Different partner sharing resources and equity with a binding
Chief Executives lead on different areas of legal agreement through to commercial
the partnership depending on their skills contracts between organisations, pre-merger
and the goals of their own organisation. strategic alliances, to relationships between
The building of positive relationships has local authorities and housing associations
helped to create a joint development and to informal alliances based on common
22 REPORT FOR FAITH IN AFFORDABLE HOUSINGvalues. It became clear from discussions b) The valuation of land and social value will
that the vagueness of the term ‘strategic be captured through an agreed formula
partnership’ would therefore cause potential c) Membership will be limited to a small
concerns for many stakeholders in Wales. In number of organisations
addition there were other concerns about d) Membership will be time limited with an
the efficacy of the development company option to renew
model: e) There will be selection criteria for
• It would need to evolve organically partners developing any housing – that
with self-selecting partners developing includes local management standards
mutual values rather than being a (including Welsh language), rent levels,
construct of HJW tenancy types, design and eco standards
• It has the potential to create inter and the generation of local employment
dependencies that would need careful opportunities
management and might require f) Membership will be obtained through an
expensive legal advice to manage open selection process where potential
• It carries an expectation of a high level partner organisations demonstrate their
of joint working that Welsh housing ability to meet or exceed the criteria set
associations are not yet ready for out above
g) The strategic partnership will involve
members sharing the cost of marketing,
7.4 FINDING THE RIGHT promotion, land assembly and the
RELATIONSHIP development of model documents
In rejecting the model of strategic
The opening assumption in this report partnerships consultees did recognise
was that once a strategic partnership was the need for change in the current FiAH
in place it would operate in the following operational model and felt that a smaller
manner: number of development partners should be
a) All site opportunities developed by HJC the strategic goal.
will be exclusively developed by the
partnership members
SCOPING A STRATEGIC PARTNERSHIP 23SUMMARY OF THE BENEFITS OF REDUCING THE NUMBER OF POTENTIAL ORGANISATIONS
Constraints of the Consequences of these Potential of a more focused
current operating constraints or strategic approach
model
Each scheme has a Each development requires Working with a much
different partners the building of new smaller number partners will
relationships between Welsh bring greater knowledge
housing associations, faith and understanding of the
groups and HJ. Understanding process. The participating
of the expectations of the organisations can build
other partners has to be and retain expertise and
relearnt in each development. thus get the best out of the
A experienced FiAH parter partnership.
would bring engender more The success of previous
realism amongst land owners schemes engenders
on land values. confidence in the programme
Failure to appreciate and allows a more mature
the different in Charity relationship between vendor
Commission guidance on and developer.
land disposal - in England the A smaller number of
advice is to seek the highest partners will have the
price but in wales the advice opportunity to develop model
is to seek ‘best value’. agreements with HJW, thus
Limited opportunity to reducing the professional fees
reduce costs by developing in the system8.
model documents.
COMMENT
Whilst the Greater Manchester Housing Partnership has delivered some tangible benefits
to members, it did not offer a model which could help HJC reduce the number of partners
it is working with.
RECOMMENDATIONS
Having consulted housing organisations in Wales and reviewed the benefits and potential
risks, HJC has rejected the idea of creating a strategic partnership and asked the report
authors to create an alternative model.
The view of housing associations consulted for this report, and the Welsh Government
is a more focused group of developing partners was needed if the FiAH model was to be
more widely implemented.
8. It is recognised that larger developing RSLs have standard contracts and agreements – but these will not be bespoke to
faith based developments working under the constraints of the Charity Commissioners.
24 REPORT FOR FAITH IN AFFORDABLE HOUSING8. A NEW OPERATING MODEL
8.1 A
NEW OPERATING 8.2 PROCUREMENT
MODEL FRAMEWORKS IN
HOUSING
Although the stakeholders rejected a
strategic partnership model they did All developing social landlords in Wales
support the hypothesis that greater will have used a framework as part of their
efficiencies could be achieved through procurement process. Frameworks are
working with a smaller number of partners. very common in procuring repairs and
Stakeholders also valued some of the maintenance and increasingly common in
strategic partnership benefits set out in the procurement of services. Procurement
Section 7.4 namely: through a framework is a form of tendering
a) All opportunities created by HJC will be where different organisations submit a
exclusively developed by partnership tender proposal setting out their skills,
members competence, experience, explaining how they
b) The valuation of land and social value will will undertake the work, the added value they
be captured through an agreed formula will bring to the process and their proposed
c) Partnership membership will be limited costs. The awarding body then scores and
to a small number of organisations ranks these proposals against a set of pre
d) Membership will be time limited with an agreed and defined criteria. Those judged to
option to renew offer the right mix of cost and quality (the
e) There will be selection criteria for most economically advantageous tender)
partners that includes local management become the framework members.
standards (including Welsh language), When works or services are then procured
rent levels, tenancy types, design and the contracting body awards work contracts
eco standards and the generation of to the framework members. Depending on
local employment opportunities the nature of the framework this could be a
f) Membership will be obtained through an direct award or even a mini tender between
open selection process where potential organisations on the framework.
partner organisations demonstrate their
ability to meet or exceed the criteria set
out above 8.3 IDENTIFYING
g) The model will involve members FRAMEWORK
sharing the cost of market, future land PARTNERS
assembly and the development of model
documents The recommendation is to follow the
After some discussion, the stakeholders methodology of a framework tender to
identified a competitive but open process find the right organisations to develop new
where organisations submitted applications affordable social housing with HJC. After
to join a framework as a development consultation with Emily Powell and Caroline
partner. The process was similar in nature O’Flaherty, partners at Hugh James, the
to a procurement framework. following framework model is proposed.
SCOPING A STRATEGIC PARTNERSHIP 25▲ St Matthews Church, Newport. Before the work started, after work was finished, and a visit
from the Archbishop of Wales.
We believe the framework model can be delivered, that it will meet the housing sector’s
expectations of transparency and will be robust if challenged.
The framework will cover the selection of housing associations or local authorities for
the Faith in Affordable Housing programme. The framework will not cover the sale of
land, any contracts for work or any linked construction contracts. Nor would it be used to
determine the ownership of any properties developed.
The selection process proposed is more of a ‘beauty contest’ rather than a formal
procurement process. However, there will be a need for additional detailed legal advice
to ensure the process remains complaint with procurement legislation during its
implementation.
In recommending a framework one of Housing framework proposed here will
the options considered and rejected was require a competition between willing
whether the HJC and faith groups could get housing organisations using the two part
better value out of a open market tender evaluation process.
process. One in which every opportunity
identified was marketed to every WHA and PART ONE – Assess whether the
LA and then each application and bid is organisation has the skills, competence
assessed. Whilst this would guarantee that and experience to the deliver the probable
each scheme was the best value available programme based on the information
at that point, all of the benefits identified of provided and other published data.
working with a narrower group of partners
would be lost. PART TWO – Assess what additional
Establishing the Faith in Affordable benefits the organisation bring to the
26 REPORT FOR FAITH IN AFFORDABLE HOUSINGprogramme. Here, housing organisations It is recommended that extracting the
will be asked to offer a number of information set out in part 1 and 2 above
additional benefits, ranging from will involve the nine stages set out in the
regeneration and training, commitments on table below and it is estimated that this
rent, on housing management, on Housing process will take about six months to
First or a range of other imaginative offers implement.
that will improve the outcomes from the
programme.
Stages in Events and activities
selecting
framework
partners
1 Grant application to Funding Organisation – the project needs pump
priming to start the process and obtain the detailed legal advice
2 Define the framework terms – working with a group of partners from the
faith community
3 Develop the procurement documents – the invitation to tender documents,
the evaluation methodology, any geography and lot divisions and the
terms of engagement
4 Carry out market consultation and identify potential framework members
5 Advertise the framework and invite submissions – from those organisations
identified in step 4
6 Establish the selection panel – which would include faith organisations
7 Evaluate and rank the submissions – this might include regional or lot
divisions
8 Appoint prospective partners to the framework partnership
9 Commence partnership working
Most stakeholders felt that any process the design and evaluation of any criteria.
to limit the number of organisations in each The staged process above meets these
framework needed to be a transparent and objectives.
that faith groups needed to be part of both
SCOPING A STRATEGIC PARTNERSHIP 278.4 S
CALE AND SIZE OF housing sector in England; however this is
THE FRAMEWORK still a growing sector in Wales and might be
seen as a potential partner for management
The FiAH programme currently works rather than as a full framework member at
exclusively with the regulated housing this stage. One interviewee felt that many
sector in Wales and it is recommended that housing associations in England had lost
this continues. Faith stakeholders identified their community focus in a drive towards
three factors in choosing potential partners commercialism and one of the responses to
to build social housing with: this has been the creation and subsequent
1. That any properties developed remain in growth of genuine community led housing
social rent in perpetuity. This was viewed as in England. Stakeholders in Wales did not
an increasingly important factor following identify with this maxim and a level of trust
policy changes in England. Some housing was retained in the regulated housing sector.
policies such as the Right to Buy (including There are currently 22 local authorities
voluntary) and the proposed Right to and 70 housing associations (including
Shared Ownership have undermined community mutual and mutuals) in Wales.
confidence in England that the housing Of these 92 organisations not all are actively
will remain in perpetuity and this has the developing new build homes. It is estimated
potential to reduce the willingness to that the number undertaking development
dispose of land for affordable housing. of new build housing is between 30 and 40.
2. That the organisations with whom they do The total number of homes enabled
business with will retain the provision of through the FiAH programme to date is
affordable housing as their core purpose. 357 and Section 5 of the report identifies
3. That they are regulated by the Welsh that there is future potential for a bigger
Government, operate to published programme. It is recommended that the
standards of probity and meet defined number of developing partners whom FiAH
housing management and build quality work with is aligned to match the scale of
standards. the potential programme. The final structure
There has been a growth in the number of the framework should provide also
of ‘for profit’ regulated providers in England provide flexibility for the future creation of
in recent years. However, these new entrants sub-regional frameworks.
have had little traction in Wales and it is The Welsh Government is currently
recommended to remain with the regulated considering the zoning of Social Housing
housing sector of Welsh housing associations Grant in Wales. Community Housing
and local authorities in the first round of Cymru, the trade body for Welsh housing
the faith in affordable housing framework. associations, has reported that the latest
In Section Two of this report we make the Government thinking is that there will be
case made for involving the community led three housing development zones for Wales.
Zone Welsh Local Authorities
North Wales Ynys Mon, Gwynedd, Conway, Denbighshire,
Flintshire and Wrexham
Mid and South West Wales Powys, Ceredigion, Pembrokeshire,
Carmarthenshire, Swansea and Neath Port Talbot
South East Wales Bridgend, Vale of Glamorgan, Rhondda Cynon Taf,
Merthyr Tydfil, Cardiff, Caerphilly, Newport, Blaenau
Gwent, Torfaen and Monmouthshire
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