Agenda item - New Homes for Neighbourhoods: Development costs of New Build Council Homes

Report of Executive Director Neighbourhoods, Communities & Housing (copy attached).

(1)            That the contents of the report be noted.

32.1   The Committee considered a report of the Executive Director, Environment, Economy & Culture which provided context and an overview of the New Homes for Neighbourhood programme to date including projects, procurement/delivery routes, design standards and specification, development costs and associated controls. It also reported the outcome of an internal audit on the housing new builds programme in May 2017 which checked that adequate procurement and project management arrangements are in place and that budget management for each project is robust. The report was presented by the Lead Regeneration Programme Manager.

32.2   Councillor Druitt referred to page 207 in relation to the planning requirement for all new homes to meet energy and water efficiency standards for the former Code of Sustainable Homes Level 4, including installing photovoltaic solar panels. He asked if there had been a valuation of other measures. It was explained that there were no other specific measures included.

32.3   Councillor Mears raised the issue of costs. Brooke Mead had been financed through the HRA and the original cost estimate had been £8m.  Costs had now risen to £12m, which should not have happened. Kite Place would cost £14m. Councillor Mears stressed that these schemes were expensive and there was a need to deliver affordable homes. It was explained that rents were set by the Committee. Lessons had been learnt from Brooke Mead and the Kite Place scheme involved a high level of construction and design which lifted that area of Whitehawk. The scheme should cost significantly lower than £14.1m.  

32.4   In response to questions from Councillor Yates it was clarified that work started on the Lynchet Close site on 29^th August 2017. Costings were now lower than expected, however there was always a risk of unforeseen costs with new build properties.

32.5   Councillor Gibson welcomed the report and welcomed the scrutiny of costs and the workshop organised for members. He stressed that many households in the city were on low incomes and he asked how the council could achieve lower rents for lower income residents. If rents were modelled over a longer period than 40 years this could provide lower rents. It was explained that officers had listened to members regarding having a longer period for modeling rents. Although from a financial perspective, there needed to be a borrowing period of 40 years, there was no reason why officers could not look at what additional surpluses were brought in, once that borrowing had been paid back. This information could be included in future reports submitted to the Committee.   

32.6   Councillor Moonan thanked officers for the report.  She referred to paragraphs 3.24 and 3.25 concerning the Internal Audit Report on housing new builds.  Councillor Moonan stated that she would like the council to consider low cost modular build and newer techniques of building. She hoped the committee would see more of these types of projects going forward. It was clarified that current projects included Y:Cube and Futureform. These types of projects could be delivered more quickly and worked well on some, but not all sites.

32.7   Councillor Hill thanked officers for the report and workshop which demonstrated how hard the council was working to minimise costs. She was impressed with the level of scrutiny involved. Councillor Hill would be against the idea of modelling rents on a 60 year period as lower rents would mean less funding available to finance more new homes. The priority was to build new council housing and the Local Housing Allowance Rate was a reasonable way to move forward.

32.8   The Chair thanked officers for the report and appreciated the amount of work that had been carried out.

32.9   RESOLVED:-

(1)            That the contents of the report be noted.