Agenda item

To update Cabinet on the Small to Medium-sized Enterprise (SME) / Small House Building Project and to seek approval for the acceptance of a proposal submitted.

RESOLVED that Cabinet –

(a)   notes the contents of the report;

(b)   authorises the Corporate Director (Operations & Delivery) to continue a process of engagement with the SME sector to deliver Council housing in the District, making use of the learning from this project; and

(c)   authorises the Corporate Director (Operations & Delivery), in consultation with the Assistant Director for Governance, to enter into a contract to purchase the three bungalows (as set out in the related private and confidential report) for housing purposes, subject to planning permission being granted for the dwellings.

The Cabinet gave consideration to a report of the Housing Portfolio Holder (A.3) which update it on the Small to Medium-sized Enterprise (SME) /Small House building Project and sought its approval for the acceptance of a proposal submitted.

Cabinet recalled that the Council had adopted its Housing Strategy 2020-2025 in September 2020 and that one of its key priorities was to deliver additional Council housing in the District for local households. An Acquisitions & Development Policy had subsequently been adopted in October 2020 in order to facilitate this delivery. In November 2020, the Council had been one of over fifty local authorities who had expressed an interest in working with Local Partnerships (a joint venture between the Local Government Association, HM Treasury and the Welsh Government) to deliver a project aimed at increasing engagement with the SME sector to deliver additional Council housing locally. In late December 2020, the Council had been advised that its bid for consultancy had been successful along with two other local authorities, namely Cornwall and Thurrock Unitary Councils.

It was reported that this project had commenced in January 2021. The aim of the project was to generate scheme proposals from local SME’s on land that they owned or could purchase to deliver Council housing. The SME’s were required to commit to securing planning consent and developing new affordable homes which the Council would then purchase at fixed prices, with the Council making staged milestone payments to the builders. As part of the consultancy package from Local Partnerships, the Council had been provided with four templates to assist in engaging with the SME sector, namely:

Invitation to Submit Proposal (ISP) – an easy to understand document for the SME’s to complete if they wanted to come forward with proposals and which set out the Council’s evaluation criteria and guide/benchmark prices per unit.

Golden Brick Development Agreement (GBDA) – a sample contract with land and housing with title passing to the Council on the final stage payment. The agreement provided for staged payments to be made once certain aspects of the build had been completed and therefore ensured a regular cash flow to the builder.

Ready Reckoner – a financial viability model that used local financial factors (e.g. grant rates, local housing allowance, borrowing rates, social housing rents etc.) to produce a guide price envelope for each affordable house type; and

Base Specification – a sample building specification for the Council to adapt to its own requirements.

In return, the Council was required to identify the types of affordable housing required and a budget below approved EU procurement thresholds. The Council was also required to populate the Ready Reckoner with local information to establish pricing levels and to develop and agree a promotional campaign to attract interest from local SME builders. The early weeks of the project had therefore been spent on adapting and amending the templates to meet local requirements. It was agreed that the Council would look to purchase homes on sites delivering 3-9 homes in total as this would reduce the level of obligations the developer would be required to pay through a Section 106 agreement.

Cabinet was informed that this project had gone ‘live’ on 1^st February 2021 and as the project was time-limited in terms of the consultancy provided by Local Partnerships, the SME’s had been advised to return their ISP’s by 5^th March 2021. As part of the publicity campaign, 44 local SME’s had been contacted directly about the project; the project had been promoted on Twitter and a press release had been produced for the local press. The Portfolio Holder for Housing had also taken part in a local radio interview. Once the project went live, ten ISP’s had been sent to local SME’s who had expressed an interest in the scheme.

Members were made aware that, at the close of business on 5^th March 2021, only one ISP had been received and the details of the submission were contained in the related ‘Part B’ report on the Agenda which proposed a development of three x two bedroom dwellings.

Cabinet was advised that although only one ISP had been received, Officers had been contacted by 5 local SME’s who could not submit ISP’s within the strict deadline for submissions but had advised that they would be interested in working with the Council on future sites. Officers were confident that there was an appetite from local SME’s to work with the Council in the future and that the lessons learnt from the project and the template documents could be used to continuously engage with the SME sector to bring forward small sites for the development of Council housing but without the requirement for bids to be submitted within strict time-frames.

Having considered all of the information and advice contained in the Portfolio Holder’s report:-

It was moved by Councillor P B Honeywood, seconded by Councillor G V Guglielmi and:-

RESOLVED that Cabinet –

(a)   notes the contents of the report;

(b)   authorises the Corporate Director (Operations & Delivery) to continue a process of engagement with the SME sector to deliver Council housing in the District, making use of the learning from this project; and

(c)   authorises the Corporate Director (Operations & Delivery), in consultation with the Assistant Director for Governance, to enter into a contract to purchase the three bungalows (as set out in the related private and confidential report) for housing purposes, subject to planning permission being granted for the dwellings.