Posted by:24 July, 2012
With ever shrinking resources getting partners to support housing projects can be a tricky prospect, Geoff Pearce, director of development and asset management at East Thames Group, pictured, explains how they managed to secure funding for a £200m housing project in East London.
At East Thames Group, we know the value of housing-led regeneration. By investing in an area and its people through improving their homes, you gain an incalculable return on investment in the resulting reduction in anti-social behaviour, social blight and general decline. Unfortunately, with local authority and central government cuts, as well as a volatile property market, finding the initial and ongoing funding for large-scale schemes is increasingly difficult.
Yet, East Thames is working on a 2,000-home, £200 million regeneration and home-building scheme on the Ocean Estate in Stepney Green – turning a formerly deteriorating estate into a great place to live, with excellent local amenities and a community atmosphere. How are we managing to fund this large-scale, mostly social and affordable scheme despite the significant local authority cutbacks?
New solutions for a new situation
Securing funding for public sector projects, large or small, requires new thinking for the new financial reality. East Thames’ and Tower Hamlet’s approach was to look for innovative methods that reduced costs for everyone without compromising quality. To this end, the money that East Thames and Bellway Homes paid for the land to build the new homes, has been invested by Tower Hamlets Council back into the refurbishment of the existing homes in the area. Both the new buildings and home refurbishments have been carried out as one cohesive programme, allowing everyone in the community to appreciate the benefits.
Admittedly, we were also fortunate with timing – the project was approved just before central government cuts were confirmed, so we secured a grant from the Homes and Communities Agency. This allowed us to offer more homes at the lower social rent rates, whereas on future projects we would have to offer more homes at the higher affordable rent level.
For East Thames and Tower Hamlets, the Ocean Estate is a hybrid – partly-funded by the HCA like previous projects, partly through innovative modern methods, as future developments will need to be. It keeps the investment in the area and has holistically addressed the housing and regeneration needs of the entire community.
Finding the right partners
As a prominent social landlord in east London, we already had a strong relationship with Tower Hamlets, which was crucial in securing their support. But the council and local authority are just one of our only partners on this project.
By working with private developers on various sectors of the development, East Thames has been able to secure the highest quality design and build for all residents. Renowned architects Levitt Bernstein, were brought in to develop the entire site’s master-plan, providing a coherent and forward-looking design across the five sites where new homes are being built.
On VIVO, the largest new-build scheme at the Ocean Estate, we have worked with private partner First Base, the urban development and regeneration company, to deliver 267 affordable and 195 private sales homes, and their private market expertise has been invaluable. Similarly, partners Bellway Homes and Wates Living Space have supported the refurbishment of existing homes. All of the partners have been adding extra value to the area through offering local employment opportunities and supporting a range of community development initiatives.
Creating a community which brings together the existing residents while increasing the housing and tenure choice within the area has been hugely important for us. The new homes will be for private sale, shared ownership and social rent.
Mixing tenures will bring together many local residents – many of whom are first or second generation immigrants, who have largely been bypassed by nearby regeneration schemes – with the area’s new city workers and creatives, drawn by its proximity to Canary Wharf, the City and fashionable Shoreditch. Both groups will benefit from infrastructure developments and improved amenities, but also the more intangible but equally valuable benefits of diversity, social interaction and wider horizons.
In a time of austerity, some local authorities may find it hard to justify spending significant sums of money on improving housing – because ultimately, however innovative your funding model, this kind of project cannot be done well without investment. But by involving a range of public and private sector partners, you can not only reduce costs and boost returns, but further regenerate the area by bringing in outside expertise and new residents.
Geoff Pearce, director of development and asset management, East Thames Group
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