Eastleigh Borough Council: bringing skills and assets together to build in partnership

The National Housing Federation (NHF), The Local Government Association (LGA) and PlaceShapers are working together to support our members to form partnerships where this can benefit all parties. This case study is one of a series from across the country to share best practice and information about the types of partnership that can work.

Key Joint venture partners

Eastleigh Borough Council and VIVID

How many and what sort of homes are being delivered?

Within Aspect, Eastleigh and VIVID are delivering two projects with a third expecting approval soon. In total they constitute around 290 homes for affordable and market rent in a range of locations.

At Stoneham Park, 146 homes are being developed by Aspect, and in Woodside Avenue, 94 homes are built for affordable and market rent. The third project will deliver a further 46 homes for market rent.

Aspect aim to provide flexibility to the tenant around the nature of the tenancy. So this may be a 6 month agreement if that is what suits the tenant, a 5 year tenancy for longer term security, or a lifetime tenancy. Aspect are also piloting a rent to ownership model where, if you opted for a life time tenancy after 5 years you are able to build up a deposit toward buying the property.

How did the partnership get started?

The partnership came from Eastleigh having an appetite to deliver new housing and having access to land and finance but without a development and housing management capability. The partnership with VIVID brought the right mix of skills to the table and has created a dynamic partnership that provides the local authority with a way to build new homes and offer a variety of tenancies across a range of properties ensuring tenants had a good landlord and live in high quality homes. For VIVID the partnership provides a way to benefit from some of Eastleigh’s financial flexibility as well as make it easier to access land that they also own. VIVID bring their development expertise to the project and manage the homes with both parties sharing in the returns.

Project summary

Aspect is a development and housing management vehicle which is off balance sheet for both organisations. Both contribute a share of the equity requirements for each of the projects and fund these through to construction. VIVID oversee the development contracts and then also take on the management and maintenance responsibilities moving forward.

Whilst voting membership on the board is always 50:50, each of the projects are their own individual LLP which means that each project doesn’t always have to be on a 50:50 funding basis. One partner can invest a lot more if it suits them financially recognising the needs of each site and the needs of each partner on a site by site basis.  This flexible approach allows projects that are less viable, but of strategic importance to one member, to be delivered as the amount of equity investment from either party flexes subject to individual views on risk and exposure.

What challenges have you experienced along the way and how have you tackled them?

Leadership can be a challenge as all partners need to be clear on their objectives and heading in the same direction. Political and executive leadership at Eastleigh has been crucial to delivering this partnership. This is similar in VIVID, who recognise the key role they play within their geography and work hard to support their partners and communities.  This sets the ambition for Aspect and ensures both side remain focussed on the strategic goals.

A second barrier for both parties can be the regulatory environment. Because of the way this sits off balance sheet accounting and audit are complex and take some explaining. Partly this is just the challenge of the unknown – not knowing what questions will be asked and what evidence needs to be provided. Aspect have found this easier as they have gained experience, they now have an audit pack for each new LLP and the process is becoming smoother.

Aligning different goals can be difficult. It is inevitable that at times different parties will have different priorities and may do things along the way that the other partner may not like. For example, the council may make a decision that the commercial sector may not around the price it pays for land of the types of land it buys. There is a need for awareness of each other’s needs from the outset, building strong relationships is key.

What would be your message to other LAs / HAs looking to do something similar?

Come with a project or a pipeline of sites to take forward. The process is easier if you have got real examples. Make sure you have got the backing and drive to follow through and deliver. Understand it is for the longer term and you have long term support.