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.
Joint venture partners
Gateshead Council, HomeGroup and Galliford
How many and what sort of homes are being delivered?
Commitment to deliver over 2,000 homes across 16 allocated sites over a 15-year period with the potential to add more sites to the portfolio. The overall aspiration is 25% affordable, and first four sites have achieved 20% (well above planning policy).
How did the partnership get started?
The Council had brownfield sites, within inner urban areas, where private developers were unwilling to speculatively build new homes. So, the Council began a procurement process to appoint a partner to participate in a joint venture, in the form of a Local Asset Backed Vehicle (LABV). Using the LABV model provided the most significant regeneration benefits and the best commercial deal.
This approach makes the council less reliant on central government funding and more able to reinvest profits back into the community, to stimulate wider regeneration. Engaging a private sector partner also unlocked the door to commercial expertise, in order to drive up construction standards across Gateshead.
The Gateshead Regeneration Partnership (GRP) is a joint venture partnership formed in 2012 between the Council and the consortium Evolution Gateshead, which is made up of Home Group and Galliford Try.
The Council put forward its land assets to allow the partners to secure private finance with both parties sharing equally in any development profit where a bundle achieves a positive land value. Through the programme partners were able to supported wider regeneration ambitions – achieving a balance of housing tenure along with high quality design and sustainable standards as well as providing jobs, training and supply-chain opportunities for residents and businesses within Gateshead.
The first bundle of development commenced in 2014 and will finish in 2020 and was made up of regeneration sites in Saltwell and Deckham, which had significant viability challenges. These two were cross subsidised by a large, high value site in Birtley. This will result in the development of over 360 homes in total involving over £70m of investment.
What have been the greatest benefits and what challenges have you experienced along the way?
The project has allowed the regeneration of urban brownfield sites. The Council consistently relied on government funding to facilitate development of challenging urban brownfield sites for the last thirty years. This new joint venture model removed the need for government subsidy.
There were also socio-economic benefits for the region, 17 local people have moved from unemployed to full time work. And 19 apprentices have completed courses and started full time work. Around £15m has been spent in Gateshead on the supply chain.
The initial principles set by the council of bespoke design on each site, no standardised house types and Lifetime Home space standards were commercially challenging, and the council agreed to be flexible with the implementation of these standards to suit site specific issues or constraints.
What would be your message to other local authorities and housing associations looking to do something similar?
Be realistic about the value of the land portfolio, when entering an asset backed vehicle. Realism and clarity of resources are fundamental to delivery of objectives and for communicating with Councillors and residents.