Agenda item

Report of the Corporate Director of Regeneration and Local Services - Development Manager, Regeneration and Local Services and Chief Development Officer, Chapter Homes.

The Chairman introduced the Development Manager, and Chief Executive Officer of Chapter Homes, Peter Coe and the Chief Development Officer, Richard Roddam who were in attendance to give a progress update on Chapter Homes(for copy see file of minutes).

The Chief Executive Officer reminded Members that he and the Chief Development Officer were both officers of the Council and Chapter Homes and the was a Service Level Agreement (SLA) as regards how their time was managed.  Members were asked to recall that in December 2013 the Council’s Cabinet asked Officers to explore the option of a Housing Development Company to compete in the open market, as residents had approached Councillors to note the poor quality of some properties for sale, also offering an opportunity for the Authority to capitalise on land sales.  It was noted that in July 2015 Chapter Homes was established and 4 pilot sites were agreed, with the first being at Newton Aycliffe, now known as Eden Field.

The Chief Development Officer explained that work began on the Eden Field site in December 2016, and a tender process led to Gentoo, now Tolent, being appointed for the design and build and they had been very good in terms of delivery.  He added that initially there was to be 125 homes, however this increased to 143 due to demand and trust in the Chapter Homes Brand.  He added that an additional area of land had been purchased from Great Aycliffe Town Council to enable those extra homes to be built.  Members were informed that the 12 affordable units for the development had already been delivered and sold to Livin for rental at affordable rent.  The Chief Development Officer noted that house builders looked at 3 sales per month as standard, with Chapter Homes already hitting this target.  It was noted that Chapter Homes have the option to rent properties and that people had contacted Chapter Homes looking to rent properties.

Members were referred to a photograph showing the site prior to construction and site plans showing what the completed development would look like.  Councillors noted pictures showing the exteriors and interiors of the homes, with high specification, and noted the mix of house type.  The Chief Development Officer noted that the site had been earmarked for development, however, there were a series of consultation events with the community and Great Aycliffe Town Council, and subsequently there had been little objection at the planning stage. 

It was noted while there were no bungalows on the Eden Field development, a Chapter Homes bungalow product was being worked on.  The Committee noted a picture showing the entrance to the estate, with a Sustainable Urban Drainage System (SuDS) to the front of the site, making the site appear more open with feedback being that this added to the appeal of the development.

The Chief Development Officer noted that the properties sold to Livin and let at sustainable rent were mixed in with the other house types and from the exterior you could not tell which were rental and which were private properties.  It was noted that in terms of the show home, Chapter Homes had worked with Next to design and fit out, helping to give an excellent quality first impression.

In terms of moving forward, the Chief Development Officer Chapter Homes would look at land with potential for development, either purchasing Council sites, or privately owned land should an appropriate opportunity arise.  It was added that completion of Eden Field was scheduled for August 2019, with work commencing on the next development at Oakerside, Peterlee.  Members noted a bid for the open market sale of the former Chester-le-Street District Council Offices site and that there would be a finalised business plan looking at the strategic direction and to have a pipeline of developments in place to aim to deliver around 100 units each year.

The Chairman thanked the Chief Executive Officer and Chief Development Officer for their presentation and asked Members for their comments and questions.

Councillor P Howell asked if there were any reasons why the brand had attracted such a good reputation and noted the affordable rent properties being delivered first to allow them to be sold to Livin quickly.  He also asked as regards exceeding targets, and whether the aim was throughput to the market or to bring money into the Authority.  He also noted sales, private rent and affordable rent via Livin, and asked if there were two levels of rent. 

The Chief Development Officer noted that there was a conscious choice to have the brand standalone from the Council; however, a lot of work was undertaken in terms of the show home and the advertising of the development in the appropriate “glossy” magazines.  It was noted that the properties were of an excellent quality, and while not at the highest end of scale, they were not budget properties.  It was noted that while the branding was deliberate, when speaking to customers, there was some reassurance in terms of the Council being the shareholder.  In terms of the design and property sales, the Chief Development Officer explained that it had been noted that the 2 bedroom properties were a more difficult sell and when the properties were sold to Livin, there had been a lot of interest in these at affordable rent.  It was added that many people did not realise Chapter Homes produced smaller properties in addition to the larger ones, though now all but 20 properties have been reserved.  In relation to targets and how many were sold and the aims, the Chief Development Officer noted the initial was for 3 per month and the aim was to bring money into the Authority.  The Chief Executive Officer noted that there was the initial outlay in terms of finance and sales were at breakeven in terms of the balance sheet, with the Chief Development Officer adding that profit had been made from the last few sales.  The Chief Development Officer noted that in terms of rent, they were different, with Livin being affordable rent.  It was added that there was demand for the Chapter Homes product, with many choosing to rent while looking to save to be able to buy in the future, facilitating further sales.

Mr T Batson was aware of the Chapter Homes brand and noted the large size of Tolent and asked if there was not an opportunity for greater profits, in terms of the economies of scale with a large company.  He also asked if there were opportunities for smaller companies and suppliers within the development, and also in terms of training for local people such as apprenticeships.

The Chief Development Officer noted that initially the company was Gentoo, and then Tolent; however, Chapter Homes made use of a consultant to work through the costings to ensure there were correct and adjusted for the North East.  He added that in terms of suppliers, it was important to ensure many were from the area, with the majority actually being local.  It was noted that when people moved into their new home, there was a hamper of local produce to help advertise what we have got on offer in the County.  Members noted that 3 firms in relation to the steel work were local to County Durham.

Councillor P Sexton noted the former District Council offices site at Chester-le-Street and the plans for around 52 houses, and asked as regards how confident Officers were in being able to deliver.  The Chief Development Officer noted a lot of work had gone into the bid, with an excellent scheme and the location offering good potential prices for properties.  He reiterated that a lot of work had gone into the figures and felt that it would stand up against any housing developer; however, a large supermarket bid for example could prove difficult to compete against, with there being no restriction on the use for the land.  Councillor P Sexton noted from his experience, people in the area would welcome houses on the site.  The Chief Executive Officer reiterated that the site was on the open market for competitive bids.

Councillor P Sexton noted the successes so far in terms of sales and asked as regards further developments and plans, would there be further investment to grow the scale or to just feed back into the Council coffers.  The Chief Development Officer noted this was a matter that the Chapter Homes board would be discussing.

Councillor M Wilkes noted he fully supported the work of Chapter Homes and asked for further information in terms of the rental properties that Chapter Homes operated.  The Chief Development Officer explained that Chapter Homes owned the properties and they were managed by the Council’s Lettings Team under a SLA.  Councillor M Wilkes noted it was difficult to bring empty private properties back into use, though the Authority did have some powers to do so.  He noted he hoped more could be done under these powers and not just to develop more and more new properties, leaving some areas without any regeneration.  The Chief Development Officer noted that this would not be an area for Chapter Homes, although the Council’s Housing Manager, Shirley Janes and her team would be the people to look at opportunities in this area.

The Chief Executive Officer noted that prior to the Council setting up Chapter Homes, there had only been Lewisham Council that had undertaken a similar move, though he was not sure whether their company was still operating.  He noted other neighbouring Authorities had asked as regards the model, though some did not have the requisite land supply.

Councillor E Adam noted he had not been aware of the private rented properties under Chapter Homes and asked if the financial data would be something the Committee would be made aware of.  Councillor P Jopling asked if the pricing was competitive. 

The Chief Development Officer noted that consultants had helped in terms of the pricing, though these were evaluated monthly in terms of increases.  Councillor P Jopling asked whether any of the properties were leasehold.  The Chief Development Officer noted that there were no leasehold properties and indeed it was never entertained as something that Chapter Homes would look to do.

Councillor P Jopling asked as regards the house types and tenure.  The Chief Development Officer noted that 10% of the Eden Field site was to be affordable rent, and all those properties had been delivered.  He added that future schemes, such as Oakerside, had the relevant amount as per planning policy.  Councillor P Jopling asked if the Authority had received a dividend, the Chief Development Officer noted not yet.

Councillor J Clare noted Chapter Homes was excellent and addressed issues, such as broadband provision, very quickly.  Councillor J Clare asked if there was any tension in terms of Chapter Homes a developer and social valid concerns.  He added that he would wish Chapter Homes to grow and in time to be able to take on the less attractive sites and be able to deliver where other private sector companies would not be able to.

Councillor J Atkinson asked as regards the Eden Field development with those rented by Chapter Homes, those by Livin and privately owned homes and whether the tenancy agreements were policed to ensure the standards for a Chapter Homes development were being maintained.  The Chief Development Officer noted that Chapter Homes had worked with Livin in terms of the ensuring tenancies were in line with the sales agreements, such as restricting of the parking of works vans.  He added Livin were very acutely aware of the expectations and the tenants so far had been fantastic.

Resolved:       

(i)            That the Economy and Enterprise Overview and Scrutiny Committee note the progress report and presentation.

(ii)          That the Economy and Enterprise Overview and Scrutiny Committee includes in its work programme for 2018/19 a further report monitoring the progress of Chapter Homes