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1,900 new homes, green spaces and shops are all set to be included in the new development of the Teviot Estate in Poplar, London.

The Hill Group, an award-winning housebuilder, and Poplar HARCA, a housing association in East London, are working together to deliver the regeneration scheme which is set t cost around £800m. The development will include around 1,900 new homes with 35% affordable, new open green and play spaces, shops, community and faith facilities, alongside improved infrastructure.

Due to be delivered over four stages, the partnership has submitted an outline planning application covering what is to be expected from each stage. Phase one is set to deliver 475 homes, 45% of which will be affordable. Subject to approvals, the project is scheduled to start on site at the end of 2025, with the first homes expected to be completed by 2028. The entire project is forecast to be completed by 2042.

The masterplan for the project, designed by leading architects BPTW, covers eight hectares and offers a wide range of homes from studios and apartments to family houses. The regeneration will feature new shops and commercial spaces, as well as a new multi-use community centre. New infrastructure and public realm design focuses on creating safer streets with better pedestrian routes to Langdon Park station and a new foot-tunnel under the A12, with enhanced lighting and CCTV to help reduce anti-social behaviour.

So far, the regeneration has already invested over £400,000 to local projects through the Teviot Community Chest Fund. Over its 15-year duration, the initiative is set to generate over £278 million in social value, which covers a wide range of community projects. such as a new pontoon on the Limehouse Cut Canal, planned to open later this year that will increase community access to water sports.

Andy Hill OBE, group chief executive at The Hill Group, said: ‘The regeneration of Teviot is going to change the lives of thousands of residents, bringing high-quality homes and improved wellbeing. The community has been at the heart of the plans since conception and we are committed to delivering on our promises to residents, collaborating to create an improved neighbourhood for all. We know that people not only want better quality, energy-efficient homes, but also improved access to jobs, more support for young people and less fear of crime, so we are pleased to reach this important milestone in rewriting the future for this community.’

Paul Dooley, director of regeneration and development at Poplar HARCA, added: ‘I am really pleased to reach this significant milestone for this important regeneration scheme. It is one step closer to delivering more affordable homes and community facilities for Tower Hamlets residents.

‘In partnership with The Hill Group, the project has already made a real impact in terms of social value. Local residents have been instrumental in shaping these plans and we are committed to making sure this exciting programme of regeneration reflects the things that matter most to them.’

Image: The Hill Group

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Councils have relied on housing revenue accounts to help boost their decent homes standard. However, Campbell Tickell, discusses that since the standards of homes have increased, should these accounts still be considered useful?

“Should we re-open our Housing Revenue Account?” (HRA) This question is one which many local authorities that have previously sold their housing stock via stock transfer (and hence closed their Housing Revenue Account) have been grappling with over the past few years. From the work we have undertaken over recent years with a number of councils considering re-opening an HRA, the answer would have to be: “it depends”.

Why consider it?

Many – probably the majority – of stock transfers occurred more than 20 years ago. They took place for a variety of reasons, but most often were driven by the desire to achieve the decent homes standard by unlocking investment from housing associations that councils simply couldn’t afford.

Fast-forward to the present day and things look a little different. A combination of fire safety requirements, net zero-carbon targets and underperforming repairs services mean stock investment needs are higher than ever. These and other current dynamics mean there is a trend for acquisitions and mergers among housing associations to try to achieve ever-improving economies of scale. As a result, it is becoming increasingly likely that connections between local authorities and the organisations to which they transferred their housing stock have fractured, with a sense of a loss of control over how social housing can best be used to meet local conditions and needs.

Add to this the pressures being felt by councils in respect of the use of high-cost temporary accommodation to meet homelessness needs, as well as pressures on children’s services and adult social care budgets – both of which typically come with a degree of need for some form of housing solution – and it is clear that a joined-up, housing-led solution could be seen as being an attractive proposition. When you take into account the lifting of the cap on HRA borrowing in 2018, and the (still) relatively cheap borrowing available from the Public Works Loans Board (PWLB), it is easy to see why many local authorities consider re-opening an HRA to help address these challenges. So what are the next steps and considerations for those that are keen?

Regulatory issues

It should be noted that a local authority could develop/acquire and hold up to 199 new council homes within the powers set out in Part II of the Housing Act 1985 (the 1985 Act) or Section 74(1) of the Local Government and Housing Act 1989 (the 1989 Act) without actually opening an HRA. This is provided a “direction” is obtained from the Secretary of State to waive the requirement to maintain an HRA (usually a formality). The requirement to establish an HRA would come into force once the number of properties owned reaches 200 or more.

Opening a new HRA is a pretty straightforward process, requiring little in the way of formal regulatory approval. It does, however, come with the burden of a regulatory framework which has been increased by the expansion of the Regulator of Social Housing’s remit to cover stock-holding local authorities, initially in respect of the application of the Rent Standard to council rents, but now also covering the application of Consumer Standards.

Financial issues

Financially, the HRA is a ring-fenced account within the General Fund (GF), which broadly means that rental income cannot be used to help fund non-HRA activity. Also, GF resources cannot be used to support HRA activity – the HRA should be to all intents and purposes self-financing. This includes being able to meet any financing costs of new borrowing undertaken to fund HRA acquisitions/developments. From previous experience, this gives rise to one of the key potential barriers to opening an HRA to own and operate new council housing: that of financial viability.

Cashflow is key to any new organisation, particularly during the early years of operation, and for a new HRA it will be critical to help ensure regulatory compliance. Under Section 76 of the 1989 Act, the council has a duty to “prevent a debit balance on the HRA”, i.e. avoid the account going into deficit. An organisation with a very small amount of stock – such as a local authority with an embryonic HRA – will need to be able to recover its overhead costs (i.e. its democratic and central support costs), in addition to its operational costs and any debt financing costs from the income arising from a small stock base.

To ensure long-term viability, it will be vital to achieve a critical mass of properties as soon as possible: i.e. a stock base of sufficient size to enable economies of scale in respect of overheads to improve viability. The size of this critical mass will vary depending on the circumstances of the local authority, but in order to achieve this we have found that a ready supply of developable land is important.

Alternative solutions

Given the potential financial challenges, a key question is: why use an HRA over other options? Alternative solutions include:

• Entering into an arrangement with an existing housing provider for them to develop new housing, perhaps on land provided by the council. While this could achieve a similar outcome, it would be at the cost of the degree of control able to be exercised by the local authority
• Establishing a new housing provider for the purpose of owning and operating new social housing. This could be a relatively lengthy process compared to establishing a new HRA, as well as potentially being a more expensive process, and also more expensive to operate as a separate stand-alone company
• Setting up wholly-owned companies to own and operate sub-market housing. Again, this could potentially be a more expensive option to operate as a stand-alone company

Councils considering any of these options would need to consider the relative risks and rewards in determining its strategy going forward.

No single answer

If there is sufficient land and resources available to enable a critical mass of social homes to be achieved, then a new HRA could potentially be made to work – but cashflow is key. It may not be the right solution for every council, and one or more of the alternatives could provide a more effective solution.

Ultimately there is no single answer to the initial question of whether or not to re-open an HRA. One size does not fit all, and, as we said at the outset, the decision will very much depend on the individual set of circumstances for each local authority.

As well as being published on NewStart this article was featured in the latest CT Brief – Issue 71.

Images: rivage and nattanan23

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The leading national bank have joined forces with Hometree who have raised £250m of debt financing to help homeowners install solar panels, battery storage systems and heat humps into their properties.

Through patterning with Barclays, Hometree – the leading residential energy services company – has created the ‘pay as you save’ programme, which is designed to help homeowners sustainably upgrade their home. Through the scheme, people can take out loans to fund the installation of solar panels, battery storage systems and heat pumps.

The idea of a loan in the current climate is frightening to say the least, with interest rates being the highest since 2008. However, Hometree’s scheme offers zero-deposit payment options that are designed for the domestic renewable energy market.

In addition, various homeowners will be able to ‘pay as they save’, with the forecasted savings they make through reduced energy bills exceeding their monthly payments from day one.

Arguably the introduction of this scheme couldn’t have come at a better time. Although energy bills have fallen since their peak in April and October 2022, research shows they are still 59% higher than winter 2021/2022. As a result, consumer interest in renewable energy systems is at an all-time high with over 220,000 heat pumps and solar installations taking place in UK homes in 2023, a record-breaking increase, according to data from MCS.

Despite increased demand, green energy solutions are still out of reach for many households. The average cost to install solar and battery systems is £13,600, and £12,700 to £31,500 for air source and ground source heat pumps. According to new figures from LCP Delta, 28% of solar panel customers used high-interest personal loans or credit cards to fund the installation, which risks adding further strain on household budgets.

Commenting on the news of the new programme, Simon Phelan, CEO and founder of Hometree, said: ‘Many homeowners naturally want to invest in renewable technologies but are put off by the extraordinarily high upfront costs. That’s why we’re focused on removing barriers to help more households take control of their energy bills and carbon emissions. We’re delighted to be working with Barclays to help us develop and scale flexible finance solutions with all-inclusive cover built-in, to enable homeowners to make the switch to clean, green energy with confidence.’

Matt Boyes, Co-MD of Hometree Finance, added: ‘The UK has some of the world’s most expensive homes to heat and power and it is costing homeowners dearly. Yet until now, there hasn’t been an easy, affordable way to finance the green energy upgrades that will benefit homeowners’ wallets and the planet. This new partnership with Barclays means it will be just as easy to install solar panels or a heat pump as it is to lease or buy a new car on finance.’

Image: Martin Adams

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Time is running out to decide who you want to see as our next prime minister. Our latest long read features Ritchie Clapson, a veteran property developer, who explores how the sector would be impacted if Labour is victorious next month. 

We are just a short time from the General Election, and, whether you’re studying the polls, the punditry, or the odds in your location betting shop/app, it’s not looking good for the Conservatives. There are of course many variables—the Reform effect, stay-at-home-Tory-voters, right-leaning press front pages, misinformation and deep-fakes on social media—that will play a part in influencing the workload of at least one high end removal company on July 5th. But it does seem likely there will be a return to Downing Street for the Labour party very soon.

With this in mind, I ask, what would this mean for the property sector?

Landlords shouldn’t get too excited

I don’t expect a sea change in how property investors are treated. The current government has belatedly worked out that pushing landlords to sell up through increased taxation or regulation doesn’t actually help anybody. This means there are now more properties for sale, but unfortunately, tenants can’t afford to buy them. Consequently, there are now fewer rental units on the market, which means that rents have gone up, thus making it more difficult for tenants to afford to rent anywhere. And then we have the now shelved Renters (Reform) Bill, the mere threat of which was enough to scare thousands of landlords out of the sector. I’m afraid I can only see any new iteration of the Bill being more draconian for landlords under a Labour regime. Labour has also started mentioning rent caps, yet another policy guaranteed to scare the horses.

A big rental myth

The rental market is not short of stereotypes, with one of the biggest misconceptions being that all landlords are wealthy.

Granted, the man generally accepted as the UK’s richest landlord. 33-year-old Hugh Grosvenor, 7th Duke of Westminster, is worth in the region of £10bn, but according to the government’s 2021 English Private Landlord Survey (updated in March 2024), 45% of individual landlords own just one buy-to-let property, with a further 40% owning between two and four properties. The report states that the average earnings for all landlords’ – excluding rental income – is just £24,000 per year and that their median age is 58.

What happens if we add in their rental profit? The median gross rental income was £17,200, from which they would need to deduct mortgage repayments, agency fees and running costs to arrive at a pre-tax profit. Obviously, each landlord’s costs will be different, but we’re clearly not looking at a king’s ransom. And many such landlords are accidental – perhaps they kept a flat when they married or inherited a house when their parents died. Super-rich? No, just ordinary people. How much more regulation and taxation are these types of landlord likely to accept before chucking in the towel?

If Labour forms the next government, they need to think through plans that impact the ‘regular’ landlord; if new policies further take the shine off renting out properties, many houses and flats could be sold, depleting rental stock even more.

Better prospects for property development?

As more landlords have felt the pipes squeaking on their buy-to-let portfolios, many have moved into small-scale property development to offset the pain. For many, the type of projects they undertake are just one step up from those they’ve done previously, such as creating an HMO or doing a refurbishment. Simply putting flats above a shop or converting a small commercial building can be expected to generate a six-figure profit, so no wonder there’s a healthy appetite. It certainly puts the average landlord’s buy-to-let profits in the shade. So, this begs the question, will Labour’s approach to property development differ from that of the Tories, who have actively encouraged it by creating many new permitted development rights in England?

In my opinion, there’s unlikely to be too much change. The reason for this is that the housing crisis is an incontrovertible fact, it’s getting worse rather than better, and it’s impossible to fix unless the government of the day is prepared to ignore the squeals of objectors across the land and start building lots of new houses.

Late last year, Keir Starmer declared himself a YIMBY and insisted he would take a dim view of any Labour MPs opposing new housing in their constituencies. It would be refreshing to hear yes, in my back yard, but, as governments of all hues have discovered, when there’s the suggestion of construction work at the bottom of our own gardens, few of us can contain our inner NIMBYs, and they are force to be reckoned with.

We need to build around four million new homes (the equivalent of around 15 Oxfordshires) which means we’re not going to be able to avoid the Green Belt or stick them all somewhere out of the way where no one will notice.

Green, brown and grey

Labour reckons it could build some new towns—around 1.5million homes—using what it calls the ‘grey belt’. This is green belt land that already has something built on it, such as car parks or petrol stations. They’ve stipulated that 50% of grey belt development must be affordable housing, but it’s not clear how the economics of this will stack up for developers who clearly are going to want to make a profit. This focus on the grey belt hasn’t gone down that well with the countryside charity CPRE, who argue that we should instead turn this grey belt back into Green Belt, which you might think is ignoring the housing crisis until you realise that we could build 1.2 million new homes using existing unused Brownfield Land. These are existing commercial properties and land not in the Green Belt, which could be converted to residential use. CPRE, not unreasonably, believes we should be starting with unused brownfield land first instead of targeting the grey belt.

These Brownfield sites are a rare political win-win. They positively impact the house-building numbers, plus voters are generally happy for these sites to be converted. It also gets more people living in our town centres, which benefits local economies. On that basis, I can’t see Labour deciding that Brownfield conversions are a bad idea. It should also be good news for landlords and investors because larger housebuilders won’t touch small commercial conversion projects since most lack the skills or appetite to do them. This leaves more opportunities for first-time property developers.

Final thoughts

Whoever forms the next government, it would be good to see the office used by the Minister of State for Housing, Planning and Building Safety lose its revolving door; since 2010, there have been sixteen Ministers of State for Housing. Over the last 14 years the housing portfolio has been to politicians what a role on The Bill used to be for the acting profession – everyone gets a go eventually. The property sector deserves better.

Images: Ritchie Clapson, Clay Banks and Avel Chuklanov

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