Affordable Housing Delivery by the Private Sector Lessons from elsewhere Integrated Housing Delivery CfHE 2015 Symon Sentain Symon Sentain Associates

What is Affordable Housing? (1) Affordable housing (in context): Social rented Affordable rented Intermediate housing Provided to eligible households whose needs are not met by the market. Eligibility is determined with regard to local incomes and local house prices. Affordable rented housing is let by local authorities or private registered providers of social housing to households who are eligible for social rented housing Affordable Rent is subject to rent controls that require a rent of no more than 80% of the local market rent (including service charges, where applicable)

What is Affordable Housing? (2) Provisions to remain at an affordable price for future eligible households or: Subsidy recycled for alternative affordable housing provision Intermediate housing: Homes for sale and rent provided at a cost above social rent, but below market levels Subject to the criteria in the Affordable Housing definition above Can include shared equity (shared ownership and equity loans) Other low cost homes for sale and intermediate rent, but not affordable rented housing

Private Sector Involvement (1) In years , National Government supported private sector… New build Indemnity Fund - up to 95 per cent loan to value mortgages for new build properties Reconsideration of planning obligations where development stalled Established a new £500 million Growing Places Fund Launched £400 million ‘Get Building’ investment fund Freed up public sector land with capacity to deliver up to 100,000 new homes Build Now, Pay Later deals, where there was market demand Support for self-build with £30 million of new funding New Homes Bonus, Community Infrastructure Levy and business rates retention. Simplified planning policy through the National Planning Policy Framework Communities given new powers under Community Right to Build

Private sector Involvement (2) Government interventions: Not driven by private sector demand to build affordable housing. Government Initiatives politically driven to: Facilitate house building to help drive economic growth in a stalled and depressed housing market

Important Note 1 As a property developer, I am primarily interested in… Land which is accessible, available and developable Deliverable projects, preferably as a pipeline of opportunities Available finance, preferably a drawdown facility as opportunities arise Saleable products, which are in strong demand Sufficient gross/net profit margins to make reward worth the risk

Important Note 2 However… I can be persuaded to do public good whilst also achieving my aims to make a profit I am willing to work in enlightened partnership structures whilst making a profit I’ll work to lower profit margins for a public good

Implications for Public Sector Leadership Private sector housing developer engagement requires 4 key policy instruments: Regulatory/planning Fiscal Financial Institutional Measures

Implications for Public Sector Leadership (Contd.) Public/private partnerships key to producing affordable housing, which is: Well managed Focused on high standards that are enforced Based on a clear and consistent planning and regulatory framework, capable of flexing NB: High standards of housing management have been vital in the British context.

Benefits of Private Sector Involvement Private sector financial discipline to affordable housing provision Use of private finance to produce affordable housing Increased scope for mixed tenure schemes Partnerships innovate to develop housing Scope to produce more housing at higher densities Partnerships quickly identify what hinders development Partnerships encourage understanding of other parties Long term planning horizons are possible

Public Private Sector Housing Partnership Models 1 Model adopted depends on the market sector and type of project… Bundle several small-scale housing projects into a contract with one private partner Joint Venture Company set up through a competitive process Use of a strategic partner using the first phase as a benchmark Incremental partnering allows project to be stopped/carried out by a different partner if better value can be achieved. Housing Partnership agrees to jointly build, design, finance, maintain, and operate the facility

Public Private Sector Housing Partnership Models 2 Housing Cooperatives as partners Limited Liability Partnerships Joint Venture Companies Special Purpose Vehicles Urban Regeneration Companies Urban Development Corporations

Direction for Ghana 1 Before the Housing Strategy, we need a Housing Startegy… ‘A cooperative venture between the Ghanaian Government and/or Municipalities, and private sector house builders built on the expertise of each partner, that best meets clearly defined affordable housing needs through the appropriate allocation of resources, risks and rewards.’

Direction for Ghana 2 Government/Municipalities assume a lead facilitating role Applying Lessons Learned Adopting a Holistic Approach Disciplined approach to planning and regulation Masterplanning acting as ‘roadmap’ for implementation early on is essential Fully exploring objectives and core values regarding the purpose of the project Common and agreed understanding of public good Provide certainty and reassurance to all parties involved.