New Supply Programme - Update on Progress Programme of Work PO13(1)
North Lanarkshire Council · 16 November 2022
Back to Housing Committee — 16 November 2022 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
Page 1
North Lanarkshire Council Report Housing Committee Does this report require to be approved? ☒ Yes ☐ No Ref PH/TM Date 16/11/22 New Supply Programme - Update on Progress Programme of Work – P013 (1) From Pamela Humphries, Head of Planning and Regeneration Email mallaghant@northlan.gov.uk Email mallaghant@northlan.gov.uk 1. Background 1.1 In May 2018 the Committee approved proposals to increase the new supply programme to deliver 5,000 new homes by 2035. This was specifically linked to the proposals for the potential re-provisioning of all tower blocks (4,600 flats) over 20 years. It was estimated that around 2,300 new homes (50%) would be built on the sites of the tower blocks following their demolition. The target also included an assumption that the council would purchase around 550 homes through an expanded empty homes purchase scheme, which had proved popular and had enabled the council to buy back a number of former council houses. Executive Summary The purpose of this report is to update Committee regarding progress with the delivery of the new supply programme which aims to deliver 5,000 new homes by 2035. The report provides an update on progress against the annual targets previously set; outline some of the current challenges the programme faces, and seek approval for revised targets. Recommendations It is recommended that the Committee: 1) Consider the contents of the report regarding progress and challenges with the delivery of the new supply programme. 2) Approve the proposed targets for delivery of the programme set out in 2.4.1. 3) Note that an update on overall progress with the delivery of the new supply programme against targets will be reported to committee annually. The Plan for North Lanarkshire Priority Improve economic opportunities and outcomes Ambition statement (1) Ensure a housing mix that supports social inclusion and economic growth
Page 2
1.2 In September 2019 the Committee approved proposals to pilot a proposed ‘Development Pathfinder’ scheme to enable the council to acquire completed housing units from developers ‘off the shelf’. The council already acquired units ‘off the shelf’ from developers in the North area where the Affordable Housing Policy applies, but the committee agreed to extend this approach to the Motherwell, Bellshill, Coatbridge and Airdrie areas. It was noted that this could potentially act as a catalyst to enable private development sites to be brought forward and therefore stimulate investment in these areas and increase new housing provision. In November 2020 the Committee approved proposals to extend the ‘Development Pathfinder’ scheme to cover all of North Lanarkshire. 1.3 In November 2021 the Committee received an update on progress with delivery of the programme and approved targets for the delivery of the programme up to 2035. It was also agreed that an annual update would be provided to committee regarding the delivery of the programme. This report therefore provides an update on progress to date against the previous targets; outlines the challenges faced and the proposed mitigation measures to address these issues and sets out proposed targets for the coming years. 1.4 The November 2021 committee also approved an expansion of the Open Market Purchase Scheme to help facilitate common works by giving the option to the last remaining owner in a block of flats to sell their flat to the council and remain in their home as a council tenant. 2. Report 2.1 Progress to date 2.1.1 New Build As at 31st October 2022, 970 new build homes have been completed with 421 on site with 170 new build homes in total expected to complete in 2022/23. Sites have been identified and are at various stages of progression for a further 1,346 homes across North Lanarkshire, including a number of town centre sites and Phase 1 tower re- provisioning. The vast majority of the sites are council owned and are brownfield, which, while bringing their own challenges, also help to support wider place making and regeneration objectives. The new build homes have also provided much needed accommodation for households affected by disability, including purpose built wheelchair accommodation. The council’s specification for its new build homes also includes a higher energy efficiency/sustainability standard than is required by current Building Regulations. Additionally, new build homes are also digitally enabled providing prewired connections for broadband and Cat 5 Digital cabling to all rooms. 2.1.2 Open Market Purchase Scheme As at 31st October 2022, 589 homes had been purchased through the Empty Homes and Open Market Purchase Scheme to date. The Open Market Purchase Scheme (OMPS) has proven to be very popular and is providing much needed accommodation to meet identified local need, while also enabling common works to be progressed where the purchase of flats is providing full or majority ownership of blocks of flats. The OMPS also represents good value for money with an average purchase and repair cost in 2022/23 of £83,698. The number of applications for the
Page 3
programme has been lower so far this year compared to other years and more in line with 2021/22. Taking account of this, it is therefore projected that this year approximately 50 homes will be purchased. This is directly linked to the heated housing market at present where homeowners in this sector of the market are able to sell their homes at a value higher than the home report valuation quickly in the open market and has badly affected the number of applicants for the programme. The market conditions have now been taken into account for the amended projections. The projections also account for the recent expansions of the scheme to allow in some cases the final owners in blocks to sell their homes to the Council and remain as tenants and for the purchase of homes from private landlords to ensure tenants do not become homeless. There has been an increase in enquiries from Landlords and it is expected that the numbers will grow over time for this category. 2.1.3 Off the shelf purchases (Affordable Housing Policy sites) There have been 78 homes purchased from private developers in the North as part of their Affordable Housing Policy planning obligation, with a further 100 acquisitions in the pipeline. In addition, 39 homes have been purchased from developers in Ravenscraig. These acquisitions continue to represent good value for money and are a good option to help deliver much needed housing in an area of high demand. 2.1.4 Development Pathfinder Work is now underway at the former John Orrs Building in Airdrie following completion of demolition works and the acquisition of 20 flats on completion is scheduled for 2023/24. In addition, the committee has approved the acquisition of 39 homes at the former DWP Building at South Circular Road in Coatbridge and 24 homes at Lorne Place, Coatbridge. Both projects have planning permission and work is due to commence following completion of missives. There have been further enquiries from developers for potential projects throughout North Lanarkshire, with every site being assessed on its merits. 2.2 Current challenges impacting on programme 2.2.1 Availability/suitability of sites The availability of suitable sites, in areas where there is a demonstrable need for housing remains a challenge. The majority of council owned sites are brownfield sites, the development of which help support sustainable communities and meet localised need, but can be problematic, and in some cases unviable, to develop. Approximately half of the current programme assumptions were based on the re- development of sites following demolition of the tower blocks. It was always acknowledged that these assumptions would be subject to on-going review to reflect the timescales for the availability of the sites, and the proposed mix/ capacity of each site. It is likely that the density of replacement housing will be lower than 50% and therefore alternative sites will require to be identified to support delivery of the programme. The council’s wider Ambition programme, including asset rationalisation and town/community hub programmes will also result in sites (including school sites) being released that may be suitable for the new supply programme. Furthermore, any sites being declared surplus by the council are assessed for their viability and there are a number of town centre sites that have been identified that will be progressed as part of the new supply programme.
Page 4
2.2.2 Scottish Water Drainage Policy As previously reported to committee in November 2020 and November 2021 Scottish Water had been strictly enforcing their policy whereby developers must retain as much surface water as possible within the site or connect directly to a surface water sewer or directly to a water course. Scottish Water have recently amended how they apply their policy to allow more flexibility in assessing applications to connect to a combined sewer if certain criteria showing betterment can be met by the applicant. At present there are now three sites being affected by this policy with an estimated additional cost to the Council of £1.4million to be able to connect to Scottish Water systems. 2.2.3 Procurement/ contractor capacity Due to the level of development activity in recent years by councils and housing associations, as well as a healthy private sector market there are ongoing issues with contractor capacity and availability of labour. This combined with impacts of Brexit and the ongoing war in Ukraine upon supply chains has also impacted on tender prices. The council has used every available procurement method from direct award and mini competition through frameworks to open tender procedures and all approaches have shown a significant increase in tender bid prices. The procurement process itself is also lengthy and resource intensive. The council will continue to utilise available frameworks including the Scotland Excel new build framework and the Scottish Procurement Alliance (SPA) new build frameworks. 2.3 Costs 2.3.1 As outlined above the cost of the new build homes has increased significantly in recent years. The tender cost increases over the past 12 months are on average 16% to 20% and this trend of tender price increases will extend into 2023. Comparing similar sized projects the tender costs over past 18 months are on average 25% higher. This is due to a number of factors including ground remediation/ infrastructure costs; contractor capacity/ shortage of skilled labour, scarcity of materials due to various reasons such as the ongoing war in Ukraine and increased standards/specifications. This has been further exacerbated by high inflation this year of circa 10%. The Building Costs Information Service (BCIS) has reported that the housing construction price index is showing a cost increase of 15.3% over the year from Quarter 2 in 2021. They are also indicating a further increase of 3.3% over quarter 3 of 2022/23. At the end of 2021 BCIS reported that annual growth in material costs was at a 40-year high and since then the pressures have become even more acute 2.3.2 There are changes to legislation that have had an impact on the cost of the new build homes, including: • From 2024 new build homes cannot be powered by gas and will require an alternative heating system. Alternative options, including a fabric first thermal efficiency approach and the use of air source heat pumps combined with PV Cells and battery storage are currently being piloted and evaluated to assess the most cost effective options for the future, both in terms of installation; maintenance and, crucially running costs. There will inevitably be an increased construction cost per unit which is currently costed at £20,000 and is rising with inflation. • Legislation has been in place as of March 2021 to make it a requirement that all new build social rented homes will require to have a sprinkler fitted, at an average cost of £4,000 per property which is also rising with inflation.
Page 5
2.3.3 The increased costs associated with the delivery of the new build programme will continue to be factored in to the HRA 30 Year Business Plan, along with the most up to date assumptions around availability of Scottish Government grant including the recently increased level of grant funding for councils. It is also hoped tender costs will stabilise and plateau in the medium to longer term. In the meantime progressing acquisitions through off the shelf purchases and the open market purchase scheme will continue to offer good value options to augment the traditional new build programme and deliver new supply to meet housing need. 2.4 Programme Targets 2.4.1 The new supply programme is continually monitored, reviewed and updated but as it currently comprises over 30 approved sites, with further sites still to be identified, it is difficult to establish accurate long term annual targets. In addition, the ‘off the shelf’ acquisitions are difficult to forecast as they are reliant on the private developers’ delivery programmes which are out-with the control of the council. The current estimated targets for the current year and each of the next three years is set out in Table 1 below, as well as the balance to be delivered by 2035. Table 1 New Supply Projections as at November 2022 2.5 The targets for 2021/22 were not met mainly due to the following reasons that are carrying forward into this year: • Difficulties with supply of materials and labour which impacted on completion dates resulting in handovers being delayed. This has been partially due to COVID having an impact on labour availability at the early part of the year but mainly due to the reasons detailed in 2.3.1 which has also increased costs. • The heated housing market affecting the purchase of homes through the OMPS as detailed in 2.1.2 and a slower than projected uptake to date of the option for the last owner in a block to sell their home to the council and remain as a tenant. New Build New Build Council Off the Shelf 2021/22 137 0 75 212 305 2022/23 170 0 50 220 413 2023/24 226 50 75 351 631 2024/25 261 87 100 448 407 2025/26 299 34 100 433 333 2026 - 2035 989 315 750 2054 2335 Total 2082 486 1150 3718 4424 Completions (to March 2021) Grand total 2762 603 1635 5000 Year OMPS (incl. targeted extension) Total 680 117 485 1282 Approved Targets November 2021
Page 6
2.6 The projections this year have been adjusted in relation to the revised delivery timescales provided by contractors reflecting the availability of labour and materials to deliver each of the current projects. The variance between the projected completions in 2022/23 and the actual anticipated completions is mainly due to the following reasons: • Difficulties with supply of materials which impacted on completion dates resulting in handovers being delayed. This has been a factor throughout the construction industry as a whole with steel and timber being particularly affected as detailed in 2.3.1. This has also led to very high tender prices which have required some projects to be retendered resulting in delays to the commencement of those projects. • The heated housing market affecting the purchase of homes through the OMPS as detailed in 2.1.2. and a slower than projected uptake to date of the option for the last owner in a block to sell their home to the council and remain as a tenant. • Projected acquisitions of off the shelf homes from developers not progressing as projected with significant delays in the works at the former John Orr’s building due to supply of materials and labour as well as the site at Lorne Place, Coatbridge being delayed due to issues with securing connections to the Scottish Water drainage system. 2.7 The delivery of the new supply programme will be closely monitored, and regular updates reported to committee, including an annual update on progress against targets and any adjustments to the programme that may be required 3. Measures of success 3.1 The measure of success will be the cost-effective delivery of the council’s new supply programme which aims to deliver 5,000 homes by 2035 3.2 The New Supply programme will also contribute to the regeneration of the town centres within North Lanarkshire which is one of the main priorities within the council’s Economic Regeneration Delivery Plan 4. Supporting documentation Appendix 1 New Build Sites as at 27 September 2022 Pamela Humphries Head of Planning & Regeneration
Page 7
5. Impacts 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The development of new affordable housing contributes to reducing inequalities through the provision of good quality, energy efficient and accessible homes to meet housing need. If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality-and-fairer- scotland-duty-impact-assessments Yes ☒ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☒ No ☐ If Yes, have all relevant financial impacts have been discussed and agreed with Financial Solutions? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The cost of the new build programme has been increasing, and is now on average around £190,000 per unit and can be higher on some more challenging sites, including town centre projects. The new supply programme is funded through a combination of Prudential Borrowing, Capital Funded from Current Revenue (CFCR), Scottish Government Funding and Subsidy Income. The affordability of both the new build programme and OMPS are reviewed each year and incorporated into the 30 year business plan. The Scottish Government’s new baseline benchmark assumptions have increased from £57,000 to £71,500 per unit (base on 3 person equivalent as well as additional grant funding available for additional quality measures benchmarks. 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts have been discussed and agreed with People and Organisational Development? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts have been discussed and agreed with Legal and Democratic Solutions? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact?
Page 8
5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☒ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for technology, has an assessment been carried out (or scheduled) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☒ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? In terms of the environmental impact, the New Supply Programme has been considered through the Strategic Environmental Assessment (SEA) as required by The Environmental Assessment (Scotland) Act 2005 and there are no major issues of relevance identified. The new homes will be built to modern standards and as a result be more energy efficient contributing to the reduction in CO2 emissions. 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The implementation and delivery of the New Supply programme will be promoted through the New Supply PR plan in conjunction with Corporate Communications, and via communications with Local Members and local stakeholders 5.9 Risk impact Is there a risk impact? Yes ☒ No ☐ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed?
Page 9
Risk associated with the New Supply Programme is managed within the New Supply Risk Register process. The risk register has been updated to reflect the impact of the current national issues affecting the costs and availability of materials and labour along with general high inflation on programme timescales and costs as well as how the risk to the council will be mitigated as far as possible. The council will also undertake detailed ground investigation and other relevant site assessments prior to proceeding with the development of any particular site to help mitigate the risk of unforeseen costs relating to ground conditions, although this risk cannot be eliminated entirely.
Page 10
Appendix 1 New Build Sites as at 31 October 2022 Area Location Units Comments Completed Holytown Main St 10 Completed (Amenity) Holytown Spruce Way 10 Completed Motherwell Ravenscraig (David Wilson Homes) 18 Completed (off the shelf) Airdrie Clarkston PS 19 Completed Millerston Coshneuk Rd 11 Completed (Amenity) Cumbernauld North Rd 29 Completed Wishaw Cambusnethan PS 20 Completed (Amenity) Viewpark Laburnum Rd (Phase 1) 12 Completed Viewpark Laburnum Rd (Phase 2) 28 Completed Moodiesburn Gartferry Road 50 Completed Cumbernauld Westfield Drive 30 Completed Airdrie Former Albert PS 14 Completed Chryston Lanrig Rd 27 Completed (Amenity) Coatbridge Corsewall St 14 Completed Bellshill Former Belvidere PS 20 Completed Kilsyth Fisher Ave 30 Completed Chryston Old Lindsaybeg Rd (Persimmon) 14 Completed (off the shelf) Motherwell Glencairn Tower site 25 Completed Viewpark Former Tannochside PS 16 Completed Wishaw Walkerburn Dr, Coltness 20 Completed Cumbernauld Cardowan Drive 30 Completed Cumbernauld Kildrum Nursery 16 Completed Chryston Station Rd (Persimmon) 30 Completed (off the shelf) Chapelhall Former St Aloysius PS (Phase 1) 24 Completed Chapelhall Former St Aloysius PS (Phase 2) 6 Completed Cumbernauld Brown Road 20 Completed New Stevenston Former New Stevenston PS 15 Completed Chryston Greenlea Road 21 Completed Coatbridge Old School Court 20 Completed Airdrie Former Alexandra PS 14 Completed Harthill Former Harthill PS 20 Completed Motherwell Cleekhimmin, Ravenscraig (Barratt) 10 Completed (off the shelf) Coatbridge Blair Road 40 Completed Motherwell Calder PS 30 Completed
Page 11
Gartcosh Johnston Rd / Inchnock Ave (Bellway) 16 Completed (off the shelf) Cumbernauld Cedar Road Nursery 14 Completed Chryston Main Street (Bellway) 18 Completed (off the shelf) Wishaw Meadowhead Rd, Ravenscraig (Keepmoat) 11 Completed (off the shelf) Bellshill Caledonian Avenue (Phase 1 ) 19 Completed Wishaw Dimsdale Road (Phase 1) 6 Completed Bellshill Caledonian Avenue (Phase 2) 8 Completed Wishaw Dimsdale Road (Further Phases) 55 Completed Coatbridge St James PS / Lismore Drive 58 Completed Wishaw Roberts Street (Belhaven House) 16 Completed Wishaw Mossburn St, Waterloo 20 Completed Plains Plains PS 16 Completed Sub total 970 Completed On Site Chryston Chilterns Care Home 21 On Site Airdrie Dykehead Road (Holehills) 150 On Site Airdrie Northburn Place 31 On Site Bellshill Community Road 29 On Site Airdrie Former Orrs Building (Wilson) 20 On Site Wishaw Castlehill Road, Gowkthrapple (Phase 1) 97 On Site Coatbridge Berwick St 19 On Site Stepps Gateside Farm (Barratt) 30 On Site Motherwell Former BRE, Ravenscliff Rd, Ravenscraig 24 On site Sub total 421 On site Design Development Underway Cumbernauld Community Growth Area 75 Planning app submitted Motherwell Mabel Street 20 Planning app approved Glenmavis McArthur Ave 21 Planning app approved Coatbridge Columba High School 130 Design development underway Viewpark Laburnum Rd 26 Planning app approved Coatbridge Bank Street 9 Planning app approved Airdrie Glenacre Drive 16 Planning app approved Chapelhall Gibb Street 25 Planning app submitted
Page 12
Wishaw Graham Street 13 Planning app submitted Coatbridge Kildonan Street 49 Design development underway Cumbernauld Former Cumbernauld Village PS 8 Planning app approved Glenboig Former Police Station, Main Street 7 Planning app approved Motherwell Brandon Street 48 Planning app approved Wishaw King Street 5 Planning app submitted Wishaw Stewarton Street & Kings House 17 Design development underway Motherwell Former Motherwell Town Hall 20 Planning app approved Airdrie Calderigg Place 42 Design development underway Airdrie Former Petersburn PS 40 Planning app approved Millerston Coshneuk Road 16 Approved at Committee - Sept 2021 Wishaw Caledonian Road 9 Planning app submitted Coatbridge Mitchell Street 100 Approved at Committee - Aug 2022 Caldercruix Former St Mary's PS 25 Approved at Committee - Aug 2022 Bellshill Thorn Road 26 Approved at Committee - Aug 2022 Airdrie Airdriehill Road 75 Approved at Committee - Aug 2022 Motherwell Hope Street (Masonic Hall) 10 Approved at Committee - Aug 2022 Coatbridge Main Street 40 Approved at Committee - Aug 2022 Sub total 872 Design development underway Re- provisioning Coatbridge Shawhead 111 Re-provisioning site Coatbridge Dunbeth 170 Re-provisioning site Motherwell Coursington 60 Re-provisioning site Sub total 341 Re-provisioning sites Off The Shelf Chryston Gartferry Road (Allanwater) 22 Off the shelf Purchase approved at Committee
Page 13
Coatbridge Lorne Place (Allanwater) 24 Off the shelf Purchase approved at Committee Moodiesburn Auchengeich, Gartferry Road (Bellway) 12 Off the shelf Purchase approved at Committee Cumbernauld Kingfisher, Dowanfield Road (Zoom) 24 Off the shelf Purchase approved at Committee Coatbridge Former DWP Offices, South Circular Road (ML5 Limited) 39 Off the shelf Purchase approved at Committee Gartcosh Johnston Rd - Phase 2 (Bellway) 12 Off the shelf Purchase approved at Committee Sub total 133 Future off the shelf purchases from developers Total 2737