Report to Lead Member and Deputy – Housing
Report for Decision / Information
Date Of Meeting - 8th June 2001
Subject: Options Paper - Athole Street Estate – Pendleton
1.Purpose of the report
1.1.To investigate future options that are currently available in regard to the Athole Street Estate. The properties are adjacent to the Seedley and Langworthy Regeneration Area and it is prudent to consider the future options in the context of that regeneration project.
2.Recommendations
2.1.That the Lead member and Deputy note the limited potential for investment under current management arrangements.
2.2.That members agree the most satisfactory course of action for the future of the estate.
2.3.The sensitivity of the needs of the local community can not be underestimated. Therefore it is recommended that Members give consideration for the authority to establish the tenants full views and to progress the most viable option by engaging a ‘Tenants Friend’ which will give a greater independent viewpoint and will give the residents more opportunity for participation.
2.4.That members sanction officers to be authorised to commission an agency to act as a Tenants Friend.
3.Background
3.1.Scheme Location and Size
The Athole Street estate is located in the Ordsall and Langworthy Community Committee Area of the City. The estate was constructed in the mid 1970’s. The estate comprises 76 dwellings – 36 three bedroom and 40 two bedroomed. Ten of the dwellings have been purchased under RTB. The estate comprises: -
1-12 Barnfield Close
1-16 Hodge Lane
1-20 Ladyshore Close
1-28 Primrose Grove
The estate appearance is generally sound, however, it is typical of its build date insofar as the layout has a Radburn footprint and has a significant amount insecure open spaces which is not appropriate for present day policing and vehicle use/ownership. There is scope within the estate layout for remodelling which would enable in-curtilage parking and ‘Secured by Design’ principles.
The estate is ‘locked’ between the adjacent completed Amersham Street Project and SALI boundary. During the development of the Seedley and Langworthy Regeneration Bid the then Chairman of the Housing Committee expressed the view that the estate should be omitted from the boundary of the regeneration area. Subsequent to this the chair of the Partnership Board has asked for this position to be reviewed. On the 13th October 2000 Lead and Deputy Lead Member approved a full option appraisal of the future of the estate.
3.2.Current Demand
There is reasonable demand for the dwellings within the estate. The area lettings team have no major difficulties with relets and the turnover is relatively low. This estate has been grouped as a ‘flexible letting area’ which will allow for greater rehousing discretion, which should help to maintain current demand.
3.3.Stock Condition
The fabric of the stock is in relatively good condition, although, the properties are of no fines construction and issues have been raised about the problems associated with the warm air heating system.
The most pressing issue appears to be the lack of major investment to the stock within this estate. The last prior to Paint scheme was completed in 1991/92. Any further programmed works will remain at a planned stage until this review has been completed. Housing Services has commissioned Ridge Associates to complete a citywide Stock Condition Survey and the Maintenance Division are expecting the results in late May this year.
3.4.Consultation
An open invitation resident meeting was held on the 17th January 2001, Councillor Salmon was present and four Officers represented the authority. The residents were informed of the reasons why the estate was not included within the original SRB5 bid and it was explained to them that there is no substantial physical investment planned for the estate in the short to medium term.
Officers suggested to the residents that one possible investment option that needed to be considered was a transfer to the emerging Salford First Community Company. The proposed investments, retained rights and rental increases of the association were discussed.
There was an initial negative reaction from the residents (that attended) to this proposal. However, officers did not promote this option and the residents were encouraged to consider this option further after the meeting had closed.
Following this, an estate walkabout was arranged with a number of residents and representatives from the area housing office and the tenant participation team.
The initial consultation process hasn’t progressed any further and we now need to firmly establish the residents’ views for the suggested transfer option. There has previously been an active Athole Street Tenants Association. This group disbanded in June 2000 stating that there main reason for resigning was maintaining member interest in the groups’ activities when the estate/ dwellings were unable to attract substantial investments. The Tenant Participation team has not received any indication that the group wishes to re-establish itself.
3.5.Options currently under review: -
(a)Baseline – Retain the properties in City Council ownership and do nothing
(b)Retain the properties in City Council ownership and carry out programmed maintenance as catch up repairs.
The Current Capital Investment priorities for the City do not include any works for this estate and it is unlikely that resources could come available within the next five years.
Within the next five year time frame it will be feasible to assume that the estate will need to be included in a Prior to Paint scheme (PTP), as the last PTP was completed 1991/92. It is also assumed that a kitchen, bathroom and heating replacement schemes will be required in this period.
The Maintenance Division estimates that average unit cost, which includes PTP, kitchen, bathroom and heating programmes, are estimated to be approximately (£) 7000.00 per dwelling. Therefore, the amount of investment to the remaining stock is likely to be in the region of (£) 462,000.00.
(c)Retain the properties in City Council ownership and carry out a full-scale estate renewal.
Similar type properties in the Ordsall area have received a comprehensive brick skinning and environmental works. Also properties on estates in Lower Broughton will be receiving substantial environmental works resourced from the SRB2 programme. Given the costs of the Ordsall and Lower Broughton works a conservative estimate on the level of investment needed to bring the properties to modern standards is between (£) 2O, 000.00 and (£) 30,000.00 per unit.
In comparison if we were to only consider environmental schemes, Development services have recently provided feasibility estimates for such schemes within the Lower Kersal / Charlestown areas. Initial estimates indicate that unit costs will be in the region of (£) 8000.00 per unit
In context, taking the costs of the comprehensive environmental work along with the costs of the programmed works as catch up repairs, this equates to a total cost of between (£) 1,782,000.00 and (£) 2,442,000.00.
(d)Transfer of Stock to a new owner.
In total over 500, 000 properties have been transferred nation-wide to date. However, this transfer would form a small-scale voluntary transfer, 499 dwellings or less. This option is in accordance with the principles of Housing Revenue Account (HRA) Business Planning, which requires that housing authorities consider all options to ensure that all residents have access to a recent home.
Given the expectation that the site would be included within the SALI it would seem logical to consider this option alongside the development of the Salford First Community Company. At their own risk Manchester Methodists Housing Group (MMHG) have, surveyed one of the properties whilst it was void and have also prepared a 30 year Business Plan for the transfer option. Key assumptions have been made in the Business Plan. In brief, they state that
Rental – A one-off increase of (£) 5.00 per week will be established on transfer completion. Rents will increase by RPI each year. Existing tenants will continue to pay based on a 48-week year, whereas, new tenants will pay the same weekly charge based on a full 52-week year.
Expenditure – No capital receipt will be given to the authority. On transfer completion (£) 500.00 catch up repairs will be completed per dwelling in year one. This will be followed by improvement costs of (£) 18,287.00 per dwelling over the first three years. Investment to 66 dwellings over a three time frame would therefore be (£) 1,239,942.00
Right to Buy – Assumed initial capital values of (£) 20,000.00 per dwelling and MMHG retains the capital receipt.
(e)Demolish the estate and release the land for development purposes.
The Athole Street estate lies just to the east of the Langshaw/Blodwell/Derg Street area of the SALI. The expectation is that this area will be demolished to create a cleared re-investment site. The Athole Street estate contains potential development sites – former clay hall site, a general amenity area adjacent to Primrose Close. Also, the authority has recently acquired the site of the Mariners Public House.
4.Conclusions
Do Nothing
As has been stated earlier within this paper, the do nothing option can be used as a benchmark against which to measure other appropriate options. There is reasonable demand and low turnover at the moment. However, consideration needs to given to maintaining demand. Consideration also needs to be given to the current tenant profile of the estate (it appears that a considerable number of the existing tenants are couples that have lived on the estate for some time) for the possibility that turnover is likely to increase in the future.
To do nothing and not being able to attract investment, would represent a failure to manage the estate and would probably result in significant/rapid decline especially when taken into context that the actual clearance of the nearby Langshaw Street site will be a mid–term outcome of the SALI.
Partial Refurbishment/ full Estate Renewal
As stated earlier, the Current Capital Investment priorities for the City do not include any works for this estate and it is unlikely that resources could come available within the next five years.
Transfer the Stock to a new owner
The spirit of HRA business planning encourages local authorities to consider a combination of options available to them that may help to deliver solutions for different parts of the stock. Alongside this, our Housing Strategy and in subsequent updates, we have highlighted our vision and intention to work with other agencies towards finding solutions to local issues.
This option compliments our commitment to working and developing new innovative partnerships with other providers. MMHG has significantly invested in the City and one of the groups’ key objectives states that they wish to expand its development and partnership activity.
If we were to pursue MMHG proposals we will not receive any capital receipt. However, as previously stated, the authority does not plan for any major capital investment over the next five years, therefore, this transfer option is an opportunity to have guaranteed early investment to this housing stock and will ease the burden on the HRA/MRA in future years.
The outcome of the MMHG proposal is dependent on a period of negotiation and the ultimate support of a majority of those tenants affected by them. Tenants will need to receive adequate information that will enable them to make reasoned judgment in relation to this potential option. An important aspect of this option is that residents get an independent viewpoint. Consideration should be given to commission ‘tenants friend’ at the earliest opportunity. If this option was pursued we should look at including other local authority stock nearby that requires investment e.g. Ailsa House.
If the transfer option was to be pursued a future negative aspect would be that the existing tenants would enjoy lower rents, whilst the new tenants are faced with higher charges and could be more inclined to become dissatisfied with the service that they are provided with.
Revenue Implications.
The following indicators are preliminary and they act as a guidance note only. Greater financial detail will need to be sought depending on the recommendation of this report.
Rent Income
It is assumed that tenants will be not be rehoused by the City Council. Based on current rent charges there will be actual annual rent loss to the City Council (66 dwellings) of (£)164,962.00
HRA Subsidy
HRA stock numbers for subsidy purposes are now fixed at 1st April prior to the subsidy year. It is assumed that the demolition will ultimately have a benefit through the dwelling count.
Management 66 x (£)315.92 = - 20, 853.00
Maintenance 66 x (£)667.77 = - 44, 073.00
Guideline Rent 66 x (£)36.70 x 52 x 98% = +123,435.00
= + 58, 509.00
(2001/2002 Allowances)
Management Costs
There will be a reduction relating to the direct expenditure of the stock therefore there will need to be savings in Area Office costs. There will be no direct savings on the repair and maintenance budget although there will be less dwellings to maintain.
Demolition and release for development purposes
This would involve rehousing and complete demolition. The resultant landmass, along with the adjoining proposed SALI redevelopment site would likely form an attractive site to developers.
This option will incur high rehousing and compensation costs. This will also break up a fairly stable community and will be unpopular the majority of the residents. There is a relatively high number of owner occupied dwellings and consideration needs be given that Valuers will have to negotiate the most equitable settlement with the owner occupiers. Comparable to recent acquisitions and RTB valuations, costs could be between (£) 20,000 to (£) 39,000 per dwelling.
This option should eventually generate a land receipt however it will be difficult to forecast the future value of the cleared site (which could offset and rehousing / compensation costs).
Revenue Implications
HRA subsidy should remain as above. There are some differences from the revenue implications previously mentioned. In summery;
This estimated cost would be funded from the Compensation budget within the HRA.
Rent Income - It is anticipated that tenants will be rehoused in void dwellings elsewhere and so there will be no actual rent loss to the City Council.
Capital Implications
Loss of 76 units would result in a reduction in Major Repairs Capital Allowance of £41,118.
5.Estimated Cost summary
Option / Cost / CommentsRetain properties and carry out maintenance as catch up repairs / £ 462,000 / Unlikely to be sufficient to meet “decent” homes standard by 2010 due to lack of thermal efficiency
Full Estate Renewal
/ Between (£)1,782,000.00 to (£)2,442,000.00 / Estate is mostly let and provides low rise family accommodation in any area of mostly non-traditional stock. Cost is affordable if Major Repairs Allowance allocations continue however the scheme would need to prioritized over other works.Transfer to RSL (The Salford First Proposals) / No capital reciept, guaranteed improvements within 3 years at a total cost to Salford First of (£)1,239,942.00. Annual rent loss to City £164,962. However positive subsidy implications. / Residents appear opposed to the proposals at this stage. Investment in stock is guaranteed and current residents rent levels are frozen
Clear the site for development purposes. / Estimated acquisition costs could be between (£) 200,000.00 to (£)390,000.00.
Estimated Homeloss and Disturbance costs - (£) 165,000.00
Estimated Demolition costs – (£) 136,800.00
Therefore, total costs could be between (£)501,800.00 to (£)691,800.00
Consideration will have to be given to annual rent loss. Based on current rent charge, this totals (£)164,962.00. / Extremely expensive. Breaks up stable community
Appendix 1 – Athole Street Plan
Appendix 2 Estate photographs
Author: Paul Longshaw
Checked by: Bob Osborne