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Partnership Working “What can be achieved” by Andrew Lavender (Project Consultant)

Partnership Working “What can be achieved” by Andrew Lavender (Project Consultant). What we set out to achieve.

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Partnership Working “What can be achieved” by Andrew Lavender (Project Consultant)

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  1. Partnership Working “What can be achieved” by Andrew Lavender (Project Consultant)

  2. What we set out to achieve • To improve the physical environment in four coastal districts of Kent - Dover, Shepway, Swale and Thanet by bringing empty properties back into use. These Districts contain 19 out of 20 most deprived wards in Kent and represented over 3,000 long term empty properties. • Agreed Performance Indicators (PSA Target – 3 Years) • Return 372 private sector long term empty or poorly used properties, including HMO’s, in the four Districts into occupation as quality accommodation (100% increase on performance) • Improve by 15% both residents’ perceptions of the physical environment and business confidence in the four Districts where empty properties have been brought back into use • Scheme extended to all 12 Kent LA in 2009

  3. Our Approach • KCC appointed a project manager for the initiative • Undertook initial collection of evidence, including residents & business survey, survey of empty properties, mapping exercise (Empty Homes Agency) • Appointed “Tamesis” - a PR & media relations company to raise and promote the profile of the initiative • Appointed “Capital Project Consultancy Ltd (CPC)” – to provide professional and technical expertise • Initiative three strands: £5 Million capital fund to support:(Revolving Fund) • Loan Scheme • Partnership Fund • KCC Direct Purchase

  4. Loan Scheme • Kent County Council – not a Housing Authority (Complications) • Loans - £25,000 per unit, maximum of £175,000 per applicant. • Properties must be sold (maximum of 2 years) or let on completion (maximum of 3 years) • Properties expected to meet the decent homes standard on completion • Do not offer loans where property will be occupied by applicant (FSA – Local Housing Authority have their own mortgage guidance)

  5. Loan Scheme • Secured as a financial charge against property (first or second only) • Will accept another property for security • Maximum LTV 90%, independent RICS valuation (charged to applicant) • Many lenders withdrawn from the market • Lenders (large developments max 60% LTV, some will not allow second charges i.e. Mortgage Works) • Buy to Lets (50-75% LTV), high interest rates, high fees and retainer for works) • RICS Valuer (Very cautious in their valuations) • 100% of the funding provided up front (staged, if maximum loan * £50K) • Provides good working capital • £25,000 @ 3% / 5% = £750 / £1,250 a year (2/3 years)

  6. Loan Scheme • Initial discussion with owner & application supported by EPO • Project Manager / Consultant meet on site to discuss the viability of scheme, available finance, ownership arrangements, vat and tax strategies • Application submitted • 2 quotes for the cost of the works or RICS Surveyor costings • Rics valuation (current value) • Letter of consent from Mortgage Company (deed of priority) • Money Laundering Regulations ID and address • Companies accounts : 3 years and financial check • Individual 3 months pay slips • Evidence of adequate finance to make scheme viable (shortfall) • Risk assessment

  7. Risk Assessment (Factors Considered) • Panel of 3 Persons (assess whether scheme low to high risk) • Credit Check: adequate / fail (does not proceed) • Business Plan: Financial viability of project, do they have additional finance plus loan to make scheme viable • Loan amount £25K-175K • Loan to Property Value (LTV ↑ 50%, ↑ 51-85% , or ↑ 85%) • Proposed Loan period up to 24 months or ↑ 24 months • Provision of references from previous projects

  8. Loan Scheme – Investment vs. Leverage *Does not include Warren Court

  9. Scheme Costs • Average renovation cost per unit = £47,381 (often very worst properties) • KCC average investment per unit £18,508 • Actual cost to KCC = £619,691(loss of interest & on costs), if loans run to completion • Current rate of interest charged & on costs@ 3.13%) = £3,008 per unit • Includes 80% Project Managers, 10% Consultant time, 5% EPO • Legal costs & local searches • Registering charges with District Land Registry & Companies House • Repayment to date £400,000 & £600,000 scheduled for 31st March 2011 • 16% Loan to Sell (2 years) & 84 % Loan to Let (3 years) • Only 26% of application forms returned , 76% of them approved (some in progress)

  10. Loan to Sell • Derelict Warehouse in Dover • NUE Loan £175,000 • Developers Contribution £161,000 • Total development £336,000 • 6 x 2 bed apartments • 2 x loft apartments • high spec - private courtyard, allocated parking, security gates & video entry system

  11. Loan to Let & Compulsory Purchase Orders • 28 & 32 Bellevue Road • NUE Loan £125,000 • Developers contribution £100,000 • Total development £225,000 • 5 units of accommodation • 34 Bellevue Road, Ramsgate • Unregistered Land – CPO • Sell the property to developer, agreed to pay CPO costs • Compensation (6 year rule)

  12. Loan Scheme • To date only 1 default of loan and concern over 1 other project. • Practice of lenders requiring recipients to pay down their mortgage, including taking funds from accounts without any warning • Assessment of financial standing of property development companies (same as KCC supplier) (often equity rich but cash poor). • Special Purpose Vehicles (SPV – set up for a single development is not uncommon and causes problems as often do not have 3 year accounts) • Strict interpretation of Money Laundering Regs (Nepal) • Company set up outside England and Wales (Malta/Isle of Man)

  13. Compulsory Purchase Orders, Enforced Sales Procedure or Empty Dwelling Management Order CPO ESP Prosecution for non compliance of Notice or undertaking the works in default and using the County Court or Enforced Sales Procedure to recover costs Works in Default or Prosecution After exhausting of voluntary assistance, threat of appropriate enforcement action is raised with owner Statutory Notices under a range of legislation. Owner has right of appeal. Enforcement (Notices Served on Owner) Threat of Enforcement Financial Assistance / Other Assistance (Loans, grants, home improvement agency, private sector leasing) Advice and Guidance (Development advice, tax and vat, reduced fees to sell via auctioneer, guidance on extent of works, guidance on planning, raising finance) No Use Empty Initiative: Achievements by Approach CPO, EDMO & Enforced Sales (3%) Threat of or Actual Enforcement 13% Grants 7% & Interest Free Loans 13% Other (Auctioneer, sale of LA land, PSL) 8% Advice & Guidance 59%

  14. Achievements to date • Strong partnership arrangements between KCC and the 12 District Councils • Increased output, knowledge, expertise of professional staff and development and sharing of good practice. • Extended the Initiative to all Authorities in Kent and gained National Recognition • 487 Properties brought back into use during scheme, target 372. • Target 2011 to return 1,050 • Achieved a minimum of 1,627 (last quarter not reported)

  15. Thank you for listening

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