Porter, Stephen [Compatibility Mode]
Helping the Excluded Middle Stephen Porter Chief Executive Great Places Housing Group
The Vibe, Salford – a case study
The Vibe, Salford • 154 apartments in 2 blocks - 40 sold on FTBI - 114 ‘definitely’ not sold • - Shop units ground floor - 2 floors of car parking - 4th floor garden • Part of 3500 unit regeneration scheme - 600 built - Only another 2900 to go!
Business Solution • Financial Plan -
20% voids High management/maintenance costs £360 per calendar month rent Assumes future sales
• Capital Cost -
Grants from HCA Grants from Salford Developer drops price Great Places pays £19,000 per unit
• Pain/Gain sharing • Developer to continue mixed tenure programme
Management Model • • • • • •
On site management Monthly tenancies Deposit, advance rent, direct debit Economically active Strong marketing Plumlife
The Vibe - Result • • • •
100% let within 12 weeks Management dream No rent arrears Strong demand from otherwise excluded households
The Vibe, Salford – with communal garden
The Vibe, Salford commercial units
The Vibe, Salford – “secret garden”
The Vibe - Lessons • • • • • •
Be brave Negotiate hard Rents way too low Pent up demand Others need to be flexible Branding
Our Plans • • • • • •
Shared ownership Shared equity Rent to homebuy Intermediate rented schemes Private rented schemes Mixed communities programme
Some observations 1. The intermediate market is a subsidised market
2. Subsidy comes from • • • •
Grant/soft loans Higher rents Cross subsidy sales/profits Not much else!
3. It meets a need, but its not our core activity
4. However, low / no grant programmes may be the only show in town
5. We want to keep our capacity/ expertise intact
6. Everything points to an increase in intermediate / private rented products
7. Hungry on loan finance / security required, hence the benefit of partners
8. It moves us into a new world – is this really our ethos?
Challenges to Intermediate Market • • • • • • • •
Where does the subsidy come from Management Ethos Competing with the private sector The market is volatile House price deflation Housing Benefit Design
Why we are going to do it • • • • • • •
It meets a huge, long term demand If demand changes, we can change Effectively, its Government policy Someone has to build something! It ought to be profitable We retain our capacity Why not?
The Vibe, Salford – a case study
The Vibe, Salford • 154 apartments in 2 blocks - 40 sold on FTBI - 114 ‘definitely’ not sold • - Shop units ground floor - 2 floors of car parking - 4th floor garden • Part of 3500 unit regeneration scheme - 600 built - Only another 2900 to go!
Business Solution • Financial Plan -
20% voids High management/maintenance costs £360 per calendar month rent Assumes future sales
• Capital Cost -
Grants from HCA Grants from Salford Developer drops price Great Places pays £19,000 per unit
• Pain/Gain sharing • Developer to continue mixed tenure programme
Management Model • • • • • •
On site management Monthly tenancies Deposit, advance rent, direct debit Economically active Strong marketing Plumlife
The Vibe - Result • • • •
100% let within 12 weeks Management dream No rent arrears Strong demand from otherwise excluded households
The Vibe, Salford – with communal garden
The Vibe, Salford commercial units
The Vibe, Salford – “secret garden”
The Vibe - Lessons • • • • • •
Be brave Negotiate hard Rents way too low Pent up demand Others need to be flexible Branding
Our Plans • • • • • •
Shared ownership Shared equity Rent to homebuy Intermediate rented schemes Private rented schemes Mixed communities programme
Some observations 1. The intermediate market is a subsidised market
2. Subsidy comes from • • • •
Grant/soft loans Higher rents Cross subsidy sales/profits Not much else!
3. It meets a need, but its not our core activity
4. However, low / no grant programmes may be the only show in town
5. We want to keep our capacity/ expertise intact
6. Everything points to an increase in intermediate / private rented products
7. Hungry on loan finance / security required, hence the benefit of partners
8. It moves us into a new world – is this really our ethos?
Challenges to Intermediate Market • • • • • • • •
Where does the subsidy come from Management Ethos Competing with the private sector The market is volatile House price deflation Housing Benefit Design
Why we are going to do it • • • • • • •
It meets a huge, long term demand If demand changes, we can change Effectively, its Government policy Someone has to build something! It ought to be profitable We retain our capacity Why not?
