Report to Strategy and Regeneration Scrutiny Committee THE HOUSING INVESTMENT PROGRAMME AND THE CREDIT CRUNCH 6 th October 2008 Bob Osborne Deputy Director for Sustainable Regeneration ITEM 4 A)

Background At the last meeting that considered the position on Housing led regeneration members requested an analysis of risks, and mitigations i.e. a plan B, if funding did not become available Since that time the economic crisis has seriously impacted upon the ability to effectively analyse the position The opportunity to review this position in the context of the emerging Homes and Communities Agency is now timely given recent announcements

What do we know? Unprecedented economic downturn Situation changing on a daily basis Market at a virtual standstill Government intervention measures announced New agency to deliver housing renewal “Dashboard” of indicators constructed Key partners consulted and in constant dialogue over programmes Audit Commission inspection of Housing Market Renewal Programme

Purpose of the presentation Clarify work to date and current position Demonstrate role of new agency and implications Indicate impact on key programmes and mitigations/options

Research and Market Intelligence Evaluation and research programme in place Key pieces of work –Credit Crunch risk assessment (version included in pack) –Analysis of Property Purchases –Auction Market Analysis Further ongoing and detailed work planned

Summary position Increasingly fragile housing market Volatility due to decreasing sales/auctions Land values falling Aspirant home owners unable to access mortgages – demand is still there Increasing numbers of empty homes when perversely waiting lists of housing are rising Unprecedented situation

Government Response Review by Professor Michael Parkinson – concludes end of October Housing Market Rescue Package - £100 billion package (details attached) Emerging role of the Homes and Communities Agency

Opportunity Homes and Communities Agency (HCA) begins work on 1/12/08 Combines Housing Corporation and English Partnerships, Academy for Sustainable Communities, parts of CLG Has £17.4 billion investment plan for A new opportunity to have a single approach to housing investment

Growth Point AGMA area selected as a growth point. Four of the ten borough as pathfinders – Salford, Manchester, Bolton, Trafford £250,000 initially allocated to develop programme Parallel Infrastructure Fund Programme of development to be submitted at end of October Work in progress

Audit Commission Performance Review Determines level of funding allocations for 2009/10 and 2010/11 First stage appraisal – performance review – complete and informal feedback positive Second stage appraisal – Use of resources – this week – a review of landlord licensing in Seedley/Langworthy Third stage appraisal – need for investment – will compare market conditions vs 2007 basline Resources will come under remit of HCA from December 1 st

The emerging funding regime A single Salford Investment strategy to be mutually agreed with HCA. Initial meeting already taken place. A “single conversation” between HCA and Council and its partners An agreed investment portfolio Remit of the HCA is consistent with Salford’s position Want to agree an investment strategy by end of November

On the ground – Agreed partnerships Key partners wish to rephase and refinance existing plans in New Deal,Broughton, and Ordsall. Committed to continuity but need to see through this decline Anticipated upturn in two years Until then need to find a way to release mortgage finance or bridge the gap between deposits and asking price Continuous dialogue with partners

On the ground – speculative building Less secure – schemes mothballed and land banked until market recovers Key shift away from the apartment market to traditional housing Auction prices low Significant growth in the private rented sector

On the ground – Housing Market Renewal – continuity and certainty Broughton – reviewing partnership to establish a greater quantum of programme New Deal – reviewing programme to facilitate one scheme progressing, second scheme under review and alternatives being considered Ordsall – rephasing of Ordsall Estate plans under active consideration, Ordsall Riverside reconfigured to traditional housing Langworthy/Seedley – progressing Weaste – some progress around Weaste Lane area….Housing Market Support applied in remaining areas ….. Aim is to put in bid as part of HCA investment plan Funding secured and protected for this year…HCA plan will argue for continuity and sustainability

Mitigation aka Plan B HCA offers toolkit of new methods Actively exploring concept of Asset Based Partnership Vehicle to mitigate funding shortfall Aggressive enforcement against unused properties – five prosecutions already sought Reviewing all partnerships to establish better phasing/funding options Holistic investment plan to be agreed with HCA by end of November.

Conclusions Ongoing detailed Research and Intelligence Programme Ongoing dialogue with developer partners Ongoing analysis of residential land supply Core Strategy Development of coherent investment plan with HCA Pending that ongoing market support and enforcement activity