Tagged: EeH HCA
June 1, 2009 at 11:57 am #101
After two failed attempts, in May and July 2008, respectively, due to irregularities and discrepancies in the Officers’ reports, the London Borough of Tower Hamlets (LBTH) Strategic Development Committee (SDC), on 28 August 2008, granted consent to EeH proposed scheme for St Georges Estate, based on 25% affordable housing being financed by the 65% market homes and assurances it received about an additional 10% affordable housing being financed by a Homes and Communities Agency (HCA) grant.
The inference was clearly that, based on the requirements of EastendHomes’ (EeH) Business Plan and the terms of its partnership arrangement with Telford Homes (on which the entire proposal, including significant amounts of profit-making ‘market housing’, had been designed) EeH could provide 25%, together with the cross-subsidy necessary for Decent Homes Plus Works.
Whilst EeH contract terms with its business partner Telford Homes are unclear, it became obvious that Telford Homes who, apparently, is an investment partner with the Homes & Communities Agency (previously the Housing Corporation), will also be applying for a grant to finance what used to be a ‘grant-free’ scheme. It therefore appears that the highly manifested ‘private contribution’ has turned into government funds (tax-payers’ money) being provided by the Homes & Communities Agency (HCA) to a private work-for-profit organisation.
The HCA has now confirmed that a grant of £8,040,255 (to fund the entire 35% affordable component) has been approved and the scheme was due to start on site last month. Furthermore, the HCA has confirmed that Telford Homes bid for funding was successful following two financial appraisals, supported by LBTH, through the production of two versions of toolkit appraisals. The first financial appraisal was dated 18th August 2008 submitted to the HCA on 19th August and the second was dated 3rd October 2008 submitted to the HCA on 21st October and these were provided by Telford Homes and supported by LBTH.
It is important to highlight that Telford Homes second financial appraisal indicating that the proposed scheme was not viable without HCA funding for the entire 35% (and not just 10%) affordable housing, and was supported by LBTH, was submitted to HCA on 3rd October 2008 which is approximately a month after LBTH approved the scheme as viable without public subsidy for the 25% of the affordable housing component.
In view of Telford Homes successful grant application to HCA to finance the entire 35% of the affordable housing component of the proposed development, it follows that the proposal is no longer the same as the construction of market homes to finance 25% affordable housing is no longer required.
As the sources of funding for the affordable housing component have been changed, it is unknown why EeH has not revised the number of market homes now required for financing the Decent Homes Plus Works.
EeH is not an investment partner of the HCA signifying that EeH has not gone through the rigorous assessment that HCA applies to its investment partners. It therefore appears that EeH is using its business partnership with Telford Homes to get funding from public subsidies.
At present, EeH is progressing with phased construction at St Georges Estate, starting with the construction of the affordable housing component, for which Telford Homes secured funding from the government. It has been said that the market homes will be built once the housing market conditions improve.
Despite numerous attempts to get a response from EeH regarding the utilisation of the extra revenue that will become available (equating to 25% affordable housing) if the market homes are built, I could not get a straight answer. Based on HCA’s funding for 35% affordable housing, it is considered that the extra revenue equating to 25% affordable housing is circa £6m. It is yet unknown who is going to benefit out of this extra revenue, in case it is not returned to the government.