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Off The Shelf - 1,400 Houses Snapped Up - Is Obel Next?

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Is this good value for money. Is it even appropriate. Does it distort the 'free' market.

So many questions

http://www.thedetail.tv/issues/6/obel-tower/developers-in-talks-to-sell-off-obel-apartments-for-social-housing

Is Northern Ireland’s premier apartment block about to become the latest in a long line of cash-strapped property developments to be saved by a publicly funded buy-out?

An investigation by The Detail can reveal how housing associations have used £132m of public money since 2007 to buy up private developments of more than 1,400 properties for social housing.

But what does this say about the true value of the north’s housing market?

And does Social Development Minister Alex Attwood’s recent threat to slash grant funding to housing associations mean that the lifeline for private developers is about to be cut?

http://www.thedetail.tv/issues/6/obel-tower/130m-taxpayers-money-paid-out-for-off-the-shelf-developments

One of the first developments to benefit from the funding was in south Belfast where Clanmil bought up 40 `off the shelf’ private apartments valued at £7m which had been built on the old Curzon cinema site.

Since then housing association have been given more than £130m in taxpayers’ money to purchase 1,400 homes on private developments to be turned into social housing.

In the first year of the scheme more than £36.1m of public money was used to buy 270 homes from private developers at an individual cost of £134,000 for each dwelling.

By 2008/2009 another 300 homes were acquired at an overall cost to the taxpayer of £34m.The cost of each individual property had dropped by £20,000 during that 12 month period.

By 2009/2010 more than 467 homes had been bought under the `off the shelf’ scheme, at a cost to the taxpayer of £38.29m.

The cost of each individual property had dropped to £82,000 during that 12 month period.

During the 2010/2011 financial year more than 400 properties were bought under the `off the shelf’ scheme at a cost to the taxpayer of £24m.

The collapse in the property market meant the average cost of an ``off the shelf’’ home in 2011 dropped to just £60,000, less than half of the original £134,000 price four years ago.

A useful reminder of the difficulties

http://news.bbc.co.uk/1/hi/uk/8052470.stm

Thousands of developers' surplus new build homes in England are being rejected by housing associations as they are not of a high enough standard.

"Many of the homes that we are being offered would not meet those standards and quite sensibly housing associations looking at those homes are saying they are not of a suitable quality for them to purchase."

Multiple flaws

Independent building inspector Steve Nancarrow told the BBC he had found 90 flaws in just one new-build flat valued at £210,000.

Faulty electrics, no hot water, and leaking windows are just some of the problems he discovered.

"It's my job every day to go around people's houses and look at the quality of the units, and it's getting worse and worse.

"They are fobbing them off with rubbish," he said.

In order to be accepted by housing associations, developments have to meet high environmental standards, as well as being built to high specifications and to a minimum size.

In the private sector the specifications are lower and there is no minimum size.

The UK builds the smallest homes in the developed world.

In Holland the average size of a new build dwelling is 115 sq m and in Japan it is 92.5 sq m, while in the UK it is just 76 sq m.

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There are three ways the Housing Associations can acquire or procure housing.

1. Buy the land themselves, employ all the external consultants and design the houses and apply for planning. Then employ a QS to draw up a BoQ and tender documents and advertise for tendering amongst a select list of suitably qualified contractors. Supervise and build out the scheme. This method, referred to as the traditional method is the slowest, most expensive route. But the units are designed and built to Life time homes, Housing Association specifications.

2. Off the shelf: As the name implies the housing Association purchases completed units, not necessarly new units. Its advantages are speed. It is the quickest way to purchase stock as it is needed. It can also be cheaper, particularly in the current market where units can be bought for levels well below the traditional build model above. Disadvantages the units are not built to the lifetime homes/Housing Association Standards.

3. Design & Build Package Deal: Wher the developer holds the land. Regardless of historical cost the land is aquired by the Housing Association, at todays market level and the Housing Association enters into an agreement with the developer to design and build the units to life time homes/Housing Association standards and the developer builds out the units for fixed (Total Cost Indicators) (Roughly cost + 5%. Advantages, generally viewed as the fastest, most cost efficent method with the risk of cost over run being borne by the developer. Disvantage: now outlawed as someone in the Housing Executive believed it conterviened the EU procurement directive as there is no compentation for the construction contract. (Note, no other country in the EU, including England, Scotland or Wales view this issue in the same light). Therefore this route, which delivered 70% of social housing has been frozen since 2006.

The Housing Associations are the most ineffective method of procuring housing ever imagined and route 1, the traditional route is a disaster zone for them. Therefore there only solution it to purchase off the shelf, at a fraction of the coust it would take them. They generally wait until the developer is in the trows of receivership and conduct directly with the banks so the developer never sees any of it.

This quality issue gets me. Yes the Housing Association [HA} houses are built to separate specifications. This generally is around room sizes, and not always in a good way. The houses are not bigger. A 3 bedroom house will still be 90 sq feet to 1050 sq feet. However the internal layouts are governed by lifetime standards. This concept is open to debate and it has certain good features that are incorporated into the private sector. Basically they want the house to be able to keep a severally disabled or elderly person at home rather than hospital. Therefore space has to be made for a vertical elevator to take a wheel chair up stairs and the arrangements of the up stairs have to allow a bed hoist between the bedroom and the bathroom. There are loads of other things about wheel chair turning space in halls toilets etc. The reception rooms end up very small with lots of space in the halls, landings and kitchens.

My personal view on this, considering they are for social rent (short term lease) a percentage of a social development should be build to accommodative different levels of dependency and people can move to these houses as the need arrives. The need can be anticipated. again this is only my opinion but a life time should be (God granting (am I allowed to say that))70 to 80 years of ability and 10 to 20 years of assistance. There will be many examples of variance to this in both directions. I do not believe that every house should be designed to accommodative the 20% or so.

Firstly there is the extra cost and more importantly these houses suffer as a result. Whilst they are the same size or bigger than the private sector version the actual living accommodation suffers. I have designed and built 100's of both versions.

One thing I will say is the specification in regards to energy efficiency of social housing is well ahead of the building control regulations and therefore private housing. The new building regs, coming out soon close that gap quite a bit. In defence of private housing they are currently streets ahead, in energy efficiency to that built only six or seven years ago. But the social housing take that a stage further. The cost of insulation alone in a social house is £15k. They usually also have solar power hot water. If I was building my own house again I would use the specification of social housing, in regards to insulation.

The public will currently not pay for this in the private sector.

Thats where my praise for social housing ends.

Politics seem to get confused between higher specification and higher quality. Having built both, I know we lift our specification of materials for the private housing, particularly in regards to finishes. Quality of doors, skirting, windows, handles, paving, electrical sockets and light fittings, kitchens and sanitary ware, etc would be more expensive in the private houses.

To sum up. If the tax payer can get better value from off the shelf then I am all for it. I would be concerned that they are not what social need, perhaps requires. But you have to weigh that against value. As most of these deals are done when the builder has went bust then I am not surprised there will be considerable snagging to get through.

Sense the Package Deal was stopped in 2006 we have not done any deals with the HA's. There is no point as it is not a bail out but a sell out, and fair play to them.

Edited by BelfastVI

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  • 338 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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