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Hyde Park Walk and Terrace Stock Transfer
1. Introduction
1.1 This report informs Cabinet of the outcome of the formal tenants’ ballot and seeks authority for officers to negotiate and finalise the transfer agreement.
1.2 The Hyde Park Walk and Terrace estate, comprising of 136 Council homes, was part of the final phase of Neighbourhood Commissions, in Housing Management Area F. The recommendation of the Commission in relation to this estate was to pursue stock transfer to a Registered Social Landlord (Housing Association). On 27 October 2004 Cabinet resolved in relation to all the potential stock transfer estates in Area F,
‘authority be delegated to the Head of Housing Strategy in consultation with the Cabinet Member for Neighbourhoods to agree and implement a competitive selection process for the selection of one or more RSLs, in conjunction with tenants; such recommendation to be reported to Cabinet for approval.’
1.3 Due to the existence of the Alpha Tenant Management Co-operative, and their wish to retain the tenant management principles, a separate landlord selection process took place for this estate. Sanctuary Housing Association were recommended as the potential new landlord for the estate.
1.4 This recommendation was reported to Cabinet on 8 February 2006 and it was approved that Sanctuary Housing Association be appointed as prospective landlord.
1.5 A further report was considered by Cabinet on 13 September 06 which approved:
That the Director of Housing, in consultation with the Assistant Chief Executive (Legal and Governance) and Director of Corporate Resources,
a) Agree any necessary changes to the first stage offer/consultation document before it is issued to the tenants affected
b) Agree any necessary changes to the offer/consultation document arising from the first formal consultation
c) Hold the transfer ballot
d) Subject to the outcome of the tenants’ ballot, to negotiate an ‘in principle’ agreement with Sanctuary Housing Association for the transfer of the Hyde Park Walk and Terrace estates for consideration by Cabinet
2. Outcome of the Formal Ballot
2.1 The formal consultation takes place in two Stages, and was conducted in accordance with the DCLG’s requirements. Stage 1, which is the Offer Document stage, ran from 15 November 2006 until 13 December 2006. Stage 2 ran from 5 January 2007 until 2 February 2007. As is normal practice in stock transfer, the ballot of tenants ran concurrently with the second Stage consultation. Electoral Reform Ballot Services administered the ballot, which closed at noon on 2 February 2007. The results were made available on the afternoon of the same day.
2.2 The outcome of the ballot is shown below:
2.2.1 Are you in favour of the Council’s proposal to transfer the ownership & management of your home to Sanctuary Housing Association?
Total number of eligible tenants … 170
Total number of votes received .. 135
Overall rate of participation 79.4%
Total number of spoilt/blank ballot papers 0
Therefore, total number of valid votes counted 135
Result
Number voting YES ....... 101 (74.8% of the valid vote)
Number voting NO ........ 34 (25.2% of the valid vote)
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TOTAL 135 (100% of the valid vote)
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2.3 The outcome shows that there is clear support for the transfer proposal. It is recommended the transfer should proceed to completion, subject to the approval of the Secretary of State. The Secretary of State in considering an application for consent to transfer is required to be satisfied that the majority of secure tenants affected by the proposed transfer are not opposed to it. The ballot result clearly satisfies this requirement.
3 Governance Arrangements
3.1 The Alpha Tenant Management Co-operative (TMC) performs part of the housing management function on the estate, and Sanctuary have made a commitment to continue this arrangement. A management agreement currently exists between Alpha TMC and the Council. Sanctuary are in the process of re-negotiating this agreement to ensure its effectiveness within the Sanctuary group structure. Sanctuary are committed to ensuring that tenants receive a high quality housing management service and will also introduce a package of training for tenants who are involved in the management of the estate.
3.2 Sanctuary Housing Association currently belong to the Sanctuary Group, and although the formal arrangements have yet to be agreed, it is expected that the Alpha TMC would be overseen by the Sanctuary North subsidiary as shown by the diagram below:
Sanctuary Housing Association (owns the stock, employs Sanctuary staff and raises the finance) |
Sanctuary Housing North Ltd (provides defined management services) |
Alpha Tenant Management Co-operative (provides defined management services and oversees the delivery on the investment programme |
3.3 This model is typically used for small scale stock transfers where only a limited number of staff work from a local base and regional staff ensure adherence to the Regulatory code and compliance with Housing Association good practice. Group structures are now common within the RSL sector, and it should be noted that under the Housing Corporation’s regulatory code they will insist on the Parent of the Group (Sanctuary Housing Association) having the right to intervene in Governance if it felt the management organisation was not fulfilling its responsibilities.
3.4 Services will be in the main delivered from the existing local office at Hyde Park Walk. Support will be given through Sanctuary’s further offices and call centres. Locally based staff would provide front line services including:
- Liaison and support during improvement works
- Debt advice and arrears recovery
- Void management and lettings
- Tenancy enforcement and dealing with anti social behaviour
- Tenant Involvement & supporting the Committee
3.5 Sanctuary recognise the need to support the City Council in meeting housing need in Sheffield and have agreed that 50% of all vacant properties at Hyde Park will be let to applicants nominated by the City Council.
4. Actions Required to Complete the Transfer
4.1 The completion date is proposed for 11 June 2007, although we are currently exploring the possibility of bringing the completion forward into May 07, subject to resourcing requirements. This will be the seventh and final transfer completion for the Better Homes Better Neighbourhood Project.
4.2 There are a number of tasks, consents and agreements that must be in place before the transfer can take place and three of the more significant ones are detailed in paragraphs 5 to 7 below.
5 Consent of the Secretary of State
5.1 The Council must formally resolve to seek the Secretary of State’s consent to the transfers and the decisions to do so must be made by the City Council and cannot be delegated to Cabinet. As stated above, the Secretary of State cannot give consent unless he is satisfied a majority of tenants are not opposed to the transfers. The ballot result will clearly satisfy this requirement.
6 Transfer Agreements
6.1 Following the successful ballot of tenants, the Transfer Agreement will document the agreements the Council has with Sanctuary Housing Association to transfer the homes on respective estates. The Transfer Agreements are contractually binding documents which set out the rights, responsibilities, covenants and requirements of both parties and contain all the necessary arrangements to enable the Housing Association to receive and manage the dwellings and the Council to enforce all the promises made during the consultation period.
6.2 As well as documenting the details of the transfer itself, the Transfer Agreement will be used in future to regulate the relationship between the Council and Sanctuary Housing Association. Practical arrangements including the rights the Council would have to nominate tenants into 50% of all lettings, will all be set out in the Transfer Agreement.
6.3 The Council's external legal advisors, Wright Hassall, have prepared the first draft Agreements and negotiations with the Housing Association are underway. It is a complex and lengthy legal document and a tight timescale has been set to ensure that the transfers can take place on the proposed date in paragraph 4.1.
6.4 The Transfer Agreement will contain the following:-
a) Covenants committing the Housing Association to
i. Carry out the promises made by the Council on the Housing Association’s behalf in the Consultation Document;
ii. Carry out the programme of repairs and modernisations detailed in the Consultation Document to ensure all transferred properties are improved to well above the decent homes standard by 2010/11. The Housing Association has been required to put in place a 30 year business plan that will ensure investment remains available to ensure homes are maintained to that standard for the next 30 years;
iii. Grant all transferring tenants Assured Tenancies as presented in the offer document
iv. Not vary the terms of the new Assured Tenancy Agreement for transferring tenants without first consulting the Council over the changes;
v. Consult with tenants on any changes in matters of housing management.
b). The agreement includes a Nominations Agreement requiring the Housing Association to let at least 50% of vacant properties to applicants nominated by the Council.
c) A requirement that the tenancy to be offered to all Council nominees will be the standard form of assured non shorthold tenancy used by the Housing Association for granting new tenancies to all new tenants.
d) An obligation on Sanctuary to take all necessary action to prevent homelessness within its own housing stock on the Hyde Park estate as a minimum requirement to apply the guidelines set out in the South Yorkshire Charter and to engage with support providers to ensure that adequate support is in place to prevent homelessness.
e) A Right to Buy Sharing Arrangement to protect the Housing Associations from the impact of RTB sales on their 30 year business plan whilst giving the Council a share of RTB sales proceeds following transfer.
f) Arrangements for the purchase of the Council's arrears portfolio for existing tenants. The purchase price to be based on a standard formula developed by CIPFA and applied to many stock transfers. A dispute resolution process which allows unresolved disputes to be referred for expert adjudication where both parties agree or to the courts if either party wishes.
6.5. In order for RSLs to secure funding it has become normal practice for lenders to require councils involved to provide environmental warranties in respect of the stock, both to the RSL and directly to the lender. The form of warranty has become relatively standardised. Wording is couched to try to ensure the council retains all environmental liabilities. As a result, the environmental warranties include liabilities arising from any dangerous substance present in, at, on or under the Property and any deleterious building materials such as lead paint and asbestos and from naturally occurring contaminants such as radon. Warranties are sometimes demanded for as long as thirty years although between 22 and 25 years is now more normal. As part of the City Council’s RSL selection process the RSLs were required to give a written commitment that they would not seek, whether at the behest of funders or themselves, to require the Council to provide unlimited warranties. However, Sanctuary will need to seek external funding to finance the proposed works and so to make it fundable the agreement will include warranties given to them and their funders by the Council.
6.6. The Council will be required to warrant the information it has provided is accurate, as this forms the basis of the Business Plan. The Council may also be required to provide a warranty in respect of environmental liabilities. The warranty would not apply to any environmental hazard that might arise as a result of any redevelopment that might be carried out in the future. It would also limit the asbestos warranty to any costs arising above and beyond those allowed for in the valuation.
6.7. Desk top studies show the possibility of environmental hazards, as they do throughout much of the city. The Council’s Contaminated Land Officer is of the view that if a need did arise under a warranty to address a hazard that did not arise from redevelopment, then a grant could be expected to be made available to the Council from DEFRA to meet the cost. The DEFRA grant is a cash limited national fund that has been in operation for over 20 years and has always been under-subscribed. The transfer agreement will oblige Sanctuary to provide timely and sufficient information to enable the Council to make a bid to DEFRA, to supply further information if necessary and to give rights of access and survey.
6.8. In view of the timescale and the length and complexity of the document it is recommended that authority to negotiate and finalise the Transfer Agreement be delegated to the Director of Housing in consultation with the Assistant Chief Executive (Legal and Governance) and Director of Corporate Resources.
7 Development Agreement
7.1 Linked with the Transfer Agreement is a Development Agreement for the refurbishment of the dwellings. This is an essential part of the VAT mitigation arrangements outlined in the report to Cabinet on 13 September 2006. In the Transfer Agreement the Council agrees to transfer the dwellings with the benefit of the proposed improvements, notwithstanding that they will not have been done when the dwellings transfer.
7.2 In the Development Agreement the Council agrees with Sanctuary that they will carry out the improvement works out on behalf of the Council and the rest of the Agreement is concerned with the machinery of VAT claims and what happens if, for some reason, VAT cannot be reclaimed.
7.3 VAT reclaimed through the VAT mitigation scheme will be invested in environmental and public realm works on the estate after the Council’s set up costs have been recovered. The nature of the work will be agreed between the Council and Sanctuary. Account will be taken of the need to deliver works that both improve the local environment and minimise future maintenance costs.
7.4 In view of the timescale and the length and complexity of the document it is recommended that authority to negotiate and finalise the Development Agreement be delegated to the Director of Housing in consultation with the Assistant Chief Executive (Legal and Governance) and Director of Corporate Resources.
8. Kier Sheffield City Council
8.1 Kier Sheffield LLP and Sanctuary have already successfully negotiated a contract for the delivery of responsive repairs on the Shiregreen estate as a result of the recent stock transfer. Although, the TMC is responsible for managing the delivery of repairs up to a value of £1000, it is expected that Kier Sheffield LLP will be involved in arrangements for major repairs above this amount.
9. HR Implications
9.1 The HR implications were reported fully in the report of the 13 September 2006. However, Members are reminded that there are no TUPE implications for staff of Sheffield City Council, as all operational housing management staff transferred to work for Sheffield Homes in April 2004. Due to the existence of the TMC and the small number of properties on the estate, there are no TUPE implications for any staff members of Sheffield Homes.
10 Financial Implications
10.1 The detailed financial implications were fully explained in the Cabinet report of the 13 September 2006. This transfer is the only one in this series that has attracted a positive valuation of the stock, around £269,000. This has been advantageous as the transfer does not require complex negotiations with the Department for Communities and Local Government for funds from its gap funding programme.
10.2 A significant change since the report of 13th September 2006 is that the financial risk to the Council of having to meet the set up costs in the event of a ‘no’ vote in the ballots will now not arise. The Council’s set up costs will be met from the receipt received from Sanctuary, supplemented by a payment from the VAT mitigation scheme if necessary.
11 Equality Impact Assessment
11.1 This project aims to make a significant contribution to the corporate agenda of closing the gap and creating sustainable communities where people choose to live across the whole of the city. A successful stock transfer will have a positive impact on all tenants and residents on the estate. All will benefit from a package of both internal and external improvements, to their homes and neighbourhood. In addition, tenants with disabilities will benefit from the delivery of aids and adaptations where required as part of the improvement works
11.2 Cultural and other diverse needs will be considered as part of developing the investment programme and provision of public services.
11.3 All consultation has been, and will continue to be inclusive and accessible.
11.4 All Registered Social Landlords are required, as a condition of their Housing Corporation registration, to comply with the Housing Corporation Regulatory Code. The Housing Corporation conducts regular monitoring to ensure compliance. The code includes the following requirements in relation to equality issues;
Housing Associations must demonstrate when carrying out their functions, their commitment to equal opportunity. They must work towards the elimination of discrimination and demonstrate an equitable approach to the rights and responsibilities of all individuals. They must promote good relations between people of different racial groups………………
The governing body must have adopted an equalities and diversity policy that covers all aspects of equalities and includes race, religion, gender, marital status, sexual orientation, disability or age.
12 Property Implications
12.1 If the stock transfer proceeds, the ownership of the land and property in Neighbourhoods/HRA ownership within the estate boundary will be transferred to Sanctuary. It is a requirement of DCLG that the freehold interest in the dwellings is transferred. Aside from the dwellings, the land and property to transfer includes some garage sites and garages, electricity sub stations and other small pieces of land. No other buildings will transfer.
13. Environmental Impact
13.1 This project aims to make a significant and positive impact on the environment, both now and into the future. At the landlord selection stage, Sanctuary demonstrated a commitment to energy efficiency and environmentally sustainable development, and this commitment has been translated into the offer. As part of the complete improvements programme, Sanctuary will replace the existing windows and doors with high performance fittings to reduce energy loss from the home. This will ensure that properties on Hyde Park continue to perform well against national standards for energy efficiency. Sanctuary also propose to retain the existing district heating system, which provides properties with a low carbon source, generated locally. Sanctuary will work alongside the supplier Veolia, to explore what scope exists to refine the system to ensure it runs at optimum efficiency levels, whilst keeping bills affordable to tenants and leaseholders on Hyde Park. Sanctuary are also exploring the use of recycled materials for the provision of fencing on the estate. Overall, the impact on the environment will be a matter for consideration throughout the housing management process as well as the investment programme.
14 Management Agreement with Alpha TMC
14.1 The Council currently has a Management Agreement in place, which formally sets out the delegation arrangements for Alpha TMC to carry out some housing management at Hyde Park Walk and Terrace on the Council’s behalf. This Agreement will terminate upon the transfer of the properties and Alpha TMC have been given notice of this as required by the Management Agreement.
14.2 In accordance with the Management Agreement, the Council must give written notice of the termination of the Agreement, to the Secretary of State. This must be done within one month of the termination.
15 Close of the Better Homes Better Neighbourhoods Project
15.1 This will be the final report of the Better Homes Better Neighbourhoods Project. The project was approved in a Cabinet Report on 19 February 2003 as a response to the Government’s ‘Communities Plan’. This set the challenge of requiring each Council to ensure all Council housing met the Decent Homes Standard (DHS) by 2010/11. It also required that by July 2005, a fully funded strategy for delivering the DHS should be in place. The total cost in Sheffield was estimated at around £1bn. The actual resources expected to be available for investment by 2010/11 was around £300m. A gap of around £700m resulted. The primary objectives of the project were therefore:
· To conduct an incremental neighbourhood based Option Appraisal process that would allow tenants to identify their preferred local investment solution
· To achieve a mixed investment solution to generate the additional £700m investment required
· To contribute towards the Council’s ‘Successful Neighbourhoods’ objective.
· To make funding and programme applications to the Government’s Department for Communities and Local Government (previously ODPM)
15.2 Between 2003 and 2006, the project has achieved its challenging objectives and has delivered;
- Investment solution recommendations by 10 Neighbourhood Commissions.
- A strategy approved and signed off by DCLG to achieve investment for the Decent Homes Standard for all 54,000 Council owned homes in the city
- Establishment of the Sheffield Homes ALMO
- A significant extension of tenant participation in decision making through the establishment of the Sheffield Homes Parent and Local Boards
- 10 separate extensive consultation programmes and tenants’ ballots which confirmed tenant support for the ALMO option.
- Allocations of over £500m under Rounds 3, 4 and 5 of the Government’s ALMO programme
- The securing of substantial investment in the Shiregreen estate by a stock transfer to Sanctuary Housing Association after an 86% vote in favour by tenants, along with the security of a 30 year funding plan.
- The securing of substantial investment in the Wisewood, Wadsley, Loxley estates by a stock transfer to Pennine Housing 2000 Housing Association after a 76% vote in favour by tenants, along with the security of a 30 year funding plan.
- Places on the 2006 LSVT programme for Woodthorpe, Lower Manor, Manor Park, Harold Lambert Court, Wybourn, Richmond Park and Birklands and Hyde Park Walk and Terrace. The securing of substantial investment in the Manor and Castle estates through stock transfers with extremely high ballot turnout figures compared to traditional rates of engagement.
15.3 In summary, at the outcome of the Better Homes Better Neighbourhoods project, the Council has a strategy and associated investment in place to deliver a £1billion programme of improvements to the homes and neighbourhoods of all of the city’s council housing stock. This has been delivered through a unique and intense programme of tenant consultation that has achieved high levels of engagement and understanding amongst tenants.
15.4 The Housing and Neighbourhood Investment Team, within Housing Strategy have been the project team dedicated to delivering the BHBN project. There are, therefore, Human Resource implications for the project team as a result of the pending close of the project. A workforce reduction process is now in place to aid employees to secure a new post within the Council and prevent, wherever possible, a situation of redundancy. Out of the thirteen team members, nine have already secured new positions, both within and outside of the service.
15.5 The timescales for the final stage of the project are as follows:
· First wave of employee reduction 2 January 2007
· Second wave of employee reductions 1 February 2007
· Final ballot results 2 February 2007
· Manor and Castle transfers March/April 2007
· Hyde Park transfer May/June 2007
· Project close June 2007
16. Recommendations
1) Subject to the Secretary of State’s consent, the dwellings at Hyde Park Walk and Terrace be transferred to Sanctuary Housing Association
2) The Director of Housing in consultation with the Assistant Chief Executive Legal and Governance and the Director of Corporate Resources negotiate and finalise Transfer and Development Agreements together with associated agreements with Sanctuary Housing Association, and take all such other steps as are necessary to complete the transfer.
3) Council be recommended to apply to the Secretary of State, under Section 32 Housing Act 1985, for consent to transfer the associated dwellings to Sanctuary Housing Association.
4) The Director of Housing in consultation with the Assistant Chief Executive Legal and Governance be authorised to negotiate and agree any necessary changes, including partial assignment of the agreement, to the Construction and Building Services Agreement made between the City Council and Kier Sheffield LLP.
5) Recognise the achievements and approve the arrangements for the closure of the Better Homes, Better Neighbourhoods Project.
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