Four years ago when the Affordable Homes Programme was introduced, we unquestionably entered a new era of development.
In essence, the fundamental points are, to some degree, what most landlords strive for.
Meeting local needs and priorities, addressing demographic challenges, countering stock discrepancies and ensuring value for money are elements at the heart of all good housing business plans regardless of Government policy.
From an economic development perspective, it was the certainty the funding brought that was welcomed most warmly.
As the 2011/15 programme draws to an end, we are in a position to assess it and look at how the 2015/18 programme will see us improve the methods we employ as home building landlords.
JV North, the consortium of 10 landlord members that I Chair (and I’m sure the rest of the sector too) has far greater understanding of the arena we now operate in.
Cast your mind back to 2011 and as well as the new way of providing development grant, we had to introduce a whole new product – Affordable Rent – at a similar time to when welfare reform was being overhauled.
We now have a better understanding and more experience.
And perhaps the biggest lesson learned is the mind set and approach needed.
While the sector got its wish and a system where funds allocated on a scheme-by-scheme basis was replaced with the certainty provided by contracts, at JV North it often felt like four individual years as opposed to a four-year programme where proof of delivery had to be made every 12 months.
This is not a criticism of the HCA, far from it.
Politicians, keen to show success, want to be able to cite results immediately.
Explaining what will be delivered in four years time doesn’t grab the headlines in quite the same way.
Now we have another long-term programme (five years when you include the two year extension) we should factor costs into business plans, deliver bigger, place-changing schemes that will make a genuine difference and give apprentices comprehensive experience.
JV North built over 1,000 homes during the first programme and will be approaching the 2015/18 round in a far more commercial way as our members provide nearly 2,000 new homes.
With the HCA retaining 25% of the fund in 2015/18, it will avoid the ‘dash for cash’ witnessed in round one and means emerging opportunities won’t be missed.
Receiving 50% at start on site and the remainder on completion reflects a better level of risk sharing while scheme specific grant means much-needed supported housing can be delivered.
More confidence and a long-term perspective will be key.
The role of framework agreements is another crucial learning point we carry forward.
Interestingly, the four-year programme took place during one of the harshest global economic recessions in generations and ended as growth, confidence and spending returned.
While frameworks are a useful tool during a diminishing construction market as we endured during the start of the 2011/15 programme, in more buoyant times, like now, they can be restrictive.
When there’s little work available, public sector frameworks are attractive.
When things pick up, contractors will receive invitations to bid for work elsewhere that’s more lucrative.
We need to learn from this.
When you have limited numbers on a framework like JV North and only half bid, we have to ask the question ‘are we achieving the best price and value for money’?
This is something we, within JV North have concerned ourselves with in great detail.
We need to be efficient and we believe we are, but it will take more than that to make a step change.
We need to be innovative, that’s why the consortium has carried out pilot schemes using modern methods of construction and continues to explore possibilities with others in the North West.
We have to make the money go further whilst constantly raising the quality of what we build and like so many other industries modern technologies may help us do that.
Creating long-term relationships is vital. The commercial imperative boils down to price but the softer side focusing on relationships needs to take on more importance.
While developing landlords need to take a long-term view, so too do contractors as there will inevitably be another downturn when frameworks will once again appeal.