MIDDLESBROUGH COUNCIL

EXECUTIVE REPORT

Grove Hill Relocation Assistance Scheme (GHRAS)

Executive Member for Regeneration and Economic Development
Director of Regeneration – Kevin Parkes

Date 10th Feb 2010

PURPOSE OF THE REPORT

  1. The purpose of this report is to seek approval to a policy defining the terms of the discretionary support package to be offered to owner occupiers in Grove Hill who are directly affected by the current regeneration proposals. The principle of offering such a package was approved by the Executive on 26 November 2009.
SUMMARY OF RECOMMENDATIONS
  1. The summary of the recommendations is as follows:

i)the establishment of the Grove Hill Relocation Assistance Scheme (GHRAS), as set out in the policy in Appendix 2, for owner occupiers directly affected by the regeneration proposals;

ii)that the GHRAS payment be registered as an HM Land Registry charge on the property for a period of five years; and,

iii) that properties purchased by the Council be managed by Erimus Housing on payment of a negotiated fee.

IF THIS IS A KEY DECISION WHICH KEY DECISION TEST APPLIES?

It is over the financial threshold (£75,000) / 
It has a significant impact on 2 or more wards / 
Non Key / x

DECISION IMPLEMENTATION DEADLINE

  1. For the purposes of the scrutiny call in procedure this report is

Non-urgent / 
Urgent report / x

BACKGROUND AND EXTERNAL CONSULTATION

  1. On 26th November 2009 the Executive approved the draft final option of the Area Regeneration Framework (ARF) for Grove Hill. The ARF, subject to adoption as a Supplementary Planning Document (SPD), will provide the way forward and vision for the neighbourhood, as well as a delivery and implementation programme.
  1. Approval in principle was also given to offer financial assistance to displaced owner-occupiers over and above statutory compensation on a similar basis to the current Older Housing Relocation Assistance Scheme (OHRAS). This would assist in the acquisition of owner-occupied properties in the affected area in order to assemble sites for redevelopment.
  1. In qualifying cases, the additional assistance will be payable towards the cost of acquiring a relocation property, where the cost of the relocation property exceeds the value of the property being acquired by the Council.
  1. Statutory home loss and disturbance payments will also be made as part of the rehousing compensation. Statutory home loss is calculated as 10% of the property value or £4,700, whichever is the greater. Disturbance payments are for costs associated with moving and are assessed individually.
  1. The principal features of GHRAS are outlined in Table 1.

Table 1 – Summary guide to GHRAS

What / Financial assistance to help property purchase
Where / Grove Hill proposed clearance area*
Who / Owner occupiers
Criteria / Owner is not means tested. Property must be sole or principal residence.
Conditions / Up to £15,000 available providing residents relocate within the Middlesbrough local authority area.
Home loss to be put towards purchase, with £4,700 retained by owner.
Must remain in property for five years or repay the assistance (the proportion of assistance to be repaid will reduce by 20% per annum from the date of the award).

* Appendix 1 shows the Grove Hill proposed clearance area (subject to being adopted within Council planning policy as an SPD)

  1. The GHRAS policy is based on existing packages of support available in Gresham (OHRAS) where it was an objective of the Older Housing Strategy to encourage owners to relocate in nearby areas. In the case of OHRAS, the maximum amount of support is payable only if the owner-occupier moves within the defined Older Housing Area. Outside of this area, a lower amount applies, provided the relocation property is within the Middlesbrough administrative area. In the case of Grove Hill, there is concern that there is insufficient choice and quality in the immediate Grove Hill area for this two-tier level of assistance to be a workable option. For this reason, it is proposed that the maximum level is applied in all cases where the relocation property is within the Borough boundary as there is no sound, policy-based rationale for a tighter area of eligibility. Appendix 2 contains the proposed GHRAS policy, including details on eligibility criteria and conditions that will apply for its implementation.
  1. The proposed level of assistance to be provided by GHRAS was determined following a comprehensive analysis of property transactions and house price changes across the whole of the wider neighbourhood (Beechwood, Saltergill, Easterside, etc). Comparisons between the average price of property and the market value of owner-occupied property in the proposed clearance areas of Grove Hill determined the level of assistance required. Table 2 below shows that the level of proposed assistance is sufficient to bridge the price gap between the properties in the Grove Hill proposed clearance area and comparable properties in the adjacent area.

Table 2 –Area average property prices 2009[1]

Sub Area / Average price
Grove Hill proposed clearance area / £65,900
Adjacent area* / £82,500

* The adjacent area includes parts of Beechwood, Saltersgill and Easterside.

  1. The valuations for properties to be acquired will be carried out on the basis that the properties are to be sold as if on the open market.
  1. There has been extensive consultation with the local community throughout the development of the ARF, this has included three drop all day drop-in sessions, along with the recent weekly drop-ins at local venues (weekly drop-in over a period of eight weeks), previous one to one home visits, and with ongoing consultation with the Grove Hill Residents’ Consultative Group. This has highlighted general concerns of owner-occupiers, who may be affected by the proposals, over their ability to afford the cost of a replacement home. The purpose of relocation assistance is to enable owner-occupiers to purchase a replacement property of a similar standard in a similar area. The research undertaken by the Council shows that the proposed GHRAS provides a sufficient level of assistance to do this. Residents who are eligible for GHRAS payments will be advised of the situation during proposed one to one visits and throughout the acquisition and relocation process. Information will also be incorporated into any published guidance.
  1. As previously agreed (Executive decision 26 November 2009) the Council will utilise its Growth Point funding allocation (total of £802,000 for 2009/10 and 2010/11) to acquire the privately owned properties (including home loss and disturbance) and pay the GHRAS element. The Council’s Housing Regeneration team will lead on this process, with assistance from the Valuation and Estates and Legal Services departments. Erimus Housing officers will assist and support the team in order to provide residents with a comprehensive set of housing solutions. Case officers will be assigned to each household and will assist residents throughout this process.
  1. Once the Growth Point funding is used up, responsibility to acquire further properties will need to be agreed between Erimus Housing and the Council unless the Council elects to utilise:

a)its share of the receipt anticipated from the development of the Roworth Road site (expected during 2010/11); or,

b)a portion of its SHIP allocation.

No decision is required on this at the present time since the framework for funding contributions and delivery responsibilities is currently in discussion between the Council, Erimus and the HCA with a view to agreeing a memorandum of understanding, funding agreement or joint venture agreement. Regardless of who is acquiring the owner-occupied properties, the Council will continue to be responsible for the discretionary GHRAS payment. In view of this, a programme of acquisition will be agreed with Erimus to ensure that sufficient resource is available to meet this commitment. Erimus Housing has indicated that it will be phasing its own decanting policy in accordance with resource availability and it is understood that this will relate to the availability of receipts from Roworth Road. Consequently, the Council will also have access to this additional funding source at the point that Erimus commences acquiring owner-occupied properties.

  1. It has been agreed in principle that once the Council has acquired a property and it has been stripped and secured, Erimus Housing will monitor the properties and be responsible for responding to any breaches on a recharge basis. In carrying out this service on behalf of the Council, Erimus Housing is subject to the same procurement regulations as the Council. Eventual demolition will also be procured by Erimus Housing in association with clearance of residential properties for redevelopment.
  1. Erimus Housing already manages the majority of empty properties in the neighbourhood and has appropriate arrangements in place to include management of Council owned properties. As the number of properties the Council can buy with current resources is in the region of five to seven, it is not considered cost effective for the Council to procure external services to manage such a small number of properties.

EQUALITY IMPACT ASSESSMENT

  1. An Equality Impact Assessment has been carried out (and is attached as Appendix 3). By its nature the GHRAS is targeted at a small number of eligible households who will qualify for the proposed support, though its implementation may be phased due to the availability of resources. However, within this group each household will have exactly the same access to the benefits of the policy.

OPTION APPRAISAL/RISK ASSESSMENT

  1. The level of financial support could be decreased, but research has demonstrated that it would be unlikely that owners could secure a similar standard of property elsewhere and would therefore be less inclined to move, which in turn, would slow down the process of site assembly and subsequent redevelopment.
  1. There is a risk that take-up of GHRAS will be higher than the Council is able to immediately accommodate due to limited resources. In this case, there will be a further assessment of each household on a case by case basis to prioritise applicants based on individual circumstances and the priorities established by any agreed phasing plan.

FINANCIAL, LEGAL AND WARD IMPLICATIONS

  1. Financial Implications - Assistance offered for the GHRAS scheme will be funded via the Council’s current 2009/10 and 2010/11 Growth Point funding estimated to amount to £802,000. This will be utilised for property acquisition, the GHRAS element and services to Erimus Housing for the management of properties and associated security costs, subject to resources being available. There are 36 privately owned properties in the affected area of which ten are privately rented and thus would not qualify for GHRAS. Experience in other similar schemes has shown that there is unlikely to be a 100% take-up as owners often prefer to change tenure to rented accommodation. Future funding options may be available through the Council’s SHIP allocation, though allocation beyond 2010/11 is not yet known. The Council may also elect to use its share of the anticipated receipt from Roworth Road for this purpose. The first tranche of this receipt is expected in 2010/11. There may also be contributions into the proposed Joint Venture for the area.
  1. Ward Implications - Resources for the delivery of GHRAS will be targeted mainly at Clairville Ward although the regeneration scheme includes part of Beechwood Ward. Ward Members will be briefed prior to Executive consideration.
  1. Legal Implications – Approval is sought to register the GHRAS payment as a direct charge with HM Land Registry rather than operating as a local land charge. This will provide greater protection for the Council to reclaim its outlay if the properties are sold within the timescales set out in the policy. This charge may have to be a second legal charge, to enable owner-occupiers to secure a mortgage on the property.
RECOMMENDATIONS
  1. It is recommended that the Executive Member approves:

i)the establishment of the Grove Hill Relocation Assistance Scheme (as set out in the policy in Appendix 2) for owner occupiers directly affected by the regeneration proposals;

ii)that the GHRAS payment be registered as an HM Land Registry charge on the property for a period of five years; and,

iii)that properties purchased by the Council be managed by Erimus Housing on payment of a negotiated fee.

REASONS
  1. Approval of the GHRAS policy will facilitate the purchase of properties, and secure progress on the regeneration proposals.
  1. By registering the GHRAS assistance as a HM Land Registry charge rather than a local charge, greater protection will be provided for the Council if the property is disposed of within the five-year period.
  1. Entering into a management agreement with Erimus Housing will ensure properties are kept secure until arrangement can be made for their demolition.
BACKGROUND PAPERS

The following background papers were used in the preparation of this report:

Grove Hill Executive Report 26th November 2009

AUTHOR: Nasreen Nazir

TEL NO: 729147

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Address: PO Box 99A, Town Hall, Middlesbrough TS1 2QQ

Website:

[1]Taken from figures from Joint Strategy Unit and Land Registry records – November 2009