The development strategy to deliver 1,000 new affordable homes was agreed by the Policy and Resources Committee on 19^th January 2022. As part of the agreed strategy there is an expectation that 50% of affordable homes delivered will be from non-council owned sites.

To support this programme an opportunity has arisen to purchase a site with outline permission submitted, for 10 apartments consisting of 2 x 1 beds and 5 x 2 beds, 3 x 3 beds and commercial space at ground floor.

Once built the apartments will be let at Affordable Rent, with rents set at 80% of prevailing market rent, but capped at Local Housing Allowance.

The Executive is asked to approve the purchase of the proposed freehold acquisition. The site is tenanted with a 5-year agreement, at a passing rent of £9,000 per annum. A mutual break clause is in place with a 6-month notice period.

1.  That the financial returns for the proposed acquisition as shown in Appendix 1, which is part 2 of the report, which support the Housing Development and Regeneration Investment Plan and the overall Development Strategy be approved.

2.  That the Director of Finance, Resources and Business Improvement be granted delegated authority to:

a)  Negotiate terms for the purchase of the site, for the sum as shown in the Exempt Appendix 1 of this report.

b)  Procure and enter into all such deeds, agreements, contracts, and documents which may be required to facilitate the purchase of the site and the subsequent redevelopment works required to deliver the scheme referred to in this report. Including (but not limited to) any related appointments such as suitably qualified consultants and Contractor.

c)  Subject to satisfactory conclusion of all due diligence, to negotiate and finalise and complete all legal formalities, deeds and agreements which may be required to facilitate the purchase.

3.  That the Head of Mid Kent Legal Services be authorised to appoint the solicitors required to negotiate and complete the necessary contract documentation, deeds and agreements associated with the purchase and construction works on the terms as agreed by the Director of Finance, Resources & Business Improvement.

4.  That, post completion of the procurement process, to employ the necessary consultants to progress the planning application. To appoint a contractor to bring forward for approval to this Committee a detailed project delivery and investment plan (prior to the development itself commencing)

1.1  An outline planning application was submitted for a potential development site by a third party in 2021 for 2 x2beds, 5x2beds, 3x 3beds and class E commercial scheme at ground floor level. The decision is pending.

1.2  The Council now proposes to acquire the site and deliver the development.  The proposed acquisition will provide 10 apartments and commercial space, subject to planning. The application drawings are shown in Exempt Appendix 2.

1.3  The proposed site will be acquired with an existing tenant in occupation, with the benefit of a 5-year lease agreement starting in 2021. The agreement includes a mutual break clause on six months’ notice at any time.

1.4  On advice from the legal team, notice will be served to the existing tenants in order to obtain vacant possession of premises, at the appropriate time.

1.5  It is proposed the development will be delivered as 100% affordable housing. There are 10 proposed car park spaces and the scheme will be designed to national space standards.

1.6  The Council’s offer for the proposed acquisition for the freehold of the site has been accepted (subject to committee approval, satisfactory contract, surveys and RICS valuation). The offer is based on a market valuation.

1.7  The offer is subject to an overage clause of £35,000 per flat, if the scheme is consented for more than 10 flats, not including the commercial space on the ground floor, within 20 years of the acquisition. We are confident due to planning constraints; we do not anticipate additional units.

1.8  A full schedule of accommodation along with the estimated market rent per unit, per calendar month (PCM) and subsequent total gross market rent per unit, per annum is summarised below:

All affordable housing will be let as Affordable Rented homes with rents set at 80% of market rent but capped at the local housing allowance as shown in table above. The homes will be let for Affordable Rented Housing to households on the Councils Housing register in accordance with allocations scheme policy.

Financial Return and Commitments

1.8.1  The total Gross Rent for the scheme and subsequent total Net rent for the scheme after the deduction of allowance (before inflation and interest) is £81,924 and £71,347 respectively. The part 2 Appendix 1 shows the relevant financial scheme summary.

1.8.2  The overall returns are reasonable, especially in terms of affordable housing. However, the costs ratio is significantly above the required level mainly due to the unprecedented increase in build costs seen recently in the Southeast.

1.8.3  It is anticipated that part of the Total Scheme Cost will be funded by MBC applying for grant from Homes England as part of the Continuous Market Engagement bid process for the Affordable Homes programme 2021-2026. The remainder of the Total Scheme Cost would be funded from the existing approved capital programme to support the delivery of affordable housing.

1.8.4  The acquisition is financially viable and meets the Council’s minimum internal financial parameters. It will provide much needed affordable homes in the area.

1.8.5  These properties will be managed by MBC Housing Management Team, which is within the Housing and Community Services Department. The team will be responsible for all tenant contact including repairs, voids, maintenance compliance and rent management.

1.9  Proposed Delivery Timescale:

1.9.1  Details of the proposed delivery timescale are given below. The dates should be regarded as indicative at this stage as the Council may need to extend/amend the timetable as necessary.

2.  Consultation results and previous committee feedback

2.1  Previous committee feedback has expressed the desire for MBC to acquire potential housing led sites within the Maidstone Borough to deliver housing for social housing purposes for the benefit of the local community. This proposal achieves that intention.

2.2  This acquisition will be considered by the Communities, Housing and Environment Policy Advisory Committee on 17 January 2023, and the Committee’s comments and recommendations will be reported to the Executive.

3.1  Option 1 (APPROVED): The purchase of the proposed acquisition is approved. On approval of planning consent, professional consultants and a contractor will be procured to deliver the scheme. This site when built would assist with housing provision for single person and families in need of affordable housing, contributing towards delivering the development strategy of 1,000 affordable homes.

3.2  Option 2 (REJECTED): The purchase of the proposed acquisition is not approved. The Council would however lose an excellent opportunity to purchase a site close to public transport and other amenities to add to its affordable housing stock. It will assist towards much needed accommodation in the Borough and contribute towards the Council’s target of 1,000 Affordable homes.