Camden housing development needs private sector to reduce risk
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Photo: Sara, Flickr
London Borough of Camden is set to bring in private sector help to overcome challenges delivering a programme which uses housing development to fund services.
The council’s Community Investment Programme (CIP) was launched in 2010 aimed at raising £300m to bridge its capital funding gap and cuts from central government grants.
But the council now says that without private sector partnership, it could struggle to meet the programme’s aims within its 15-year timescale.
A report agreed by the council’s cabinet this week said: “Working with external partners has the potential to deliver new CIP schemes without recourse to further HRA borrowing, give Camden access to external innovation and skills and reduce calls on internal resources for delivery.
“A partnership approach would limit the council’s exposure to financial risk on new projects compared to the ‘council as developer’ model.”
However, the report said that working with a private developer would come at a cost. “Any partner will require a return on their investment – and involves relinquishing some control over future projects,” it said.
In addition, finance from partners is likely to be more expensive than council borrowing, the report concluded.
Despite, this, the move is seen as the only way to overcome supply chain problems which are threatening delivery on housing schemes being undertaken as part of the project.
“…developers across all sectors are facing challenges delivering to time and cost due to a shortage of skilled labour across London in a buoyant market – but some private developers may have sufficient market power and flexibility in procurement to manage their supply chain more effectively,” the report said.
The CIP programme aims to build 3,050 homes on council-owned sites, of which 1,400 would be affordable.
It will also invest in capital improvements to schools and children’s centres, existing council housing and other community facilities.
The council said that approved projects are forecast to deliver 2,177 (71%) of the programme’s targeted homes and £259m (66%) of the targeted net capital receipts.
It said that the cost of the schemes had risen due to changes to the scope and design of some schemes in response to stakeholder consultation and higher than anticipated build cost inflation.
However, receipts have increased by 57% due to higher than anticipated house price inflation in Camden.
