7 11/249 PERTH AND KINROSS COUNCIL

Housing and Health Committee – 1 June 2011

PROPOSED COUNCIL HOUSING NEW BUILD PROGRAMME SUBMISSION TO SCOTTISH GOVERNMENT

Report by Executive Director (Housing and Community Care)

ABSTRACT This report seeks approval for a proposed submission to the Scottish Government’s ‘Innovation and Investment Fund’, for subsidy funding, to support the development of 39 local authority new build affordable units.

1. RECOMMENDATION

It is recommended that Committee:

1.1 Approve the attached proposals (appendix 1) to be submitted to the Scottish Government.

2. BACKGROUND

2.1 Since 2009, the Scottish Government, in three phases, has invited bids from local authorities for capital funding to assist in delivering new build local authority housing across Scotland.

2.2 Committee reports:

09/18 9 January 2009 Executive Sub-Committee of Housing and Health Committee

09/448 23 September 2009 Executive Sub-Committee of Housing and Health Committee

10/214 26 April 2010 Joint Executive Sub-Committee of Housing and Health Committee and Strategic Policy and Resources Committee

approved the Council’s previous successful submissions, totalling 81 units, securing £2,300,000 of Scottish Government grant.

2.3 The Scottish Government has invited local authorities to bid for a fourth ‘Innovation and Investment’ round of capital funding, with a subsidy of up to £30,000 per unit.

155

3. PROPOSALS

3.1 Delivering high quality housing in safe and secure neighbourhoods and ensuring that Perth and Kinross is a place where everyone enjoys good quality housing in a pleasant and safe environment is a key priority for Perth and Kinross Council and its partners.

3.2 Perth and Kinross Council’s submission is consistent with the investment priorities of the Local Housing Strategy and Strategic Housing Investment Plan and contributes to meeting local unmet housing needs including homelessness and high demand ‘pressure’.

3.3 Perth and Kinross Council’s overall proposal is for 39 houses on 4 sites. The house /location/size mix is outlined in table one below.

Table 1: Perth and Kinross Council Local Authority New Build Proposals Unit Nos./Size/Location

Site A - Perth Road, Scone No. Units Apartment Size Person Nos. 10 3 Apt 4 Site A Total – 10 units

Site B – Lower Oakfield, Pitlochry No. Units Apartment Size Person Nos. 6 3 Apt 4 Site B Total – 6 units

Site C - Dalchampaig Phase 2, Pitlochry No. Units Apartment Size Person Nos. 6 2 Apt 2 Site C Total – 6 units

Site D - Quinns Cinema, Blairgowrie No. Units Apartment Size Person Nos. 8 3 Apt 3 9 3 Apt 4 Site D Total – 17 units

Sites A - D Summary No. Units Apartment Size Person Nos. 6 2 Apt 2 8 3 Apt 3 25 3 Apt 4

Sites A - D Total – 39 units

156

4. CONSULTATION

The Head of Finance, Head of Legal Services, and Head of Planning and Regeneration have all been consulted on this report.

5. RESOURCE IMPLICATIONS

5.1 The total cost of creating 39 new affordable housing units is estimated to be £4,723,318 at an average cost of £121,110 per unit.

5.2 The project will be funded through three funding streams and these are:

• Scottish Government Subsidy – A potential subsidy of up to £30,000 will be made available for each new build council house. Should this full amount of funding be available it will inject £1,170,000 into the projects.

• Council Tax Income on Second Homes Reserve – The balance ear- marked for Affordable Housing within the General Fund Reserve at 31 March 2011 was £2,650,000. After applying balances to meet the cost of previously approved spending commitments and allowing for a budget of £500,000 per annum from 2011/12 onwards to support future Housing Association projects, it is anticipated that there will be £1,069,000 available which can be utilised to assist in meeting the costs of this programme and accordingly reduce borrowing costs. The utilisation of £390,000 for this programme means that the anticipated balance on the Second Homes Reserve at 31st March 2013 will be £679,000. The Housing Investment Programme presently assumes that £10,000 of Second Homes Reserve money will be used to fund each new affordable unit.

Table 2: Summary of Second Homes Reserve Expenditure Profile (including previous commitments)

Year Item 2011/12 2012/13 £000' £000' Opening Balance (2,650) (619) Existing Commitments Housing Associations Funding 384 50 Council New Build Phase 1 81 0 Council New Build Phase 2 544 0 Council New Build Phase 3 1,522 0 Anticipated New Commitments Housing Associations Funding 500 500 Council New Build Phase 4 0 390

157

Year Item 2011/12 2012/13 £000' £000' Assumed Increase in Council Tax Reserve Balance (1,000) (1,000) Balance at 31 March (619) (679)

• Prudential Borrowing – Following the application of Scottish Government Subsidy of £1,170,000 and £390,000 of anticipated income from Council Tax on Second Homes Reserve there will be a requirement to fund the remaining £3,163,318 from prudential borrowing. The annual loan charges will be approximately £205,000 on the new borrowing. This can be met from the net rents generated on the new properties of approximately £87,000 with a further contribution of approximately £118,000 per annum from the Housing Revenue Account. The overall funding strategy is summarised in table 3.

5.3 The funding strategy assumes the continuing receipt of approximately £1,000,000 per annum of Council Tax income on Second Homes Reserve. It also assumes that there will be no change to either the Council’s current policy on Council Tax discounts for Second Homes or Council Tax as a funding mechanism for local government. Whilst the risk presented by these assumptions is currently considered acceptable, the Committee are advised that should it not prove possible to realise this income or should costs increase beyond the above estimates then any shortfall in funding will require to be contained within the Housing Revenue Account budget.

Table 3: Perth and Kinross Council Local Authority New Build Proposals, Sites A- D, Capital Expenditure Profile (2011/12 prices)

Year Funding Source 2011/12 2012/13 2013/14 Total

£ £ £ £ Scottish Government Subsidy @ £30,000 per 0 1,170,000 0 1,170,000 Unit Council Tax Income on 0 390, 000 0 390,000 Second Homes Prudential Borrowing 278,130 2,867,718 16,470 3,163,318 Total 278,130 4,427,718 16,470 4,723,318

6. COUNCIL CORPORATE PLAN OBJECTIVES 2009-2012

The Council’s Corporate Plan 2009-2012 lays out five objectives which provide clear strategic direction, inform decisions at a corporate and service level and shape resources allocation. The following are relevant to this report:

158

(i) A Safe, Secure and Welcoming Environment. (ii) Healthy, Caring Communities. (iii) A Prosperous, Sustainable and Inclusive Economy. (v) Confident, Active and Inclusive Communities

7. EQUALITIES ASSESSMENT

7.1 An equality impact assessment needs to be carried out for functions, policies, procedures or strategies in relation to race, gender and disability and other relevant protected characteristics. This supports the Council’s legal requirement to comply with the duty to assess and consult on relevant new and existing policies.

7.2 The function, policy, procedure or strategy presented in this report was considered under the Corporate Equalities Impact Assessment process (EqIA) with the following outcome: Assessed as not relevant for the purposes of EqIA.

8. STRATEGIC ENVIRONMENTAL ASSESSMENT

8.1 Strategic Environmental Assessment (SEA) is a legal requirement under the Environmental Assessment (Scotland) Act 2005 that applies to all qualifying plans, programmes and strategies, including policies (PPS).

8.2 The matters presented in this report were considered under the Environmental Assessment (Scotland) Act 2005 and no further action is required as it does not qualify as a PPS as defined by the Act and is therefore exempt.

9. CONCLUSION

The purpose of this report is to seek approval for a proposed submission to the Scottish Government’s ‘Innovation and Investment Fund’, for subsidy funding, to support the development of 39 local authority new build affordable units.

DAVID BURKE Executive Director (Housing and Community Care)

Note: No background papers, as defined by Section 50D of the Local Government (Scotland) Act 1973 (other than any containing confidential or exempt information) were relied on to any material extent in preparing the above report.

Contact Officer: Stephen Rankin, Ext. No. 76174, Email: [email protected] Address of Service: 5 Whitefriars Crescent, PERTH, PH2 OPA Date: 19th May 2011

159

Stephen Rankin

160

Perth and Kinross Council

‘Innovation and Investment Fund’

Proposals Submission to Scottish Government

31 May 2011

1 161

Contents Page

1. Introduction, Strategic Planning Context and Proposals 3 Summary

2. Ability to Manage the Stock 11

3. Affordability and Financial Issues 13

4. Housing Needs and Homelessness in Perth and Kinross 20

5. Our Delivery Plan and Procurement Approach 25

6. Delivering the Maximum Number of Homes 31

7. Risk Management 33

8. Contact Details 34

9. Conclusion 34

10. Summary Proformas Sites A – D 36

11. Annex A - Sites A – D Site Plans 40

12. Annex B - Scottish Local Authority New Build Financial 44 Proforma

Appendices

1. Interim Perth and Kinross Local Housing Strategy 2009-12

2. Perth and Kinross Strategic Housing Investment Plan 20010-15

3. Perth and Kinross Homelessness Strategy 2009-12

4. Perth and Kinross Tenant Participation Strategy 2009-12

2 162 1. Introduction, Strategic Planning Context and Proposals Summary

1.1 Introduction

This is the Perth and Kinross Council’s submission to the Scottish Government for subsidy funding to support the development of a local authority new build affordable housing programme through the 2011/12 Innovation and Investment Fund.

1.2 Meeting the Criteria

Delivering high quality housing in safe and secure neighbourhoods and ensuring that Perth and Kinross is a place where everyone enjoys good quality housing in a pleasant and safe environment is a key priority for the Perth and Kinross Council and its partners.

Our proposals meet the eligibility criteria in that our proposals show that:

• Perth and Kinross Council has the ability to manage and maintain the new stock effectively.

• The developments are affordable at the available level of grant and proposed rent levels and are affordable to the tenant.

• The new homes are prioritised to contribute to meeting evidenced housing and regeneration needs as well as homelessness targets.

• Perth and Kinross Council can demonstrate that it has well developed plans to ensure delivery of the proposed new housing.

• The proposed developments fit with the Local Housing Strategy and the Strategic Housing Investment Plan

• The number of units that are being built is maximised within the resources available and not at the expense of having to compromise on design quality and quality of place.

Specifically our proposals set out that:

• The housing will be social rented and managed by Perth and Kinross Council under Scottish Secure Tenancy (SST) and are consistent with the existing stock management and maintenance approach.

• Perth and Kinross Council have high quality housing management services.

• The developments contribute to reducing per unit management costs.

3 163 • Perth and Kinross Council has the prudential borrowing capacity and other available resources to fund the new housing.

• Rent levels strike an appropriate balance between being affordable, given local market conditions and contributing to the cost of the developments.

• Resources are not needed for other purposes, for example, to meet the Scottish Housing Quality Standard (SHQS), and committing funds to a new build programme does not compromise the sustainability of the HRA.

• Have effective and robust procurement methods alongside robust delivery arrangements that are being developed or are in place already.

• The new houses contribute to reducing pressure in terms of achieving the 2012 homelessness target, helping to shorten time spent in temporary accommodation.

• The new houses contribute to meeting recognised affordable housing needs and addressing local and regeneration needs ‘hotspots’.

• The developments can be on-site by 31 March 2012.

• The new houses are additional to the existing social housing stock and are not completed already or in Council ownership.

• The Council has agreed the developments’ scope and is committed to funding the projects.

• The development’s land titles are clear.

• Are consistent with the investment priorities of the Local Housing Strategy and Strategic Housing Investment Plan.

• Consistent with requirements for Housing for Varying Needs and relevant Building Regulations.

1.3. Proposals Summary

Perth and Kinross Council is confident that our proposals meet the above mentioned principles and supporting detailed eligibility criteria. The creation of new housing within existing neighbourhoods is intended to address identified housing need for social rented accommodation within the specified locations.

It is the aim of the Council to achieve balanced and sustainable communities and the provision of affordable rented accommodation which is accessible, sustainable and energy efficient will assist the Council to achieve this. It is also an objective of the Council to utilise unused and gap sites to bring these areas back into productive use for the benefit of the community as a whole.

4 164 In so doing, the use of such sites will not only address identified housing need but also improve the environment in a sustainable and productive fashion. Our proposals are for 4 separate developments totalling 39 units. Details are shown in table 1. The sites are identified in order of preference of development (i.e. Site A is first preference, site B second priority and so on).

Table 1: Perth and Kinross Council Local Authority New Build Proposals Unit nos./Size/Location

Site No. Units A Perth Road, Scone 10 B Lower Oakfield, Pitlochry 6 C Dalchampaig, Ph 2, Pitlochry 6 D Quinns Cinema, Blairgowrie 17

Sites A - D Summary Totals No. Units Apartment Size Person Nos. 6 2 Apt 2 8 3 Apt 3 25 3 Apt 4 Sites A - D Total – 39 units

Total summary development costs for our proposals are set out in table 2. Details are shown at table 5 below.

Table 2: Perth and Kinross Council Local Authority New Build Proposals Total Development Capital Costs (2011/12 prices) Summary

Sites A - D Unit Nos. 39 Works £3,373,390 Demolition £73,419 Consultancy fees £657,466 Site acquisition £565,000 Local authority charges £31,769 Site investigation £22,274 Total £4,723,318 Average unit cost £121,110

A provisional timeline summary with milestones is shown below.

Site A - Perth Road, Scone - Milestones

Milestone Dates

• Approval to proceed 1/9/11 • Start on site 23/1/12 • Construction Period 40 weeks • Contract Completion 29/10/12

5 165 Site B - Lower Oakfield, Pitlochry – Milestones

Milestone Dates

• Approval to proceed 01/09/11 • Start on site 01/03/12 • Construction Period 52 weeks • Contract Completion 28/02/13

Site C - Dalchampaig, Phase 2, Pitlochry - Milestones

Milestone Dates

• Approval to Proceed 1/9/11 • Start on site 12/12/11 • Construction Period 40 weeks • Contract Completion 14/9/12

Site D - Quinns Cinema, Blairgowrie - Milestones

Milestone Dates

• Approval to proceed 1/9/11 • Start on site 29/9/11 • Construction Period 60 weeks • Contract Completion 22/11/12

Our proposals are part of a larger ongoing Perth and Kinross Council programme which includes, (from previous successful bids to the Scottish Government for funding), a total of 81 units combined from the first three phases of the Scottish Government’s ‘Kick Starting’ and ‘Incentivising’ local authority new house building programmes.

Table 3: Perth and Kinross Council Local Authority New Build Proposals, Sites A-D, Capital Expenditure Profile (2011/12 prices)

Year Funding Source 2011/12 2012/13 2013/14 Total

£ £ £ £ Scottish Government Subsidy @ £30,000 per 0 1,170,000 0 1,170,000 Unit Council Tax Income on 0 390, 000 0 390,000 Second Homes Prudential Borrowing 278,130 2,867,718 16,470 3,163,318 Total 278,130 4,427,718 16,470 4,723,318

6 166 For 39 units, the average unit costs are £121,110. Figures are based on costs, supplied by other developing Registered Social Landlords, for the projects identified in the Strategic Housing Investment Plan. Total development capital costs are estimated at £4,723,318. Funding sources and capital expenditure are shown in Table 3.

1.3 The Strategic Planning Context

1.3.1 Scottish Government’s National Housing Priorities

The Scottish Government’s has set out its national housing priorities in ‘Homes Fit for the 21st Century’. These include a vision:

• For a housing system which provides an affordable home for all, to achieve a strong recovery in the construction sector and a substantial increase in the number of homes of all types, including housing to meet the needs of disabled people and older people for independent living.

• Improving in the quality of housing, so that everyone has a warm and comfortable home, whether they own it, part own it, rent it privately, or rent from a social landlord.

The Scottish Government’s four major housing-related targets are that by:

• December 2012, all unintentionally homeless households will be entitled to settled accommodation.

• April 2015, all social landlords must ensure that all their dwellings pass all elements of the Scottish Housing Quality Standard.

• November 2016, so far as is reasonably practicable, nobody will be living in fuel poverty in Scotland.

• December 2020, improved design and greater energy efficiency in housing will have made a contribution to Scotland’s commitments to reduce our energy consumption by 12% and our greenhouse gas emissions by 42%.

These are translated into the strategic objectives of

• To build the new, high quality, affordable homes, (including social housing), to meet current need and the demand arising from Scotland’s growing and ageing population.

• To maximise the sustainable housing options available across all tenures, including for people living on lower incomes, and to significantly improve the quality of the existing housing stock and the places we create.

The Scottish Government’s vision of a Scotland that is greener, safer, smarter, healthier, wealthier and fairer is aligned with the Council’s priorities.

7 167 1.3.2 Local Policy Context

The Perth and Kinross Council Corporate Plan 2009-12 identifies as its number one priority that ‘individuals and communities have the right to live in good quality, affordable homes, suited to their needs, in safe and secure communities’.

In particular our proposals contribute to the Single Outcome Agreement national outcome number 10 ‘We live in well designed, sustainable places where we are able to access the amenities and services we need’. Additionally our proposals contribute to Perth and Kinross Council Council’s Single Outcome Agreement which highlights as priority a local outcome number 14 of ‘Our people will have better access to appropriate and affordable housing of quality’.

The Perth and Kinross Local Housing Strategy aligned with the Community and Corporate Plans sets the strategic vision, aims and objectives and actions to support them for Perth and Kinross for housing and related matters.

Our proposals are part of the Local Housing Strategy and Strategic Housing Investment Plan. These play an important and integral role in the Council’s priorities. Local Housing Strategy objectives are fully consistent and aligned with corresponding Perth and Kinross Community Plan, Perth and Kinross Council Corporate Plan, related partner plans and the Single Outcome Agreement. This is shown in detail in section 6.2 below.

1.3.3 Partnership Processes Employed in Developing Our Proposals

The implementation and monitoring of our proposals as part of the Strategic Housing Investment Plan is overseen, on an ongoing basis, by a multi-agency Local Housing Strategy Steering Group with representation from key services within the Council, Scottish Government, NHS Tayside, Registered Social Landlord representation and sits under the umbrella of the Perth and Kinross Community Planning Partnership. The Local Housing Strategy Group is chaired by Perth and Kinross Council’s Housing and Community Care Services and is a key element in the Perth and Kinross community planning structure.

Partner involvement and consultation on the Council’s proposals for affordable housing is a continuous process. Events take place with a variety of stakeholders to ensure that all our partners and stakeholders have their say in developing priorities and associated actions. Perth and Kinross Council has hosted and took part in a number of events and processes. Specific events and processes linked to the proposals for affordable housing included:

• Bilateral meetings with respective RSLs undertaking development role on behalf of the Council.

8 168 • Consultation on development funding joint priorities and the Strategic Housing Investment Plan with Registered Social Landlords and the Scottish Government.

• Consultation on development priorities with elected member/officer working group on affordable housing.

• Involvement of corporate Affordable Housing Working Group in progressing development opportunities.

• Local Housing Strategy consultation seminars with a wide range of stakeholders (e.g. Registered Social Landlords, private developers, housing support providers) to raise awareness of Local Housing Strategy priorities.

• Monitoring and evaluating related strategies (e.g. Local Housing Strategy, Tenant Participation Strategy and Homelessness Strategy).

1.3.4 Equalities

The planning and delivery of good quality housing and appropriate information, advice and support services in Perth and Kinross embraces the principle of equal opportunities, following the lead of the Council’s Corporate Equalities Scheme.

Perth and Kinross Council Housing and Community Care Services has an Equalities Action Plan which aims to ensure that all housing and related services take positive steps towards the equalities agenda.

This means that Perth and Kinross Council will strive to encourage equal opportunities and diversity, responding to the different needs and service requirements of people regardless of sex, race, colour, disability, age, nationality, marital status, ethnic origin, religion or belief, sexual orientation or gender re-assignment.

The Council’s approach to meeting the housing needs of people with particular needs focuses predominantly on a ‘supported living’ approach which seeks to enable individuals to live independently within their own homes integrated within existing communities.

For future provision for particular needs it is envisaged that this need will be met mainly within housing for varying needs mainstream developments. The Council’s approach is to enable integrated developments to assist individuals with community care needs to live independently with appropriate support rather than develop ‘specialist’ schemes. Our proposals will strengthen this approach to integrated community care housing. This is particularly so at site a which is part of a partnership approach between the Perth and Kinross, NHS Tayside and a social care provider to deliver services for those being reprovisioned for as part of a hospital closure programme.

9 169 1.3.5 Strategic Environmental Assessment

Strategic Environmental Assessment (SEA) is a legal requirement under the Environmental Assessment (Scotland) Act 2005 that applies to all qualifying plans, programmes and strategies, including policies (PPS).

The proposals within this document are a supporting element of the Local Housing Strategy and, as such, after consideration of the analysis provided to the SEA Gateway by the Council, the Council has received confirmation from the SEA that the Local Housing Strategy is not likely to have significant environmental effects. Therefore the Council will proceed to make a “screening determination” and submit this to the Scottish Government. This will then be publicised including a notice being placed on the Council website.

10 170 2. Ability to Manage the Stock

2.1 Housing Management Services

Perth and Kinross Council Housing and Community Care services has a business network of offices across the local authority area serving our tenants and other clients. The offices have dedicated professional housing officers and assistants to oversee the management of our housing stock. Our neighbourhood services are decentralised and main contact will be with the local area team and in particular the local housing officer.

In addition each area has a property inspector who is available for advice on repair issues. General repairs are reported direct to our dedicated call centre via the Repairs Finder booklet and work required will be scheduled via the “Job scheduler” online and an appointment offered. All our housing management information is held in our ‘Northgate Integrated Housing Management System’. This includes integrated comprehensive management information stock data base including condition surveys, gas servicing records etc. Local housing management arrangements are as follows:

• Site A - the proposed 10 units in Perth Road, Scone, are in the Scone letting area and will be managed by the City/Central Area Team based in Perth.

• Site B - the proposed 6 units in Lower Oakfield, Pitlochry, are in the Pitlochry letting area and will be managed by the North Area Team based in Blairgowrie.

• Site C - the proposed 6 units in Dalchampaig, Pitlochry, are in the Pitlochry letting area and will be managed by the North Area Team based in Blairgowrie.

• Site D - the proposed 17 units in Blairgowrie are in the Blairgowrie letting area and will be managed by the North Area Team based in Blairgowrie.

Local teams report to the Area Housing Manager who in turn reports to the Neighbourhood Services Manager and then the Head of Housing Services. Our proposals include for the provision of Scottish Secure Tenancies for all prospective tenants.

2.2 Quality of Housing Management Services

Following the publication of the then Communities Scotland inspection report of our housing service in April 2007 we developed an improvement plan which was accepted by the Scottish Housing Regulator in December 2007. Since the inspection, the council has continuously developed its plan to improve the service. The improvements are evidenced in that for example:

11 171 • Our repairs service is the 3rd highest performing local authority reporting an average of 97.7% of repairs completed within target. (Audit Scotland 2010).

• Our voids rent loss performance has improved year on year since 2006 reporting 0.9% in 2010. This figure has improved further in 2010/11 to 0.7%. (Audit Scotland 2010).

• 100% of our properties gas central heating were serviced within 12 months of the previous service. This compares to a group average of 93%, (the group is made up of 31 local authorities and Glasgow Housing Association), of the Scottish Housing Best Value Network of 97%. (SHBVN).

• 96% of tenants who have reported a repair were satisfied with the service provided (PKC Northgate management information service).

• Our average rental costs are below the group average of the Scottish Housing Best Value Network (SHBVN 2010).

In addition, a re-inspection of our homeless service during 2010 highlighted significant improvements which resulted in a ‘B’ Grading. The Scottish Housing Regulator’s overall assessment is that ‘Perth and Kinross Council’s homelessness service has significantly improved since their last inspection. They found that ‘the Council has responded well to address the weaknesses identified in their last report. The council has done this in a relatively short timescale and has effectively improved its approach to providing services for homeless people. Perth and Kinross Council can evidence that it has made significant improvements across the service’.

2.3 Per Unit Management Costs

Our proposals for a total of 39 units will be managed effectively through our existing structures with little impact on our supervision and management costs. Our proposals will have a minor positive impact on an overall reduction in per unit management cost (see Annexe B).

12 172 3. Affordability and Financial Issues

3.1 Resources Required for Our Development Proposals

The cost of developing housing to meet Local Housing Strategy priorities varies depending on the area and/or type of housing required. The cost of developing new provision in high pressure areas is more expensive due to higher land values. However increasing provision in these areas remains the highest priority due to the acute shortage of affordable rented accommodation and the impact that this shortage has on the Council’s ability to meet housing need and Scottish Government’s homelessness targets.

In some parts of Perth and Kinross, as well as a shortage of affordable housing, there is a lack of housing choice, in terms of type or tenure. In such areas the Council undertakes an option appraisal to assess the long term viability of the stock and the need for re-provisioning to provide a better housing mix to meet for needs and aspirations.

To help us achieve these aims our proposals are set out in table 4. The sites are identified in order of preference of development (i.e. Site A is first preference, site B second priority and so on). Priority has been assessed using the same option appraisal matrix as employed in the Strategic Housing Investment Plan. Priority is assessed using a series of appraisal criteria and include:

• Contribution to Single Outcome Agreement and LHS objectives. • Contribution to meeting significant local housing need. • Deliverability. • Inclusion, equality and meeting particular needs. • Impact on communities and regeneration. • Contribution to meeting strategic housing need profile defined by Housing Needs and Demand Assessment.

Due regard has also been given partnership working and value for money in prioritising projects.

Our proposals are for 4 separate developments totalling 39 units. If successful our proposals will be part of a larger ongoing programme which includes, (from previous successful bids to the Scottish Government for funding), a further 81 units, to date, combined from the first three phases of the Scottish Government’s ‘Kick Starting’ and ‘Incentivising’ new local authority house building programmes.

13 173 Table 4: Perth and Kinross Council Local Authority New Build Proposals Unit Nos./Size/Location

Site A - Perth Road, Scone No. Units Apartment Size Person Nos. 10 3 Apt 4 Site A Total – 10 units

Site B – Lower Oakfield, Pitlochry No. Units Apartment Size Person Nos. 6 3 Apt 4 Site B Total – 6 units

Site C - Dalchampaig, Pitlochry No. Units Apartment Size Person Nos. 6 2 Apt 2 Site C Total – 6 units

Site D - Quinns Cinema, Blairgowrie No. Units Apartment Size Person Nos. 8 3 Apt 3 9 3 Apt 4 Site D Total – 17 units

Sites A - D Summary No. Units Apartment Size Person Nos. 6 2 Apt 2 8 3 Apt 3 25 3 Apt 4

Sites A - D Total – 39 units

For the 39 units, the total development costs are £4,723,318. The average unit cost is £121,110 Figures are based on real costs, supplied by the Registered Social Landlords, for projects identified in the Strategic Housing Investment Plan.

Total development capital costs are estimated at £4,723,318. Funding sources and anticipated capital expenditure profile is shown by year alongside funding sources details in table 6. These development costs do not include exclusions such as:

• Unknown abnormalities in site conditions. • Exceptional service upgrades beyond site boundaries. • Contributions to infrastructure beyond site boundaries. • Any specialist consultancy fees.

14 174 Table 5: Perth and Kinross Council Local Authority New Build Proposals Unit nos./Size/Location

Site A Site B Site C Unit Nos. 10 6 6 Works £900 000 £521,982 £520,360 Demolition - - £20,367 Consultancy fees £191,411 £90,276 £63,894 Site acquisition £200,000 £90,000 £50,000 Local authority charges £12,000 £3,859 £4,128 Site investigation £12,000 - - Total £1,315,411 £706,117 £658,749 Unit cost £131,541 £117,686 £109,792 Average cost/m2 floor area £1,491 £1,577 £1,629

Site D Total (Sites A-D) Unit Nos. 17 39 Works £1,431,048 £3,373,390 Demolition £53,052 £73,419 Consultancy fees £311,885 £657,466 Site acquisition £225,000 £565,000 Local authority charges £11,782 £31,769 Site investigation £10,274 £22,274 Total £2,043,041 £4,723,318 Unit cost £120,179 £121,110 Average cost/m2 floor area £1,714 -

The assumptions that have been used to calculate funding requirements include that the subsidy of £30,000 per house is available from the Scottish Government. No allowance has been made for inflation in development costs. In addition, the Council anticipates being able to apply £390,000 of Council Tax income on Second Homes over the construction phase of the project leaving 3,163,318 to be met through prudential borrowing.

The annual loan charges will be approximately £205,000 on the new borrowing. This can be met from the net rents generated on the new properties of approximately £87,000 with a further contribution of approximately £118,000 per annum from the Housing Revenue Account. The Council currently raises approximately £1,000,000 per annum from the discretionary discount on Council Tax income on Second Homes which is employed for investment in the provision of affordable housing.

15 175 Table 6: Perth and Kinross Council Local Authority New Build Proposals, Sites A- D, Capital Expenditure Profile (2011/12 prices)

Year Funding Source 2011/12 2012/13 2013/14 Total

£ £ £ £ Scottish Government Subsidy @ £30,000 per 0 1,170,000 0 £1,170,000 Unit Council Tax Income on 0 390,000 0 390,000 Second Homes Prudential Borrowing 278,130 2,866,719 16,470 3,161,319 Total 278,130 4,426,719 16,470 4,721,319

In addition to the Scottish Government subsidy funding used to deliver our proposals, Council Tax income from the reduction of discount for empty and second homes fund will be employed alongside prudential borrowing. The Council is confident that from rental income generated by the new units and existing capacity within the Housing Revenue Account Budget there will be sufficient resources to meet loan charges associated with the prudential borrowing. Committing funds to a new build programme does not compromise the sustainability of the HRA, (e.g. including the ability to meet the SHQS Delivery Plan), as Annexe A illustrates.

The financial capacity of the Council to deliver is demonstrated in detail in Annexe A alongside key assumptions (e.g. current and projected unit debt and loan charges to rent ratio). Annex A also shows in detail the projected changes in rent in relation to projected changes in unit costs.

3.2 SHQS Standard Delivery Plan

In July 2003, the Perth and Kinross Council adopted a ‘Retention Plus’ strategy following a stock options appraisal with Council tenants voting to retain the Council as their landlord. A Business Plan including a rent strategy was agreed with tenants.

A Scottish Housing Quality Standard (SHQS) Delivery Plan (SDP) was approved by the then Communities Scotland, now Scottish Government Housing Investment Division, in July 2006. The investment estimates in the SDP were prepared using information obtained from a stock condition survey carried out in 2005. Updated annually, the approved SDP forms the basis of Perth and Kinross Council’s proposals to ensure that the Council’s houses comply with the Scottish Housing Quality Standard by the required completion date in 2015. The delivery of the plan was structured to suit a list of priorities that had been derived from extensive tenant consultation.

16 176 In June 2009, the Council commissioned consultants, to help refine its stock information base through a local house condition survey. The primary objectives of the survey were to benchmark the current performance of the Council’s housing stock against the Scottish Housing Quality Standard, to estimate investment needs to achieve compliance with the SHQS by 2015 and to examine longer term investment requirements over a 30 year business planning cycle to 2040. At the time of the survey, overall, 3,568 of Council dwellings (47.8%) complied with the requirements of the SHQS. The remaining 3,897 dwellings (52.2%) were non-compliant. Only one other local authority in Scotland had a higher compliance rate. Housing conditions in Council housing in Perth and Kinross are generally in line or better with Scottish averages for social housing including physical housing conditions, energy efficiency and fuel poverty. Levels of dampness and disrepair within the Council housing stock are below the Scottish social housing average as are rates of non-compliance with the SHQS. For example, 52.2% of Perth and Kinross Council dwellings fail the SHQS compared to 61% of all social housing in Scotland and 11.1% of Council dwellings in Perth and Kinross experience extensive disrepair compared to 36% of all social housing in Scotland.

Table 7: SHQS Summary Performance – 2009 House Condition Survey

SHQS QUALITY CATEGORY DWELLING PERFORMANCE

Compliant Non-Compliant Nos. % Nos. % Tolerable Standard 7465 100.0 0 0.0 Repair 7416 99.3 49 0.7 Amenities 6723 90.1 742 9.9 Health/Safety/ Security 5621 75.3 1844 24.7 Energy Efficiency 5365 71.9 2100 28.1 Overall 3568 47.8 3897 52.2 NB Dwellings failing the SHQS can record multiple failures across quality categories. The sum of the quality categories will therefore not necessarily equal the number of dwellings non- compliant.

Overall, 3,568 dwellings (47.8%) comply with the requirements of the SHQS. The remaining 3,897 dwellings (52.2%) are non-compliant. While quality defects are apparent across all main categories of the SHQS overall performance is strongly influenced by matters associated with health/safety/security (individual dwelling and block security) and energy efficiency (NHER target ratings). Patterns of non-compliance support the implementation of single element improvement approaches to SHQS improvement rather than multi-element programmes. The main areas of SHQS failures based on the survey information is as follows:

• Energy Efficiency - NHER < 5 deficiencies - primarily due to the lack of mains gas network in the Eastern and Highland LHMAs.

17 177 • Main Door Entry System - mainly due to the absence of main door entry systems and secure rear common access in flats. • Kitchen Power Provision - primarily due to some kitchens not having six or more power sockets. • Wall Insulation - lack of SHQS levels of wall insulation in around 300 dwellings.

These four elements were the cause of the overwhelming majority of SHQS failures. The SHQS Delivery Plan will be amended to address the particular failures evidenced from the survey. It should be noted that works have been continuing on the kitchen renewal programme, bathroom renewal programme, heating renewal programme and insulation programme since the time of the survey in 2009. It is expected that the relatively small numbers of failures recorded on kitchen and bathroom related elements will have now been effectively eliminated. The condition profile identified by the house condition survey investment costs have been calculated in three main areas:

• Catch-up improvement costs to achieve SHQS compliance. It is estimated that in the period to 2015 investment of £2.5 million was required.

• Future major repair costs both SHQS and non SHQS related. It is estimated that in the period to 2010 to 2015 investment of £17.8 million was required.

• Contingency for major repairs. It is estimated that in the period to 2015 to 2015 investment of £0.4 million was required.

Total investment over 5 year period to 2015 was estimated at £20.7 million. To achieve SHQS compliance this represented an annual expenditure of £4.15M and an average of £555 per dwelling per annum. Therefore the SHQS Delivery Plan and our proposals are complementary and affordable within the overall 30 year Business Plan that the Council has for its investment needs in its own stock. Budgeted SHQS Delivery Plan expenditure is on track.

3.3 Rental Policy

As table 8 shows Perth and Kinross Council’s rent structure compares favourably with other local Registered Social Landlords operating in Perth and Kinross, particularly for 3 Apt and 4 Apt sized properties. The 39 units shall be part of the overall Council standard rent policy. Rent levels have an appropriate balance between being affordable, given local market conditions and contributing to the cost of the house. Rents shall be pooled with other Council rents. The prudential borrowing serviced by rental income on the 39 properties shall not significantly affect existing Housing Revenue Account budgeting which supports the delivery of the Council’s Scottish Housing Quality Standard Delivery Plan nor retention of stock Business Plan.

18 178 Table 8: Comparable Registered Social Landlord Average Rents in Perth and Kinross, 2011/12

Registered Social Apartment Size/Annual Rent (£) Landlord 1/2 3 4 5 PKC 2,679.36 2,833.92 3,046.08 3,793.40 Perthshire HA 2,859.39 3,074.78 3,467.49 3,650.79 Hillcrest HA 2,642.94 3,070.04 3,680.91 N/A Kingdom HA 2,763.00 3,178.00 3,736.00 N/A Fairfield Co-op 2,890.32 3,054.72 3,239.28 3,337.80 Servite HA 2,973.88 3,285.36 4,328.48 4950.92 Source: Registered Social Landlord and Local Authority Databases – April 2011

As table 8 shows Perth and Kinross Council rents, are on average, more affordable than other local social rented housing providers. Indeed average social rented rents across Perth and Kinross are lower than national averages also. Table 9 shows Perth and Kinross Council social rented housing rents are affordable compared to lower quartile household income across all local housing market areas and by house size.

Table 9: Perth and Kinross Council Average Rents, 2011/12, compared to Lower Quartile Income

Local Housing Lower Apartment Size/Annual Rent as Market Area Quartile Percent of Lower Quartile Income Income 1/2 3 4 5 Eastern £15,073 17.8% 18.8% 20.2% 25.2% Greater Perth £15,675 17.1% 18.1% 19.4% 24.2% Highland £14,773 18.1% 19.2% 20.6% 25.7% Kinross £20,498 13.1% 13.8% 14.9% 18.5% Strathearn £15,843 16.9% 17.9% 19.2% 23.9% Perth and Kinross £15,815 16.9% 17.9% 19.3% 24.0% Source: Scottish Government Housing Investment Division CACI Paycheck Data 2010

Table 10: Perth and Kinross Council Average Rents, 2011/12, compared to Local Housing Allowance

Apartment Size/Annual Rent (£) 1/2 3 4 5+ PKC Average 2,679.36 2,833.92 3,046.08 3,793.40 Rent Local Housing 2,819.96 – 5,639.92 7,199.92 9,239.88 Allowance 4,200.04 Source: Scottish Government Website (http://www.scotland.gov.uk/topics/Built- Environment/Housing/privaterent/tenants/money/localhousingallowance/Figures-1) – Figures valid for April 2011

As table 10 shows Perth and Kinross Council social rented housing rents are affordable compared to Local Housing Allowances.

19 179 4. Housing Needs and Homelessness in Perth and Kinross

4.1 Structure of Local Housing System

Perth and Kinross Council covers an area of 5,286 square kilometres. While approximately one third of the population in the area lives in Perth and 60% live either within Perth or within a ‘commuter village’ just outside Perth, throughout the rural area there are a number of sizeable settlements with a historical status of being the former ‘county towns’. Five self-contained Local Housing Markets (LHMAs) exist in Perth and Kinross. These are shown in table 11 below.

Table 11: Local Housing Markets in Perth and Kinross

Name LHMA Eastern Blairgowrie and Eastern Perthshire (including Site D)

Highland Pitlochry, Aberfeldy and the Highland Perthshire area (including Sites B and C ) Kinross Kinross and Kinrosshire

Greater Perth Perth and the surrounding area (including Site A)

Strathearn Crieff, Auctherarder and the Strathearn area

Source: Perth and Kinross Council

4.2 Existing Local Authority Supply

The current supply of Perth and Kinross Council Stock is set out in table 12.

Table 12: Perth and Kinross Council Stock Profile by LHMA/Size, 31/3/11

LHMA / Apt. Size 1/2 3 4 5+ Total

Eastern 324 578 217 16 1,135

Highland 167 154 79 2 402

Kinross 115 156 82 7 360

Greater Perth 1,738 1,983 922 52 4’695

Strathearn 279 380 92 14 765

Total 2,623 3,251 1,392 91 7,357

20 180 The most common size of local authority dwelling is three apartments which accounts for 44% of stock. Around 36% is one or two apartment size. Four apartment sizes make up around 19%. Very few numbers of five or more apartment size stock remain. Perth and Kinross Council’s stock profile has been significantly affected by the Right to Buy, with a very high proportion of pre-1980 stock sold with larger sized and ‘house’ type dwelling proving to be popular with purchasers.

4.3 Local Housing Needs and Demand

The Local Housing Strategy emphasises that there is a high level of need for additional affordable houses throughout Perth and Kinross. A housing needs information framework for provision of additional affordable housing is set out in the Local Housing Strategy. This framework details that the largest proportion of the funding available for affordable housing should be invested in the Greater Perth, Highland and Eastern LHMAs. Our development proposal sites are within these 3 LHMAs. Our proposals are fully aligned with the investment priorities of our Local Housing strategy (appendix 1) and Strategic Housing Investment Plan (appendix 2).

The Perth and Kinross Council area has recognised affordable housing needs with many local ‘hotspots’. This has been demonstrated by a number of sources as shown below, (e.g. Bramley data, pressured area designation and housing ‘pressure’ studies).

The high levels of housing need in Perth and Kinross are demonstrated in the 2006 Scottish Government commissioned report ‘Local Housing Need and Affordability model for Scotland – Update’ by Professor Glen Bramley of Heriot Watt University. This report provided robust estimates and forward projections of housing need linked to affordability. Bramley estimates that Perth and Kinross has a need for an additional 540 affordable houses per year, among the highest levels of any local authority area in Scotland.

The Council commissioned an independent Local Housing Need and Demand Assessment using Scottish Government guidance. The Scottish Government has confirmed that the Local Housing Need and Demand Assessment is robust and credible. The Assessment demonstrated that high levels of affordable housing exist across Perth and Kinross. The level of need in the housing market areas throughout Perth and Kinross is summarised in the table 13 below:

This shows that significant and ongoing levels of unmet affordable housing needs exist across Perth and Kinross, particularly in the LHMAs of Greater Perth which includes site A, Highland, which includes sites B and C and Eastern which includes site D. Our proposals are targeted at areas of highest housing need.

21 181 Table 13: Affordable Housing Need in Perth and Kinross, 2008-2013 (per annum)

A B C D

Newly Backlog Total Arising Affordable LHMA Need for Affordable Need Housing Affordable Housing Affordable Housing Supply Need Housing (A+B-C) Eastern 54 157 125 86 Highland 96 75 56 115 Kinross 41 65 53 52 Greater Perth 199 592 534 258 Strathearn 62 93 92 62 Total PKC 452 982 860 574* Source: Arneil Johnston Consulting/Perth and Kinross Council. * Difference due to rounding

As table 14 shows, there are high levels of demand ‘pressure’ across all LHMAs in Perth and Kinross. Perth and Kinross Council (PKC) operates a Common Housing Register with Perthshire Housing Association (PHA) and Hillcrest Housing Association. The demand ‘pressure’ is therefore calculated by taking the total number of applicants requesting social housing compared to the number of vacancies within the PKC, PHA and Hillcrest Housing stock over the course of the year. In all LHMAs demand pressure is higher than the national average, which is typically in a ratio of between four and five.

Table 14: Demand Pressure in Perth and Kinross by LHMA, 2010/11

WL 1st Area Vacancies Demand Pressure LHMA Preference Apr ‘11 2010/11 Ratio Eastern 565 97 5.8 Highland 384 53 7.2 Kinross 197 39 5.1 Greater Perth 3,101 315 9.8 Strathearn 477 103 4.6 Perth and 4,724 607 7.8 Kinross Source: Perth and Kinross Council Waiting List and Vacancies 2010/2011 NB The waiting list figures include housing transfer requests but exclude sheltered housing applications, applications for Double Dykes and Bobbin Mill traveller sites. Vacancies also exclude sheltered housing lets and sheltered housing transfers, Double Dykes and Bobbin Mill.

22 182 It should be noted that in the Greater Perth and Highland LHMAs that contain sites A, B and C, the ‘pressure ratio’ is significantly higher than national average demand pressure. The pressure is still higher than national averages in the Eastern LHMA where Site D is proposed. For all LHMAs higher demand pressure exists for smaller sized dwellings. Therefore our proposals are mostly focussed on these property sizes.

4.4 Homelessness

The Council faces significant challenges in respect to homelessness. In year 2010/11, the figures, which have been audited by the Scottish Government, showed that there were a total of 1,153 homeless assessments completed by Perth and Kinross Council. Of these, the Council had a statutory duty to provide permanent accommodation to 821 cases which were classed as unintentionally homeless and in priority need.

With low levels of social rented housing, the Council’s ability to provide both temporary and permanent accommodation is significantly tested. The overwhelming majority of unintentionally homeless households require housing in the Greater Perth LHMA. Although over half of all unintentionally homeless households are single persons, there are large numbers of single parent and other households with children requiring larger ‘family housing’ across Perth and Kinross.

Increasing demand on the Council’s ability to meet its statutory duties will occur as the Council’s responsibilities are expanded due the impact of implementing wider legislative and responding to social and economic change including: • The impact of removing the priority need criteria by 2012. • The suspension of the local connection test. • Amendments to the intentionality criteria. • The impact of a shortage in affordable housing options. • The impact of inward migration by migrant workers on the demand for housing. • The impact of implementing section 11 of the Homelessness (Scotland) Act 2003. Perth and Kinross Homelessness Strategy 2009-12 (appendix 3) details activities and priorities with projected timescales, identified resources, and outcome performance indicators. The main issue in tackling homelessness is the adequate supply of affordable housing in order to meet the Scottish Government’s outcomes. Our proposals will contribute to reducing pressure in terms of achieving the 2012 homelessness target, especially by helping to shorten time spent in temporary accommodation by homeless households.

23 183 Perth and Kinross Council and its partners have made significant strides in addressing the causes of homelessness. Our track record speaks for itself in demonstrating our commitment to preventing and addressing homelessness. Our proposals will assist us to achieve even more progress toward the Scottish Government’s outcomes that:

• No-one need sleep rough. • Existing homelessness becomes more visible. • Sustainable resettlement is secure for people who become homeless. • Fewer people become homeless in the first place. • The duration of homelessness is reduced.

4.5 Pressured Area Status

The Scottish Government has recognised the significant local housing needs and demand pressures by granting ‘pressured area status’ to much of the Perth and Kinross. This includes much of the local housing markets in which our proposed developments, (Sites A, B and C), are to be developed and specifically the area of Scone where we are proposing to develop 10 units, and Pitlochry where 12 units are to be developed.

The Scottish Government has designated parts of Perth and Kinross as ‘pressured areas’. The designation is effective from 1/2/07 and last for five years. The effect of the designation is to suspend the Right to Buy for some Council tenants in the designated areas. The areas that have been designated are in the LHMAs as follows:

• Greater Perth Local Housing Market Area Abernethy, Abernyte, Almondbank, Chapelhill, Collace, Balbeggie, Bankfoot, Bridge of Earn, Dunning, Forgandenny, Glencarse, Harrietfield, Guildtown, Inchture, Invergowrie, Kilspindie, Kinrossie, Leetown, Longforgan, Luncarty, Methven, Pitcairngreen, Saucher, Scone (Site A), St. Madoes.

• Highland Local Housing Market Area Aberfeldy, Acharn, Birnam, Calvine, Dull, Dunkeld, Fearnan, Glenlyon, Kenmore, Killiecrankie, Ballinluig, Grandtully, Logierait, Blair Atholl, Kinloch Rannoch, Pitlochry (Sites B and C), Weem.

The Council is currently reviewing the potential impact of expanding pressured area status’ designation to additional settlements across all 5 LHMAs and will bring forth proposals to undertake this later in 2011.

4.6 Tenant Priorities

Perth and Kinross Council tenants are consulted upon and involved in decision making procedures on an ongoing basis. The Council invests heavily in tenant participation through its Tenant Participation Strategy. Tenant groups play an invaluable role in helping to shape Council policy and priorities. Details of our Tenant Participation Strategy can be found at appendix 4.

24 184 5. Our Delivery Plan and Procurement Approach

5.1 Our Development Proposals Approach

Scottish Government policy is that all procurement should be on the basis of value for money and not lowest price alone. The selection of the most appropriate procurement strategy, and the appointment of consultants and contractors, should therefore be on that basis.

Selection and award procedures comply with EU procurement and Perth and Kinross Council contract rules where these are applicable. The key factors which were considered when selecting our procurement approaches were:

• In-house resource availability and experience alongside compatibility of externally available resources. • Project size and complexity. • Importance of timescales and possible phased completion requirements. • Importance of quality and issues surrounding whole-life use of the facility. • Availability of funding (in addition to setting and agreeing the budget for the project).

5.1.1 Site A - Perth Road, Scone

With regards to Site A, Perth and Kinross Council shall purchase ‘off the shelf’ a turnkey development from Perthshire Housing Association based on a design and build negotiated procurement between Perthshire Housing Association and Xenon contractors. Xenon have a confirmed option on ownership of the site.

5.1.2 Site B - Lower Oakfield, Pitlochry

With regards to Site B, Perth and Kinross Council shall purchase ‘off the shelf’ a turnkey development from Servite Housing Association based on a design and build negotiated procurement between Servite Housing Association and Daval contractors. Daval have a confirmed option on ownership of the site.

This project is part of a complementary proposal for the RSL element of the ‘Innovation and Investment Fund’ whereby the overall development will be divided between 6 units for social rented for Perth and Kinross Council, 8 units for social rented for Servite Housing Association and 8 units for ownership Daval properties. The respective bids to the local authority and RSL elements of the ‘Innovation and Investment Fund’ are 6 units for social rented for Perth and Kinross Council (part of this Perth and Kinross Council local authority bid only), and 8 units for social rented for Servite Housing Association (part of the RSL bid only).

25 185 5.1.3 Site C - Dalchampaig, Phase 2, Pitlochry

For site C, Perth and Kinross Council shall employ a ‘single stage competitive tender’ approach. Design and project management shall be undertaken by Perth and Kinross Council’s own in-house experienced design team provided by the Council’s Property Services. The advantages of this approach include:

• A high level of quality in design and construction is achievable as the scope of the work is prescribed on an input basis. • Perth and Kinross Council retains direct relationships with design team and main contractor. • Changes to the works can be evaluated on the basis of known prices obtained in competition without necessarily excessive cost or time implications.

Our in-house design team will fully develop the design prior to going out to tender and will have responsibility for:

• Development and monitoring of project plans. • Production of design brief, including consultation with all relevant parties, (e.g. Planning, Transportation, and Scottish Water). • Preparation and appraisal of tenders as well as selection of contractor. • Working with the contractor to complete design and cost plan, and help ensure all relevant consents are secured. • Provide project management support during the construction period, up to and including handover, including attending site/design team meetings and close liaison with the Clerk of Works. • Budget monitoring and financial planning/projections.

This is our preferred approach at this time. However the Council is exploring a possible approach to procurement at Site C which would could possibly provide greater efficiencies. Site C at Dalchampaig, Pitlochry has an existing adjacent development of Perth and Kinross local authority new build. It is being examined whether it is feasible to extend the existing contract therefore potentially maximising efficiencies through economies of scale.

5.1.4 Site D - Quinns Cinema, Blairgowrie

With regards to Site D, Perth and Kinross Council shall purchase ‘off the shelf’ a turnkey development from Perthshire Housing Association based on a negotiated tender procurement between Perthshire Housing Association and Campion contractors. Perthshire Housing Association owns the site.

The advantages of the design and build approach, for sites A, B and D is that:

• Design and construction are the responsibility of the main contractor. • Emphasis of risk borne by the contractor. • Single point of responsibility means that the contractor is not relying on other parties for design or for the supply of information.

26 186 • Greater price certainty than more traditional forms of procurement, • Greater speed of project delivery allows work on site to begin earlier due to the level of control with the contractor. • ‘Buildability’ as a contractor has responsibility for design and construction, it follows that the building is more likely to be ‘buildable’ than is the case under other procurement methods.

Sites A, B and D are negotiated procurement. To ensure that the Council is achieving value for money, our in-house design team will liaise with the contractor and project managing agencies on:

• Development and monitoring of project plans including cost plan. • Consultation with relevant parties, (e.g. Planning, Transportation, and Scottish Water). • Ensuring that all relevant consents are secured. • Budget monitoring and financial planning/projections.

For all sites, tender costs have been benchmarked against information available with data available from local housing associations including projects recently procured in open competition by local authorities and housing associations.

5.2 Proposals are Corporately Approved and Promoted

A corporate Affordable Housing Working Group enables the contribution of other Council services towards increasing the supply of affordable housing. This Group reports to a elected member/ officer group specifically focusing on issues experienced in bringing forward affordable housing projects with a view to wherever possible assisting overcoming any issues arising. This proposal has been scrutinised and approved by the Housing and Health Committee of Perth and Kinross Council on 1/6/11.

Consultation on wider issues is achieved through regular liaison with private developers and Scottish Water organised by planning services. Discussion on the wider agenda of the development plans for the strategic planning authorities have taken place through meetings organised by Perth and Kinross Council planning services.

5.3 Development Control and Related Planning Issues

Our proposals satisfy a range of development control and related planning issues. These include:

• Site A – Xenon have a confirmed option on ownership of the site.

• Site B - Daval have a confirmed option on ownership of the site.

• Site C - in Perth and Kinross Council ownership.

27 187 • Site D - in Perthshire Housing Association ownership

• Site A – Full detailed planning approval achieved.

• Site B - Full detailed planning approval achieved.

• Site C - Planning approval application is currently being progressed.

• Site D - Full detailed planning approval achieved.

• The sites have not already been built.

• There is no known encumbrance over the sites.

• There are no issues with educational establishment catchment area capacity.

Outline plans are included for the site in section 11 of this proposal below.

5.4 Anticipated Delivery Timescales

A provisional timeline for all four sites with milestones is shown below.

Site A - Perth Road, Scone - Milestones

Milestone Dates

• Approval to proceed 1/9/11 • Design Development 1/10/11 • Planning Consultation N/A • Planning Application In place • Building Warrant Application 1/10/11 • Tender Issue Negotiation • Tender Return Negotiation • Tender Acceptance 20/12/11 • Contract run in 4 weeks • Start on site 23/1/12 • Construction Period 40 weeks • Contract Completion 29/10/12

Site B - Lower Oakfield, Pitlochry – Milestones

Milestone Dates

• Approval to proceed 01/09/11 • Design Development 01/10/11 • Planning Consultation N/A • Planning Application In place • Building Warrant Application 01/10/2011

28 188 Milestone Dates • Tender Issue Negotiation • Tender Return Negotiation • Tender Acceptance 01/02/12 • Contract run in 4 weeks • Start on site 01/03/12 • Construction Period 52 weeks • Contract Completion 28/02/13

Site C - Dalchampaig, Phase 2, Pitlochry - Milestones

Milestone Dates

• Approval to Proceed 01/09/11 • Design Development 1/8/11 • Planning Consultation 1/8/11 • Planning Application 20/7/11 • Building Warrant Application 1/8/11 • Tender Issue 12/9/11 • Tender Return 10/10/11 • Tender Acceptance 14/11/11 • Contract Run In 4 weeks • Start on site 12/12/11 • Construction Period 40 weeks • Contract Completion 14/9/12

Site D - Quinns Cinema, Blairgowrie - Milestones

Milestone Dates

• Approval to proceed 1/9/11 • Design Development 1/8/11 • Planning Consultation N/A • Planning Application In place • Building Warrant Application 4/7/11 • Tender Issue Negotiation • Tender Return Negotiation • Tender Acceptance 1/10/11 • Contract run in 4 weeks • Start on site 29/9/11 • Construction Period 60 weeks • Contract Completion 22/11/12

29 189 5.5 Consistency with Legal and Regulatory Requirements

Our proposals meet key legal and regulatory requirements and this is demonstrated below. The layout and design of all homes will satisfy the principles of:

• All construction will comply with current Building Standards (the Technical Standards which are the ‘relevant standards’ for compliance with the Building Standards (Scotland) Regulations 2010, and as amended).

• ‘Barrier Free Housing’ complying with the standards specified within ‘Housing for Varying Needs – A Design Guide’,

• Delivering homes which are within community safety parameters.

• Design of all homes will seek to achieve the principles of sustainable design as outlined in ‘The Sustainable Housing Design Guide for Scotland’ (published in 2000 by The Stationery Office on behalf of Communities Scotland).

• Design of all properties will be designed to have an internal floor area that is no less than the space standards set out in Scottish Housing Handbook, Bulletin 1 – Metric Space Standards and be in accordance with the design principles of ‘Housing for Varying Needs, A Design Guide, Part 1: Houses and Flats’.

• Any roads are to be constructed to adoptable standards and accord fully with the Council’s ‘Roads Design Requirements’.

• Proposals will make every effort to comply fully with the Council’s ‘Minimum Space Standards for Space Around Dwellings’.

• In line with the Council’s Energy Policy the aim is to design particular elements to achieve energy usage lower than current Building Regulations.

In addition the proposals:

• Procurement is in accordance with EU rules as well as Council contract rules and requirements.

• Planning and Building Control consents are in the process of being applied for.

• Are in accordance with Government guidelines for new build housing in Council ownership.

• Land ownership titles have been checked and are in order.

30 190 6. Delivering the Maximum Number of Homes

6.1 Maximising the Potential Number of Units

Our proposals maximise the potential number of units to be built within available resources but not at expense of design quality and quality of place. This is borne out by our commitment that the design of all homes will satisfy the principles of:

• All construction will comply with current Building Standards (the Technical Standards which are the ‘relevant standards’ for compliance with the Building Standards (Scotland) Regulations 2010, and as amended).

• ‘Barrier Free Housing’ complying with the standards specified within ‘Housing for Varying Needs – A Design Guide’,

• Delivering homes which are within community safety parameters.

• Design of all homes will seek to achieve the principles of sustainable design as outlined in ‘The Sustainable Housing Design Guide for Scotland’ (published in 2000 by The Stationery Office on behalf of Communities Scotland).

• Design of all properties will be designed to have an internal floor area that is no less than the space standards set out in Scottish Housing Handbook, Bulletin 1 – Metric Space Standards and be in accordance with the design principles of ‘Housing for Varying Needs, A Design Guide, Part 1: Houses and Flats’.

• Any roads are to be constructed to adoptable standards and accord fully with the Council’s ‘Roads Design Requirements’.

• In line with the Council’s Energy Policy the aim is to design particular elements to achieve energy usage lower than current Building Regulations.

6.2 Consistency with the LHS and SHIP

The Perth and Kinross Local Housing Strategy aligned with the Community and Corporate Plans sets the strategic vision, aims and objectives and actions to support them for Perth and Kinross for housing and related matters.

Our proposals as part of the Local Housing Strategy and Strategic Housing Investment Plan link with other national and regional influences and the detailed local strategic context. The Local Housing Strategy and Strategic Housing Investment Plan play an important and integral role in the Council’s priorities. Our proposals fit with the Local Housing Strategy investment themes of:

31 191 • Addressing Housing Requirements to enable housing supply in the size and type people need, in the areas they want to live, and that they can afford.

• Developing appropriate housing and related services to Promote Sustainable and Mixed Communities.

• Improving Stock Conditions and Energy Efficiency helping to reduce fuel poverty.

• Assisting People With Particular Needs to ensure there is a range of house sizes and types available with appropriate support to meet the needs of people with particular needs.

Local Housing Strategy objectives are fully consistent and aligned with corresponding Perth and Kinross Community Plan, Perth and Kinross Council Corporate Plan, related partner plans and the Single Outcome Agreement.

Our proposals support the SHIP and do not adversely impact upon the delivery of other local affordable housing projects being funded through the Affordable Housing Investment Programme. This is particularly so in respect to the funding contribution from Council Tax Income on Second Homes. This contribution is carefully managed and monitored to ensure that this funding stream contributes fully to the delivery of affordable funding. For example this fund assists housing associations to bring forward projects, (e.g. by way of site purchase), to ensure that future year’s Affordable Housing Investment Programme expenditure profiles are maximised.

Our proposals contribute to delivering the Development Plan, both local development plan and wider Strategic Development Plan fully (e.g. in terms of adopted polices on tenure mix and quality of design), where there is acknowledgement of Perth and Kinross substantial housing needs and demand profile.

32 192 7. Risk Management and Constraints

Risk management is the process of identifying, gauging and responding to risks in a particular programme or project, for example project cost, schedule or quality. Risk management planning establishes a consistent approach to programme and project risk management. There are three elements, these are risk identification, risk assessment and risk control.

Table 15: Identified Constraints and Possible Mitigating Actions

Constraint Mitigating Actions Funding – lack of certainty • Effective liaison with Scottish Government to regarding future investment prioritise projects to enable projects to be levels pulled forward if required.

Funding – reduction in grant • Reassess funding package and explore use levels differing resources. • Work with Scottish Government to progress efficiency agenda. • Work with Scottish Government to ensure sufficient flexibility in system to recognise higher development costs in certain areas and/or house types.

Ground condition problems/ • Site Investigation at early stage. abnormal costs • Ensure land values reflect remediation costs.

Scottish Water connections • Early discussions with Scottish Water to identify constraints.

Access/ Planning issues • Consultation with relevant stakeholders on access and layout etc. • Early discussions with planning services regarding road layouts • Effective internal liaison arrangements within the Council.

As with any long term financial plan, there is a need to keep the projections and assumptions used under constant review to ensure that the level of investment that has been assumed can actually be delivered. The main potential risks, or variables, that have to be managed include:

33 193 • Development constraints. • Financial assumptions. • Infrastructure constraints. • Planning constraints. • Legal procedural constraints.

Table 15 shows potential constraints and associated mitigating actions.

8. Contact Details

You can forward your comments or questions to:

Stephen Rankin Planning and Commissioning Manager Housing and Community Care Perth and Kinross Council 5 Whitefriars Crescent Perth PH2 0PA

Tel: 01738476174 Email:[email protected]

9. Conclusion

We conclude that Perth and Kinross Council’s proposals for a new build programme of 39 houses meets the Scottish Government’s grant funding eligibility criteria in that our proposals:

Our proposals meet the eligibility criteria in that our proposals show that:

• Perth and Kinross Council has the ability to manage and maintain the new stock effectively.

• The developments are affordable at the available level of grant and proposed rent levels and are affordable to the tenant.

• The new homes are prioritised to contribute to meeting evidenced housing and regeneration needs as well as homelessness targets.

• Perth and Kinross Council can demonstrate that it has well developed plans to ensure delivery of the proposed new housing.

• The proposed developments fit with the Local Housing Strategy and the Strategic Housing Investment Plan

34 194 • The number of units that are being built is maximised within the resources available and not at the expense of having to compromise on design quality and quality of place.

• The housing will be social rented and managed by Perth and Kinross Council under Scottish Secure Tenancy (SST) and are consistent with the existing stock management and maintenance approach.

• Perth and Kinross Council have high quality housing management services.

• The developments contribute to reducing per unit management costs.

• Perth and Kinross Council has the prudential borrowing capacity and other available resources to fund the new housing.

• Rent levels strike an appropriate balance between being affordable, given local market conditions and contributing to the cost of the developments.

• Resources are not needed for other purposes, (e.g. to meet the SHQS), and committing funds to a new build programme does not compromise the sustainability of the HRA.

• Have effective and robust procurement methods alongside robust delivery arrangements that are being developed or are in place already.

• The new houses contribute to reducing pressure in terms of achieving the 2012 homelessness target, helping to shorten time spent in temporary accommodation.

• The new houses contribute to meeting recognised affordable housing needs and addressing local and regeneration needs ‘hotspots’.

• The developments can be on-site by 31 March 2012.

• The new houses are additional to the existing social housing stock and are not completed already or in Council ownership.

• The Council has agreed the developments’ scope and is committed to funding the projects.

• The development’s land titles are clear.

• Are consistent with the investment priorities of the Local Housing Strategy and Strategic Housing Investment Plan.

• Consistent with requirements for Housing for Varying Needs and relevant Building Regulations.

35 195 10. Summary Proformas Sites A – D

General Name of Local Authority Perth and Kinross Council Address 5 Whitefriars Crescent, Perth, PH2 0PA Contact details Stephen Rankin Planning and Commissioning Manager Housing and Community Care Perth and Kinross Council 5 Whitefriars Crescent Perth PH2 0PA

Tel: 01738476174 Fax: 01738476822 Email:[email protected]

Proposal Detail – Site A Project Name Perth Road, Scone Address of proposed units Perth Road, Scone Number and location of units 10 units, Scone proposed Required subsidy – both total Total £300,000 (£30,000 per unit) and per unit Site start date 23/1/12 Completion date 29/10/12 Confirm whether the land that Xenon design and build contractor has a will be developed is owned by confirmed option on ownership of the site the local authority outright. Is Planning Permission in place Full (detailed) planning permission (specifically say if outline, granted detailed, applied for or received)? If not is the site zoned for housing in the current development plan? Is the site a section 75 site? No Insert any other relevant details N/A or supporting commentary as required

36 196

Proposal Detail – Site B Project Name Lower Oakfield, Pitlochry Address of proposed units Lower Oakfield, Pitlochry Number and location of units 6 units, Pitlochry proposed Required subsidy – both total Total £180,000 (£30,000 per unit) and per unit Site start date 1/3/12 Completion date 28/2/12 Confirm whether the land that Daval design and build contractor has a will be developed is owned by confirmed option on ownership of the site the local authority outright. Is Planning Permission in place Full (detailed) planning permission (specifically say if outline, granted detailed, applied for or received)? If not is the site zoned for housing in the current development plan? Is the site a section 75 site? Part of a section 75 site Insert any other relevant details N/A or supporting commentary as required

37 197

Proposal Detail – Site C Project Name Dalchampaig, Phase 2, Pitlochry Address of proposed units Rie-achan Road, Pitlochry Number and location of units 6 units, Pitlochry proposed Required subsidy – both total Total £180,000 (£30,000 per unit) and per unit Site start date 12/12/11 Completion date 14/9/12 Confirm whether the land that Land owned by local authority outright will be developed is owned by the local authority outright. Is Planning Permission in place No approved planning consent for (specifically say if outline, development. The site is zoned as ‘white detailed, applied for or land’ in Local Plan. Housing is an received)? If not is the site appropriate use so the principle of zoned for housing in the current housing on site is agreed. development plan? Is the site a section 75 site? No Insert any other relevant details N/A or supporting commentary as required

38 198

Proposal Detail – Site D Project Name Quinns Cinema, Blairgowrie Address of proposed units Blairgowrie Number and location of units 17 units, Blairgowrie proposed Required subsidy – both total Total £510,000 (£30,000 per unit) and per unit Site start date 29/9/11 Completion date 22/11/12 Confirm whether the land that Land owned by Perthshire Housing will be developed is owned by Association the local authority outright. Is Planning Permission in place Full (detailed) planning permission (specifically say if outline, granted detailed, applied for or received)? If not is the site zoned for housing in the current development plan? Is the site a section 75 site? No Insert any other relevant details N/A or supporting commentary as required

39 199 11. Site Plan A – Perth Road, Scone

200

40 Site Plan B – Lower Oakfield, Pitlochry

201

41 Site Plan C – Dalchampaig, Pitlochry 202

42 Site Plan D – Quinns Cinema, Blairgowrie

203

43 12. Scottish Local Authority New Build Financial Proforma

Innovation and Investment Fund Local Authority Financial Proforma Perth and Kinross Council

Round 4, 2011

Please indicate whether monetary values are in nominal (cash) terms or in real (constant price) terms

Nominal/Cash terms

204 A HRA position in 2010-11 Total Per unit (£)

1 Stock at 1 April 2010 units 7,400 n/a 2 Stock at 31 March 2011 units 7,357 n/a 3 Average stock for 2010-11 units 7,379 n/a 4 HRA debt at 31 March 2011 £000 47,744 £6,490

5 HRA loan charges for 2010-11 £000 4,350 £590 6 - of which repayment of debt principal £000 2,494 £338 7 - of which interest charges £000 1,856 £252 8 Net rental income (gross rents less voids and arrears) for 2010-11 £000 20,176 £2,734 9 Loan charges as a % of net rental income for 2010-11 % 21.6% n/a

10 Supervision and Management expenditure for 2010-11 £000 8,704 £1,180

44 11 Repairs and Maintenance expenditure for 2010-11 £000 5,632 £763 12 Management and Maintenance expenditure for 2010-11 £000 14,336 £1,943 13 Capital Expenditure Funded from Current Revenue (CFCR) for 2010-11 £000 1,566 £212 14 Average weekly rent (52 week basis) for 2010-11 £ 51.87 n/a 15 Pooled HRA interest rate for 2010-11 % 3.8% n/a

B Round 4 new build summary Total Per unit (£)

16 Round 4 new build addition to stock units 39 n/a 17 Construction costs £000 3,373 £86,487 18 Land costs £000 565 £14,487 205 19 Other costs (fees, preliminaries, etc.) £000 785 £20,128 20 Total capital costs for Round 4 new build £000 4,723 £121,103 21 Scottish Government grant (the maximum subsidy per unit is £30,000) £000 1,170 £30,000 22 Other sources of capital finance (i.e. not SG grant and not borrowing) £000 390 £10,000 23 Additional borrowing required for Round 4 new build £000 3,163 £81,103 24 Interest rate on additional borrowing % 4.5% n/a 25 Average weekly starting rents for Round 4 new build (52-week basis) £ 56.69 n/a Rental premium for Round 4 new build (compared to rents on existing stock of the 26 % 0.0% n/a same type in the year in which new build is available for letting) 27 Rents on new build as a percentage of lower quartile income in local authority area % 18.6% n/a

45 C Estimated HRA position in 2011-12 including Round 4 new build Total Per unit (£)

28 Stock at 1 April 2011 units 7,357 n/a 29 Stock at 31 March 2012 units 7,367 n/a 30 Average stock for 2011-12 units 7,362 n/a 31 HRA debt at 31 March 2012 £000 47,035 £6,385

32 HRA loan charges for 2011-12 £000 4,465 £606 33 Net rental income (gross rents less voids and arrears) for 2011-12 £000 21,293 £2,892 34 Loan charges as a % of net rental income for 2011-12 % 21.0% n/a

35 Supervision and Management expenditure for 2011-12 £000 8,813 £1,197

36 Repairs and Maintenance expenditure for 2011-12 £000 5,573 £757 206 37 Management and Maintenance expenditure for 2011-12 £000 14,386 £1,954 38 CFCR for 2011-12 £000 2,357 £320 39 Average weekly rents (52 week basis) for 2011-12 £ 54.52 n/a

D Estimated HRA position in 2016-17 including Round 4 new build Total Per unit (£)

40 Stock at 1 April 2016 units 7,393 n/a 41 Stock at 31 March 2017 units 7,397 n/a 42 Average stock for 2016-17 units 7,395 n/a 43 HRA debt at 31 March 2017 £000 46,587 £6,298

44 HRA loan charges for 2016-17 £000 6,142 £834 45 Net rental income (gross rents less voids and arrears) for 2016-17 £000 25,856 £3,512

46 46 Loan charges as a % of net rental income for 2016-17 % 23.8% n/a

47 Supervision and Management expenditure for 2016-17 £000 8,750 £1,189

48 Repairs and Maintenance expenditure for 2016-17 £000 6,452 £876 49 Management and Maintenance expenditure for 2016-17 £000 15,202 £2,065 50 CFCR for 2016-17 £000 4,563 £620 51 Average weekly rents (52 week basis) for 2016-17 £ 66.31 n/a

Notes: Nominal or cash prices means that prices have been increased to take into account the effect of general inflation (e.g. as measured by RPI or CPI); Real or constant prices means that there has been no adjustment for general inflation HRA loan charges are the sum of (i) repayment of debt principal, (ii) interest payments, and (iii) loans fund expenses attributable to the

HRA 207 Please use the definitions of Supervision and Management expenditure and Repairs and Maintenance expenditure as per the HRA return, see guidance at:

http://www.scotland.gov.uk/Topics/Statistics/Browse/Housing-Regeneration/HRA2008

47

208

48