Cambridgeshire and Peterborough Combined Authority Board has agreed a repayable commercial loan up to a maximum of £24.4 million to bring 88 empty homes in Ely back into use.
The loan will enable the purchase of the Ministry of Defence-owned homes site at Princess of Wales hospital in Ely, where the properties currently sit vacant and are in need of a programme of refurbishment. The loan agreement will be with East Cambs Trading Company (ECTC), the wholly owned trading arm of East Cambridgeshire District Council. The intention is that the District Council will acquire the site and immediately transfer it to the ECTC to commence work.
The site will be redeveloped to provide 92 homes, by dividing four units to eight, then sold back to the market within two years, at which point the loan will be repaid.
The scheme will also develop 15 affordable homes to link in with an existing community land trust (CLT). The CLT, governed by members of the local community, will oversee the affordable homes, ensuring they are made available for people who live and work in the area as affordable rent properties. The scheme will therefore create additional affordable homes without the need for any grant funding by the Combined Authority.
Alternatively, if the site was purchased by private developers, there would be no obligation to provide affordable homes.
On November 28, the Combined Authority Board heard a report which detailed that the loan will be repayable with interest, and in addition, the Combined Authority will have a profit share arrangement with ECTC.
A projected £1.5 million in combined interest and profit could be returned to the Combined Authority once the 92-home scheme has completed.
It is projected that repayments would start as soon as Autumn 2019 and by year-end March 2020 re-payments will have reduced the loan to £18,140,000 and the loan repaid in full by December 2020. The loan will be secured against the assets that will be acquired with it.
There is also a potential opportunity for the Combined Authority to form a joint venture with ECTC as a development partner for the further delivery of up to 62 additional homes, including affordable homes, on undeveloped infill land, once the site has been acquired. Further work, and a further report to be presented to the Combined Authority Board, would be required.
In September this year the Combined Authority Board agreed a new housing strategy that would see a flexible, revolving fund of £40 million created out of its £100 million affordable housing budget to accelerate the delivery of housing of all types, including affordable homes. The intention for the revolving fund is to seek out opportunities to bring forward new housing schemes through, for example, loan funding, which would then be repaid and recycled to unlock further developments.
Alongside this, the Combined Authority will continue its work on delivering the 2,000 affordable homes across Cambridgeshire and Peterborough as set down in the devolution deal, though offering grants to affordable housing providers to deliver housing, with £60 million from the £100 million fund.
Mayor James Palmer said: “When we face a housing crisis, people rightly find it ludicrous to see properties sitting empty that, with some investment, could quickly be turned into homes for people to live in.
“The Combined Authority’s recently approved housing strategy is all about finding innovative ways to deliver new housing, including affordable homes, which this area so desperately needs.
“This scheme will tick many of the boxes of that strategy, delivering open market properties and bringing forward additional affordable homes through a community land trust. All of this is achieved through a repayable loan, from which the capital can then be recycled and used again to unlock further housing development. The scheme will also see the delivery of affordable housing without the need for grant funding – a clearly different approach to the traditional method handing grant funding to housing associations.
“It is clear we are not building nearly enough homes across Cambridgeshire and Peterborough and the Combined Authority has a unique opportunity to inject fresh thinking into how we accelerate the delivery of homes of all types, including affordable homes. This is a prime example, so it is fantastic news the Board has agreed this loan.”