A proposal to build 96 new flats at an unspecified site near the “entrance to Western Harbour” is in the offing, assuming that the City of Edinburgh Council agrees to lend the land owner Forth Ports £11,914,875.
All the new homes will be dubbed as “affordable” homes, despite the fact that all of them will be rented at index linked rates comparable to 95% of the Local Housing Allowance in the city. Whilst cheaper that most private rents, apparently there will be absolutely no homes for rent at “social rent” levels – the name given to rent arrangements that most people would recognise as “affordable.”
Tenants of the new homes, if they are built, will also have little more security of tenure than others in the private rented sector as if the council is to be paid back it’s multi-million pound loan, all the homes apparently need to be sold off within ten years of construction.
The homes will not even be managed by a housing association or the council whilst they are rented out. Instead, even before the homes are built, private letting agent Rettie and Co, have been lined up to manage them.
Whilst many people will therefore question how “affordable” homes such as these really are, there are undoubtedly those who will simply be pleased to see any kind of development taking place at Western Harbour. It’s a large brownfield site and any development that keeps the momentum going there, and creates some much needed jobs, will no doubt be seen as a good thing – even if the project is basically a government subsidised building project.
Before a spade can go in the ground, the council must approve the loan, and then set-up a partnership with Forth Ports and Scottish Government Body – The Scottish Futures Trust (SFT). It is this three way Limited Liability Partnership (LLP) that will own and manage the homes before they are sold off.
There will therefore be another important difference between these “affordable” homes and the homes most people think of as “affordable.”
Compared to renting from the council or a housing association, there will be far less opportunity for tenant oversight of the management arrangements for these homes, and it is unlikely the LLP will fall under Freedom of Information rules.
As for who actually makes money at the end of the day – one assumes that Forth Ports don’t enter into this deal without having a clear profit margin in mind.
The council report reassuringly says the Scottish Futures Trust has run the slide-rule over the deal and says its ok. It says: “The SFT undertake the financial evaluation for NHT procurements, and DTZ review value for money on their behalf. The SFT and DTZ have both reported that the submission has passed the financial evaluation and the value for money appraisal.”
So there we have it, another tremendously innovative new “affordable” housing development, with higher rents, worse security of tenure, and less democratic oversight or transparency.
Many people would agree that it is wise to use the historically low rates of interest that the government can access to subsidise job intensive capital projects, building things that the city really needs. That’s classic Keynes.
But the question nobody seems to be asking is, is it really necessary to stretch the definition of “affordable housing” pretty much to breaking point to do that?
Incidentally, Sir Angus Grossart, chairman of investment bank Noble Grossart, is also chairman of the Scottish Futures Trust. The Herald reported almost exactly a year ago, that Noble Grossart was one of the investors involved in a land deal that saw them involved in the purchase of many of the other brown field sites on Western Harbour.
The paper went on to report that that deal: “…has the advantage of preventing other developers from buying it to build low-grade dwellings nearby, which could further damage land prices, and it also maximises the firm’s influence with Edinburgh City Council.”
It is unknown whether the other investors in the area regards the Forth Ports proposal as one that will enhance or damage land prices at Western Harbour.
The first version of this post said that the rents would be pegged to 95% of typical private sector rents which was incorrect. The post was amended on the 15th to reflect the fact that rents will be set at 95% of Local Housing Allowance rates, which makes them cheaper – but still more expensive than Social rents. Thanks to “The Ball is Round” for pointing this out in the comments.