Redevelopment and decants – what to watch out for
Redevelopment of existing housing estates is a necessity today. Some stock is no longer fit for purpose, and what people expect from a modern estate in terms of open space and services is constantly changing. That's before you consider the potential to cross-subsidise the updated affordable homes from the sales income derived from an expanded development.
But as any landlord who has embarked on a project like this will tell you, often the most time-consuming (and costly) exercises is securing the temporary relocation of existing residents.
Resident engagement and support is key to any long term redevelopment plans – particularly for housing associations in London who may need to secure grant funding and therefore need to satisfy the Mayor's requirements for a positive ballot result. Most landlords will be looking out for the best interests of their existing residents in any event. The question is then how does the housing association protect itself legally in its dealings with a developer.
Many redevelopments and joint ventures are structured to include a "buy-back" of the affordable homes by the housing association. A standard bulk purchase of rented homes will include payment of liquidated and ascertained damages (LADs) for late delivery, and the buy-back on a redevelopment is no different.
An additional consideration for a redevelopment (rather than a straightforward purchase) is the fact the housing association will not only be losing out on rental income where there is a delay, but also that additional costs are being incurred to provide the temporary accommodation. Housing associations should make sure that all these costs are covered under an LADs mechanism.
It is also important to ensure that the wishes of the returning residents are also provided for. These items may have come out through a housing needs survey, or through promises made to residents ahead of a ballot. In a situation where a housing association is delivering the redevelopment with a partner, it is crucial to ensure these requirements are picked up in the planning application and assessment of the issued planning.