6 th October 2008 Bob Osborne Deputy Director for Sustainable Regeneration

1. ITEM 4 A) Report to Strategy and Regeneration Scrutiny CommitteeTHE HOUSING INVESTMENT PROGRAMME AND THE CREDIT CRUNCH 6th October 2008 Bob Osborne Deputy Director for Sustainable Regeneration

2. Background • At the last meeting that considered the position on Housing led regeneration members requested an analysis of risks, and mitigations i.e. a plan B, if funding did not become available • Since that time the economic crisis has seriously impacted upon the ability to effectively analyse the position • The opportunity to review this position in the context of the emerging Homes and Communities Agency is now timely given recent announcements

3. What do we know? • Unprecedented economic downturn • Situation changing on a daily basis • Market at a virtual standstill • Government intervention measures announced • New agency to deliver housing renewal • “Dashboard” of indicators constructed • Key partners consulted and in constant dialogue over programmes • Audit Commission inspection of Housing Market Renewal Programme

4. Purpose of the presentation • Clarify work to date and current position • Demonstrate role of new agency and implications • Indicate impact on key programmes and mitigations/options

5. Research and Market Intelligence • Evaluation and research programme in place • Key pieces of work • Credit Crunch risk assessment (version included in pack) • Analysis of Property Purchases 2003-2007 • Auction Market Analysis 2006-2008 • Further ongoing and detailed work planned

6. Summary position • Increasingly fragile housing market • Volatility due to decreasing sales/auctions • Land values falling • Aspirant home owners unable to access mortgages – demand is still there • Increasing numbers of empty homes when perversely waiting lists of housing are rising • Unprecedented situation

7. Government Response • Review by Professor Michael Parkinson – concludes end of October • Housing Market Rescue Package - £100 billion package (details attached) • Emerging role of the Homes and Communities Agency

8. Opportunity • Homes and Communities Agency (HCA) begins work on 1/12/08 • Combines Housing Corporation and English Partnerships, Academy for Sustainable Communities, parts of CLG • Has £17.4 billion investment plan for 2008-11 • A new opportunity to have a single approach to housing investment

9. Growth Point • AGMA area selected as a growth point. Four of the ten borough as pathfinders – Salford, Manchester, Bolton, Trafford • £250,000 initially allocated to develop programme • Parallel Infrastructure Fund • Programme of development to be submitted at end of October • Work in progress

10. Audit Commission Performance Review • Determines level of funding allocations for 2009/10 and 2010/11 • First stage appraisal – performance review – complete and informal feedback positive • Second stage appraisal – Use of resources – this week – a review of landlord licensing in Seedley/Langworthy • Third stage appraisal – need for investment – will compare market conditions vs 2007 basline • Resources will come under remit of HCA from December 1st

11. The emerging funding regime • A single Salford Investment strategy to be mutually agreed with HCA. Initial meeting already taken place. • A “single conversation” between HCA and Council and its partners • An agreed investment portfolio • Remit of the HCA is consistent with Salford’s position • Want to agree an investment strategy by end of November

12. On the ground – Agreed partnerships • Key partners wish to rephase and refinance existing plans in New Deal,Broughton, and Ordsall. Committed to continuity but need to see through this decline • Anticipated upturn in two years • Until then need to find a way to release mortgage finance or bridge the gap between deposits and asking price • Continuous dialogue with partners

13. On the ground – speculative building • Less secure – schemes mothballed and land banked until market recovers • Key shift away from the apartment market to traditional housing • Auction prices low • Significant growth in the private rented sector

14. On the ground – Housing Market Renewal – continuity and certainty • Broughton – reviewing partnership to establish a greater quantum of programme • New Deal – reviewing programme to facilitate one scheme progressing , second scheme under review and alternatives being considered • Ordsall – rephasing of Ordsall Estate plans under active consideration, Ordsall Riverside reconfigured to traditional housing • Langworthy/Seedley – progressing • Weaste – some progress around Weaste Lane area….Housing Market Support applied in remaining areas ….. Aim is to put in bid as part of HCA investment plan • Funding secured and protected for this year…HCA plan will argue for continuity and sustainability

15. Mitigation aka Plan B • HCA offers toolkit of new methods • Actively exploring concept of Asset Based Partnership Vehicle to mitigate funding shortfall • Aggressive enforcement against unused properties – five prosecutions already sought • Reviewing all partnerships to establish better phasing/funding options • Holistic investment plan to be agreed with HCA by end of November.

16. Conclusions • Ongoing detailed Research and Intelligence Programme • Ongoing dialogue with developer partners • Ongoing analysis of residential land supply • Core Strategy • Development of coherent investment plan with HCA • Pending that ongoing market support and enforcement activity