Summit Partner Blog – The Coal Authority

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At the Coal Authority, we aim to provide expert advice and creative solutions to governments, public bodies, private organisations and landowners to manage the public safety and environmental issues arising from historical coal and metal mining.

In recent years, we have had a big focus on innovation, particularly in relation to our mine water heat schemes – where we’ve been looking at how we can create green energy from water that has been collected within former mines.

The initiative is now a proven success as we have just celebrated 6 months of the nation’s first large-scale network operating successfully and we’re keen for more of these projects to be rolled out across the former coalfields.

It took just three years for the ground-breaking energy project in Gateshead to go from first concept meeting to full operation on 29 March 2023.  It is now one of the largest in Europe and has been providing hot water and heat to hundreds of homes and businesses for six months now. It uses existing technology to supply secure, stable-priced heat, replacing the gas engines that used to heat the network.

This is a major step forward in the mission to decarbonise heat and a real-world example of how former mining communities could benefit from using the historical industrial coal mining infrastructure to create an eco-friendly future.

The innovative project is helping to combat climate change and achieve net zero aims by tapping into the potential of water-filled, disused coal workings underground. It harnesses geothermal energy from mine water to generate localised, secure, low-carbon heat, replacing the function of traditional boiler systems.

Work on the underground mines required by the scheme was supported by the Coal Authority as we own and manage the disused coal-mining infrastructure on behalf of the British Government. We also have a team of dedicated specialists who have been researching the potential for recovering low-carbon heat from disused coal mining infrastructure for several years. We are proud to have supported the Gateshead Energy Company project throughout and believe it demonstrates how similar networks could benefit other coalfield communities across Great Britain.

Train People, Generate Ideas, Reduce Carbon Emissions

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As the world grapples with the urgent need to address climate change, it is crucial for all sectors to play their part in transitioning to a sustainable future. Social housing providers have a unique opportunity to lead the way in reducing carbon emissions while also addressing the issues associated with social and economic inequalities in Britain. The Carbon Literacy Toolkit for Social Housing presents an invaluable resource to empower and educate stakeholders, enabling them to take meaningful action towards a greener, more sustainable future. As global greenhouse gas emissions continue to rise, there is an imperative for organisations and communities everywhere to take control of the emissions over which they have influence. Those of us without the political clout of public office or presence at international conferences might feel powerless to do anything about climate change. But we can choose a different path, we just need to know how.

The Carbon Literacy Project has been supporting workplaces in creating the time and space to talk about climate change and its solutions for over 10 years. Training materials are designed to frame climate change conversations through lenses that are relevant to the organisation and the local area; a collection of 17 housing associations across Greater Manchester realised that their materials might look rather similar. They jointly funded the development of a Carbon Literacy training programme that coordinated their training efforts and low-carbon actions. This was the precursor to the Carbon Literacy Toolkit for Social Housing.

The Social Housing Toolkit is a comprehensive and user-friendly resource designed to enhance the understanding of climate change, its impacts, and the measures required to mitigate its effects within the context of social housing. Developed with and for social housing providers, the Toolkit provides a systematic approach to building Carbon Literacy among staff and tenants, as well as other key stakeholders.

The Toolkit was shortlisted for the Unlock Net Zero Awards 2023. It was fantastic to see that so many of the winners this year are organisations that train their staff in Carbon Literacy to aid their low-carbon ambitions. One of the strengths of the Social Housing Toolkit is its ability to empower staff and tenants within the social housing sector. By equipping them with the knowledge and skills necessary to tackle climate change, the Toolkit fosters a sense of responsibility and encourages collective action. This, in turn, can lead to a range of benefits, including improved engagement, enhanced reputation, and reduced operational costs.

The Toolkit provides a wealth of educational resources, including training materials and case studies. Its interactive delivery style is designed to raise awareness and deepen understanding through learning with and from everyone in the room. By increasing Carbon Literacy, social housing providers can empower their employees to make more low-carbon choices in their roles within the organization and in their own lives too. Such knowledge can inspire innovative solutions and foster a culture of sustainability within the workplace. Whether at the beginning of your sustainability transition, or trying to put robust policy into action, the Carbon Literacy Toolkit is an impactful means to realise excellent results.

The adoption of sustainable practices is not only beneficial for the environment but carries with it a wealth of other benefits. The Social Housing Toolkit assists social housing providers in identifying energy-saving opportunities and implementing measures to reduce energy consumption and associated costs. By promoting energy efficiency and encouraging the use of renewable energy sources, providers can significantly reduce their carbon footprint while simultaneously lowering operational expenses. Better efficiency and lower bills allow householders to live comfortable, healthy lives in their homes.

In an era defined by the urgent need for climate action, social housing providers (and their supply chains) have an incredible opportunity to drive change and create a sustainable future. The Carbon Literacy Toolkit for Social Housing equips staff, tenants, and stakeholders with the knowledge and tools necessary to make informed decisions and take effective action towards a greener and more sustainable social housing sector that provides safe, decent, affordable homes now and into the future. Those that embrace this powerful resource can strive for a brighter, carbon-conscious world.

If you would like to use Carbon Literacy training to enhance your transition to net-zero carbon emissions, contact us via email at housing@carbonliteracy.com.

Locata – Predictive model for assessing future TA need

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Councils can now estimate the size and cost of their future Temporary Accommodation (TA) need using a predictive model developed by Andy Gale, one of the country’s leading homelessness experts.

It is designed to help housing managers make the case for additional budget or capital resources to help purchase lower-cost TA.

This is particularly important given the current economic downturn and cost of living crisis, with some commentators claiming that we are “facing a tsunami of homelessness”.

The free predictive model is available for download from the Locata website, by clicking this link.

The model establishes a “baseline position” allowing a council to record the numbers in TA and then breaks it down by each reason for a TA placement.

If the exercise is conducted at the end of March actual figures can be used.

Each reason for a TA placement is examined with guidance on whether TA placements are likely to rise, or remain the same, or fall.

Officers then input their own estimate for the impact on TA for each cause of a TA placement, allowing an accurate estimate of the council’s additional TA need.

The predicted figure can then be checked against the national trend as data emerges from Government published HCLIC statistics, which are normally published six months behind.

The model then helps estimate the potential cost of these additional TA placements if the only alternative TA options available to a council are either B&B or nightly rate TA. These two types of TA are the most expensive options available to a council.

Once the predictive model has been completed, managers will be able to make the case for:

  • Additional budget
  • Capital resources to buy lower-cost TA
  • Other interventions such as increasing the percentage of social housing properties targeted at households in TA
  • Or a combination of all of the above

Double appointment for Ward Hadaway’s Built Environment Team

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Law firm Ward Hadaway has appointed two new solicitors who have joined the firm’s growing Built Environment Team in Newcastle.

Based at the firm’s Quayside office in the city centre, the appointments of Philippa Jones and Victoria Chatterton, joining from their previous firms have further strengthened the construction and engineering team, supporting their growing client base across the North East and further afield.

Philippa joins as an Associate solicitor and will be responsible for a wide range of contentious and non-contentious construction and engineering matters. She joins from her previous firm where she worked as an Associate and has over five years working within construction law.

She particularly focuses on major infrastructure projects and will act for a wide variety of construction and engineering clients including contractors, developers, employers, subcontractors, consultants, procurement specialists and Local Authorities.

Commenting on her appointment, Philippa, said: “Ward Hadaway has a great reputation in the region with an impressive client roster and collegiate atmosphere. I’m looking forward to building my construction practice throughout the region by supporting local major infrastructure projects in addition to national clients. I am delighted to have joined this expanding team at such an exciting time.”

Victoria has also been appointed to the same team and joins the firm as a solicitor. She is acting for a variety of construction and engineering clients in drafting, reviewing and negotiating consultancy appointments, collateral warranties and standard contracts working from project inception.

Victoria is a member of the Women’s Lawyer Division and Women in Construction forums. Commenting on her appointment, she said: “I’m really enjoying my new role and it’s an exciting time to be joining this growing team. Ward Hadaway has a great reputation and is one of the leading law firms in the north so I am grateful to be able to apply my knowledge and experience with construction clients across the region.”

Paul Reekie, a Partner and Head the firm’s construction and engineering service, said: “This is a really exciting time as we continue to strengthen our Built Environment Team to support our growing client base. Our priority is to attract and recruit high-calibre solicitors to ensure we can provide an all-encompassing service for our clients across many specialisms.

“In the last three months alone, we have made six significant appointments within the team across all three of our regions and I’m confident Philippa and Victoria will complement and add value to our existing relationships with our clients. I’m looking forward to working with them both.”

New appointments: Solicitors Philippa Jones (left) and Victoria Chatterton have both joined Ward Hadaway’s growing Built Environment Team.

New Locata Lettings system on show for first time

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Locata’s National Users Group (NUG) saw the first demonstration of the new Lettings system at its Autumn meeting.

The development work on the new module for the Locata Pro Platform, which is designed to be a replacement product for our current Choice Based Lettings product, has been undertaken by Locata’s strategic partner, Sector, throughout 2022.

Sector’s Luke Hatfield explained that the new Lettings system is not completely built yet, but already looks “much more modern, clean and fresh.”

“Over the last couple of months we have focused on the property shortlisting cycles and being able to set up a property, advertise that property and then pushing it through into a shortlist and then working that shortlist,” he said. “We are now trying to finish that process and get it into test.”

Luke showed how the new system offers the user much more control – for instance, allowing property fields to be configured by the officer.

It also introduces the concept of an “Advert Instance”, where a new advert is created automatically whenever a property is being prepared to be advertised.

“The idea is that you will have a history of the property each time it is advertised.” said Luke. “Currently you have to over-write the current advert with new information, such as hand over dates, and you lose that history, although it is in the audit trail.”

Other new functionalities include a cropping tool for photos and configurable fields and rules on the property wizard meaning you can build your own property wizard as simple or as complex as you like.

We expect the new Lettings system to be fully built and ready for you to use from April 2023 onwards.

To find out more about the new Lettings system, including links to a recording of Luke’s demo, please click here.

Or, alternatively, come and meet us at our stand at the rescheduled NHC Northern Housing Summit on Tuesday, January 17, 2023 in Manchester. We would be delighted to have a chat with you.

Sector’s Luke Hatfield delivering the first public demo of the new Lettings system at the virtual NUG

 

Locata progresses to G-Cloud 13

Locata has been successful in applying to join the Crown Commercial Services latest iteration of its digital marketplace – G-Cloud 13.

The latest version of the G-Cloud framework went live last month and offers the very latest cloud technology and digital support to organisations across the public sector.

This means that Locata continues to be an official Crown Commercial Service supplier and our products and services can be bought by local authorities through the Digital Marketplace without needing to go through a full tender process.

Public sector organisations that buy services through the Digital Marketplace save significant time and money as the process is faster and cheaper than entering into individual procurement contracts.

You can find out more about G-Cloud 13 and the digital marketplace here.

One year on: assessing the value of the new shared ownership model

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Richard Houghton Director JLL Affordable Housing Valuation – North

A year is an awfully long time in politics.

It was back in September 2021 that the UK government sent shockwaves through the affordable housing sector by revealing a new shared ownership model.

Fast-forward 12 months – and three housing secretaries – and housing associations are dealing with myriad pressures. But what’s been the impact of the shared ownership changes? And how can we value properties under this model?

What’s changed

Many of the changes sought to increase accessibility and flexibility for customers, but have also raised questions about the long-term viability of the model.

To recap, the key changes of note are:

  • the minimum initial equity share is reduced from 25% to 10%
  • there is a 10-year repair warranty during which the shared owner will receive support from their housing provider/landlord to pay for essential repairs
  • a new 1% gradual staircasing model will enable shared owners to buy more shares in smaller instalments over the first 15 years
  • a reduction in minimum larger share purchase from 10% to 5%
  • shared owners will be able to take control of the resales process at an earlier point
  • and, finally, a lease must now be granted with a term of 990 years.

What’s the value impact

So how does this new model impact valuations?

First, we need to consider how we value Shared Ownership as a tenure. Typically, we apply a discounted cashflow approach, with the value derived from two sources: the rental income received from lessees on the RP’s retained element; and capital receipts from lessees when staircasing.

The year one rent is taken as the starting point, with real growth applied, less any non-recoverable costs (there are usually some in practice, despite the wording of leases).

The capital receipts are normally modelled to reflect a cautious profile over the cashflow, currently at 25% initial tranche sales to reflect a sensible average and typical transaction. Separate discount rates are applied for rental income and receipts, whilst benchmarking and sense-checking is undertaken against similar valuations and transactional evidence.

The main risks arising from the changes are as follows:

  • Minimum initial equity sale decrease from 25% to 10% – Reduced first tranche receipt however higher rents (3% of RP retained equity) Potentially reduced covenant strength, with possible increased arrears/bad debts
  • Minimum staircasing tranches reduced from 10% to 1% – Reduced capital receipts and increased admin/ management costs. Potential for a stronger rental profile
  • 10 year landlord repair contributions – New added cost with increased admin/management, additional repairing liability

The changes that have been implemented are clearly weighted towards the lessee, which in itself is no bad thing, given that providing quality housing opportunities across a wide range of tenures is a fundamental objective within the sector.

That said, the newly presented risks and the increased administrative and operational costs will create additional pressures for housing providers delivering new shared ownership homes. As a result of the additional repair cost liability, and the potential to reduce the net rental income position, there will be a need to remodel.

Conversely, where first tranche sales are completed on lower equity shares, the income over the length of a lease could be more valuable, certainly in a market where investment appetite for long-dated, index-linked income remains strong. Despite the negative impacts on value, there are some balancing factors which potentially soften reductions.

Getting the message across

From the Registered Providers themselves, the message has been clear – that the potential for reduced capital receipts on initial and ongoing tranches is perceived negatively, as are the additional repair liabilities. This will require an adjustment to delivery models which may impact land appraisals and, ultimately, business plans. The level of downward pressure on viability and values will however be dependent upon the average position adopted for first tranche sales as well as the staircasing assumptions.

And what about investors? Essentially, the shared ownership tenure offers investors income hedged against inflation, albeit the same risks do present themselves under the new model, with the potential for increased arrears and bad debts, capital receipts from tranche sales reduced, and the increase in management and repair costs.

Despite all these factors, the fundamentals for those interested in the tenure remain intact – an alternative asset class with strong ESG credentials, as well as the possibility of inflation-linked returns and exposure to house price growth. Whilst questions have been raised over the changes, these can all be explicitly modelled and, as a result, market sentiment remains strong with investors undeterred.

JLL has been involved in some of the largest portfolio transactions of shared ownership homes over the last 24 months; what has been clear is that pricing remains strong, and, from conversations across our client base and wider residential market, there is currently no evidence of pricing change in the s.106 market as yet. It is this latter area which is likely to see some price adjustment.

Admittedly, tangible evidence of pricing under the new model is a little way off at present, as stock numbers to date are limited. In the immediate term however, a lack of supply will likely continue to drive demand.

Finally, the lenders within the sector will be discussing the same considerations dominating every other boardroom table; changes to facility cover ratios, and reduced shared ownership proportions permitted within security pools, will be something to keep an eye on.

What impact these changes will have upon those considering home ownership remains an unknown quantity. Will we see lower equity sales and smaller staircasing activity?

Based on recent discussions within the sector, consensus certainly pointed towards the potential for that, depending on the market dynamics in any given location; but in a lot of instances, it is felt that activity from both new and existing lessees, will continue a similar pattern as it always has.

There are many different tangents that can be explored whilst discussing Shared Ownership, with affordability and regional variances just two things that spring to mind. But, whilst it forms part of the government’s delivery strategy, it is important to understand fully how the model can be applied to meet some of our housing needs.

There are no end of headwinds facing the sector at present, and to be perfectly honest, this article was written before the latest maelstrom, but from both a valuation and viability perspective, hopefully the new model in isolation can be considered more of a stiff breeze as opposed to a force 8 gale that has development programmes struggling to stay upright.

Help and advice delivered simply and clearly

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My Advice Gateway is a free resource that helps people quickly find information on claiming benefits, accessing help and support and looking for a job or training opportunities.

Many of our partner schemes have links to the website allowing their customers to access key financial information at a time of rising costs and economic uncertainty.

The website is supported by Locata. It has many links to authoritative advice or the precise application form a customer needs.

One key section sets out the way benefits are currently claimed and paid and explains how universal credit works and all the Government help available under the Cost of Living Support 2022.

Each section has multiple sub-sections to make it easy for the reader to find exactly what they require.

For instance, the Money & Debt section has sub-sections on Banking, Borrowing, Legal Help, Managing Debt, Money & Debt Advice, Mortgages, and Savings.

Each sub-section then has a series of articles providing all the key information in a straightforward manner with links to relevant additional material.

My Advice Gateway also provides a quick way to see what help is available from the charity sector.

Charities play a significant role in many of our essential services such as the health service, community and education, but they also provide free authoritative advice on a wide range of issues, such as providing help and support for the elderly, the disabled, those that are ill and people in need of housing help.

However, the best way to appreciate the free advice on offer is to have a play within the website yourself. Why not check it out by clicking on this link <link to https://myadvicegateway.org/>

If you would like to know more about My Advice Gateway, please email us at enquiries@locata.org.uk

Giving officers on the ground control of their IT systems

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A video showing how the “tasks and questions” procedure can help local authority officers design, build and deliver their own workflows is available by clicking the image.

More and more councils are taking control of their customer facing IT systems and configuring their own workflow processes using Locata’s unique intuitive software.

Local authority officers are encouraged to develop their own tasks within the system to suit the processes that work best in their local area.

This means that councils do not need to compromise on their software system as they cast around to find the approximate “best fit” for their local needs.

Instead, the Locata software can be easily adapted using its unique “task and question” procedure to deliver each local authority’s precise requirements.

Kirsty Farmer, Housing Manager at New Forest DC, has been overseeing the introduction of a new Locata module called Private Sector Housing (PSH) at her council.

“I am not from an IT background and have not configured a system before. However, the tasks and question functionality is very simple to use,” she told Locata’s National Users Group (NUG) earlier this month.

“I have been able to tailor the system to how I want the team to work, rather than the confines of the system dictating the way we work.”

The functionality giving control to users of the Locata system was first developed with a module called HPA2, developed for officers to reflect the new duties placed upon them by the Homelessness Reduction Act 2017.

Locata worked with a Development Group formed by practitioners from 27 councils. The officers on the group made it clear during the development of HPA2 that each would need the ability to configure the system slightly differently from each other, based on their own local need.

The resulting homelessness system with its unique “tasks and questions” functionality impressed local authorities across the country and is now used by more than 120 councils.

The platform that HPA2 was built on has now been re-purposed for a series of new modules, including Temporary Accommodation and Rents Accounting, Third Party and Housing Related Support, and Private Sector Housing – each giving officers unique control over their workflows.

“The implementation of the PSH module allowed me to review all of our processes”, Kirsty Farmer told the NUG meeting. “The beauty of the ability to amend the system so freely means I can change processes and fields at any time.

“Previously we would need to instruct our IT department and the software provider, wait a number of weeks and agree a cost to make even the most simple of changes, even if they were possible in the first place.

“With the Locata PSH system I have been able to create multiple case types and add workflows accordingly to manage cases that were often held outside of our previous system.”

Locata is also planning to move its much admired and widely used Choice Based Lettings software over to the new platform to give housing officers even greater control of the way they work as part of a “Complete Lettings Digital Solution”.

To find out how our unique software can benefit your council, please contact Locata at info@locata.org.uk

Rent Caps – What are the Potential Impacts?

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Richard Houghton Director Valuation Advisory – Affordable Housing JLL (richard.houghton@eu.jll.com)

After a long period of guessing and surmising what may unfold, the government finally provided some insight on their directive for rental policy, outlining three options for a social housing rent cap next year. It is certainly not the most welcome news for those pulling together business plans, but at least there is some visibility on what 2023 may hold. The juggling act of meeting operational requirements, high levels of service dependency and the continual pressure to invest in existing stock whilst delivering new developments presents a significant challenge on all fronts.

Over the next few weeks, the government is consulting with the sector on capping social rent rises at either 3%, 5% or 7%. Whilst this intervention aims to protect residents from the current storm of soaring inflation, conversely it removes some of the limited protection available to Registered Providers to counteract the rising service delivery costs. The rent settlement agreed in 2017 reinstated a period of rental growth stability following a period of rent cuts, allowing annual rental increases at a maximum of the consumer price index plus 1%, but with inflation sitting at 10% plus, this could potentially result in 11% rises on current rents.

With the cost of living crisis arguably felt most acutely by our social housing tenants, a delicate balancing act is required to address affordability, but at what cost?

The initial cap suggested by the government would come into effect from 1 April 2023 to 31 March 2024, but the consultation also seeks views on whether to set a limit for 2024-25. The consultation will close on 12 October 2022. Following the consultation, we understand firm direction will be announced later in the year, hopefully providing some time for landlords to factor this into their business plans for April 2023.

Here at JLL (Jones Lang LaSalle), we have been modelling shadow appraisals for some of our existing RP clients to assist with financial planning and stress testing to help inform their boardroom discussions.

When modelling the different rent caps, the assumed level of inflation and its projected impact on net income is fundamental to the outcomes and, to this end, we have adopted Citibank’s recent prediction of 18% UK inflation in early 2023, which we would hope models a very worst-case scenario. Despite some variances depending upon the age of stock, investment programmes and rent levels, our initial projections across mixed tenure social housing stock have generally returned similar results regardless of location. These results are summarised as follows:

 

Indicative Projected EUV-SH Values 1 April 2023

Assumed management cost increase 10%

Assumed repair and maintenance cost inflation: 18%

 Impact on valuations compared with previous April 22 reporting.

 

3% Rent Cap 5% Rent Cap 7% Rent Cap
EUV-SH Apr 23 EUV-SH Apr 23 EUV-SH Apr 23
-6.5 – 7.5% -3.0 -3.5% 0.5 – 1.00%

Whilst we appreciate that such a high level of inflation combined with a rent cap would have a material impact on business plans, based on this analysis, we would suggest that on valuations at least, a rent settlement of between 6.5% and 7% may well mitigate the effect of a potentially high inflation figure of around 18%.

Although we at least have some details to start considering, as ever, there appear to be more questions than answers. However, the JLL team are keen to share views and provide assistance as the sector works through the impact of the rent caps and prepares its response to the consultation, so please do get in touch if you would like to discuss this further.

 

Bolton’s new system linking housing applicants to providers of support

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Bolton Council is the latest local authority to put Locata’s Housing Related Support (HRS) module at the heart of its management of housing support applications.

The system will go live this Friday and will help officers manage a pathway of referrals into accommodation with support or floating support.

Bolton’s new HRS module assists the officer as they manage the applicant through to a provider who will give them the service they need.

It also monitors the applicant’s progress, recording the outcomes of all steps and stages, automatically providing full reporting and other management information direct to the officer.

HRS has an inbuilt “provider” database including details of the services each provide. There is also a custom login portal for third party providers of housing related support services, allowing local authority partners to accept new clients into their services and report on progress.

The system massively reduces the amount of manual information needed to be entered by officers as data is exported between modules with just one click of a button.

The information required by support providers is very similar to that already gathered as part of the homelessness service, so Locata has ensured that the workflows of the HRS module are aligned with that of our homelessness module, HPA2.

This not only makes the transition between products seamless, but officers already using HPA2 require little training on how to use HRS as it has been built on the same system platform.

Locata has also recently released a new feature which enables officers to export fields and questions between modules. This means that when clients are exported from one module to another the information matches in all the relevant fields.

To find out more about our HRS module and HPA2 please email us at enquiries@locata.org.uk