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Brownfield Housing Zones Prospectus Published

Tue 02 Sep 2014

Following publication by the Mayor of London in June 2014 of the prospectus relating to the establishment of 20 housing zones (HZs) across London, the government has now published its own prospectus in relation to the launch of a further 10 HZs on brownfield sites outside London. (BHZs)  The government is making available a further £200m as capital investment funding to support the 10 BHZs which is in addition to the funding that has already been made available by central government to support the 20 HZs in London. 

Eligibility criteria for Brownfield Housing Zones

Any bid must identify a site or sites that will provide a minimum of 750 housing units.  The majority of the land identified must be brownfield land (i.e. previously developed land).  Local authorities can submit more than one bid for a BHZ and can also submit bids for cross-boundary BHZs with other local authorities. 

Local authorities must provide a robust plan for delivery in support of the bid.  They must also provide details of how the planning requirements for the BHZ will be satisfied and be able to demonstrate that the bid has local support.  If the local authority is not also applying for capital investment funding it must confirm that the scheme can be brought forward without such funding. 

The bids for BHZ status will be assessed according to the following criteria:-

  • The extent to which designation as a BHZ will accelerate housing delivery and maximise regeneration opportunities.
  • The percentage of the BHZ on brownfield land.
  • The commitment to delivery of high quality housing including through off-site construction and innovative approaches to delivery such as through custom-build.
  • Alignment with local priorities for housing and economic growth.
  • Evidence of “something for something”, for example, where the local authority is also providing financial and/or other in-kind contributions.

Eligibility criteria for funding

The funding is only to be made available to private sector developers rather than to the local authorities.  The bid for funding must therefore identify the proposed recipient of the funding.  The government does want to encourage collaboration between the public and private sectors in the BHZs and the HZs in London and it seems unlikely that any bid that does not include a private sector developer will be as favourably considered as one that does.

The funding will be provided on a State Aid compliant basis and will be fully repayable to the Homes and Communities Agency.  Funding requests must be for capital expenditure in “infrastructure” which can include demolition and/or land remediation works and/or site preparation works that support economic growth.  Applications for funding for “soft” infrastructure, such as funding for schools, community facilities and energy infrastructure, will also be considered. 

The funding available for each BHZ scheme cannot exceed 50% of the total project costs across the life of the scheme.  Funding will be made available over three years starting in the financial year 2015-2016.

Bids for funding will be prioritised based on the following criteria:

  • Clarity of the link between the requested investment in infrastructure and the homes delivered.
  • The greatest prospect of quantified early delivery.
  • The greatest acceleration of housing delivery.
  • The impact in terms of amount requested and number of homes delivered.
  • The greatest prospect of investment recovery with an identified repayment mechanism in place.
  • Capacity of the provider to deliver the project and their knowledge of site issues.

Benefits of BHZ designation

In addition to the access that designation as a BHZ would give to the £200 million pot of capital investment funding, the following benefits will also be made available:

  • Priority access to the ATLAS expert planning and technical support team.
  • Dedicated brokerage support from central government to help remove barriers to delivery.
  • Increased priority access to the £5 million local development order incentive fund that was launched in August.
  • Access to cheaper borrowing via the Public Works Loan Board’s preferential rate (being 40 basis points lower than the prevailing PWLB rate) for capital infrastructure expenditure in the financial years 2014-2015 and 2015-2016.

Summary

The BHZs clearly do not have the added potential benefit available to the HZs within London of the GLA acting as a development enabler with planning and compulsory purchase powers ready to be deployed.  The BHZs will therefore be solely driven forward by the sponsoring local authority.  It will be interesting to see whether local authorities bidding for BHZ designation do also apply for capital investment funding on the terms proposed.  These terms will be more expensive than the terms available via the PWLB (especially at the preferential rate on offer for the next two financial years).  The deadline for bids to be submitted is noon on 3 October 2014.

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