Happy marriage

Success has its victims. If everybody wants to move to regenerated cities with their jobs and gyms, what happens to the places they left behind? Ushaw Moor is a case in point. Two years ago, this former mining village did not look as though it had an inhabitable future. Its population was draining away into the neighbouring suburbs of Durham and the number of children at Ushaw’s primary school had dwindled to the point where it faced closure. Once that went, the village was moribund.

But then an unusual partnership between the private and public sectors stepped in, and things began to change. Durham council and Keepmoat, a private sector developer and regeneration specialist, together formed the Durham Villages Regeneration Company (DVRC). Over the past 18 months, DVRC has built 153 homes in Ushaw Moor, given grants to local amenity providers, including £100,000 to give the school a second football pitch and brighten up the village’s landscaping.

The deal between the council and Keepmoat is simple: Keepmoat’s subsidiary Haslam Homes bought 153 plots from the council in 2003, but it only has to hand over the money when the plot is sold. In addition to the money for the land, the council receives a 50% share of the profit from the sale of the homes.

Brian Lilley, Haslam Homes’ sales manager for the North-east, says both partners gain from the arrangement. The council is able to raise revenue for improvements to the village and increase its council tax take, whereas Keepmoat is able to minimise its development costs.

Lilley says DVRC thought carefully about what development mix would encourage people to settle in the village. “Ushaw Moor is only three miles from Durham, so it’s well within commuting distance. The problem was that the kind of homes people want to buy weren’t available. The old miners’ cottages were very small and many were in need of modernisation. We wanted to encourage first-time buyers and families to the area so most of the new homes are three-bed and we’ve tried to keep prices affordable to local people.”

Of the properties sold so far, about half have gone to first-time buyers and Brian Spears, chief executive of the council, says most of these are returning locals. A further 10 properties have been sold to Three Rivers Housing Group for shared ownership.

The partnership between Durham and Keepmoat has grown and deepened over the 10 years that staff from the two have worked together, and the closeness of the partnership is essential to the outcomes of its work. As Spears says, it’s a relationship that has evolved gradually and is underpinned by trust.

Haslam bought 153 plots from the council in 2003, but it only has to hand over the money when the plot is sold. When that happens, the council gets half the profit

The two came together in 1994 as the Durham Housing Partnership, with the aim of using the council’s land assets to cross-subsidise the construction of flats and bungalows for local housing associations. The council selected Keepmoat because it was the only developer that offered a profit share. By 2001, Durham decided to move its partnership with Keepmoat on to a new level and provide a greater mix of development through Haslam Homes.

Spears says Durham’s relationship with Keepmoat has not been straightforward, which is possibly why there are not more partnerships like it elsewhere. He says, “We’ve burned a lot of midnight oil sorting out the legal issues of our partnership and have had to make plenty of trips down to the Treasury to iron out the creases – for example, to sort out how a public authority could take profits from a commercial venture. What’s more, some of our projects over the years have made slight losses. But, overall, both we and Keepmoat have our sights on the long-term benefits that our collaboration brings. That’s what keeps us stable.”

Ushaw Moor is unusual, but no longer unique. DVRC is adopting a similar approach to other villages in the area, including Bowburn, which is also three miles from Durham. This village is a high demand area for housing but little new build has taken place in the past decade. DVRC is also constructing homes in the villages of Sherburn and Shadforth (see box).

In a further extension of the relationship DVRC is building the council a £2.5m information centre, which gives advice on housing and public services, at Meadowfield, just south of Durham. In return for building the centre, the council is giving Keepmoat five plots on which to build homes, the sale of which will provide funds for building the centre. Profits made on the homes will, as ever, be split between the developer and the council – Spears calls it a “swap deal”. He says: “It’s an innovative way for us to procure our new building. If we were to sell those five plots on the open market we’d incur sale costs. This way, we get our building and we get a share in the profits made on the new homes.”

It is Spears’ aim to keep pushing Durham’s agenda with Keepmoat and develop alternative procurement models. He says: “We’re constantly looking at how this model can be expanded. The private sector is integral to our wider regeneration aims for Durham and its villages.”