Gillian Bastow and Clare Reddy stress the wisdom of not taking your eye off the objective
With a £20bn backlog of disrepair in council housing, the future lies in regeneration. It isn't just about housing; it's also about employment, transport and the local economy.

If you are thinking of becoming involved in a regeneration project, be prepared.

The process can be long. Get your team on board early – internal and external.

When the mighty tome or CD-Rom arrives, take stock of what you can commit to on design, affordability, resident involvement, finance and delivery.

Check the legal requirements, perhaps in a lease or development agreement – in particular development obligations, affordable housing covenants and whether the submission is expected to form a binding contract. If so, get legal advice.

Then ask whether you are going to deliver the project in-house or through a new subsidiary or joint venture?

If it's going to be done through a new vehicle, you will need to consider representation from the local authority, residents and other community interests. Consider the pros and cons of charitable and non-charitable status. If the vehicle's purpose is predominantly housing, you must, of course, make sure you register it with the Housing Corporation.

There are some useful model objects for charitable regeneration companies but these will need to be tailored to your particular project. If, for example, you are providing "kick start" funding make sure you have the legal powers to do so.

Local authorities can assist with land value subsidy if the land is used for the provision of affordable housing.

The project may involve a private sector developer partner with sales proceeds being ploughed back in. Whatever the source of subsidy, check the requirements of private lenders during the development period and long term, especially if there are development obligations and affordable housing covenants.

The fundamental objective is to enhance housing conditions, the environment and build a sustainable community. Involving residents and the wider community can range from working parties – for instance, on design input/housing choices – to setting up organisations controlled by residents or the community for ownership or management.

Practical considerations
If the project involves redeveloping homes in which people live, what are the arrangements for decanting and the legal powers to do so? Are there owner- occupiers? If so, what are the arrangements for buying in their properties? Will the local authority need to exercise compulsory purchase order and/or road closure powers?

Ask whether the project will involve a phased development programme, and if it will, what are the risks if phases cannot be delivered on time?

Heads of terms with all interested parties, including the local authority, joint venture partner, any funder and the contractor and/or professional team, need to develop in tandem. Any "gaps" may lead to your exposure to unwanted risk. Issues to be agreed include: risk allocation and "penalties"; involvement and entitlements of the parties; and their obligations.

Discussing these early with your legal advisers can help reduce legal fees and negotiations on final documents.

Decisions on the procurement route should be taken as soon as possible as this will impact on the documentation and heads of terms. You should think about:

  • EU procurement – its application and process
  • construction procurement – pure partnering contract or more familiar contract with concepts such as key performance indicators
  • step-in rights – to whom should they be provided and in what circumstances? How are they to be documented?
  • collateral warranties – who should provide them and whom should they favour?

    While it may not be possible to deal with these issues at the outset, they should be reviewed on a regular basis and catered for in the heads of terms.

  • see www.urcs-online.co.uk for a list of urban regeneration companies or www.bura.org.uk for the British Urban Regeneration Association; you may also find www.urban.odpm.gov.uk useful