How do we find private partners?
Reputation and good local knowledge are the keys to success in attracting the private sector. Annington was aware that Colne had experience of working on similar high-profile schemes and cooperating with Colchester council. Annington was looking for a responsive and professional partner organisation that had first-hand knowledge of the area and the agencies involved. Colne fitted the bill, which proved invaluable during negotiations.
How do you negotiate a deal?
This can be a long and complex process. First, agree on the number of properties required and what can be managed. This has to be balanced by what the property owner wishes to lease out. Lease length, cost and liabilities for items such as structural repairs need to be ironed out.
It is always a delicate balancing act. Housing associations have to be careful about budgets and carry out clear risk appraisals, as w ell as complete the deal as quickly as possible.
Who should they consult, and how?
Consultation is critical. Once the principle partners have agreed terms and conditions it is then vital to get contractors on board as quickly as possible. It is also important for housing associations to get their own boards onside and to promote the scheme internally. Local authorities will also have to get their member’s approval. The private sector partner may also have to get board and management approval. All this may be time consuming.
The question will almost certainly arise as to who is responsible for the refurbishment side and it has to be agreed whether this is to be contracted out. It also has to be agreed what kinds of things may have to be changed in order to make the properties habitable. It is again important that a timeline is factored into the agreed schedule to allow for the tendering process and for the correct specs to be drawn up.
Risk sharing
With any financial project there is always an element of risk. From the housing association’s perspective it is important that this is shared between all the partners. An example in this case was void costs. Annington requires the properties back empty and in good condition after the lease period. Colne Housing loses money if properties become void, and therefore cannot be re-let, in the last six months of the project.
This was resolved by Annington Homes offering to refund any void losses in the last six months providing the properties were handed back empty and in good repair.
Are there any problems?
The short answer to this is yes. Differing agendas will need to be reconciled early on. The housing association and local authority want to provide the best accommodation at the lowest price while the private sector is likely to be want maximum profit. There can also be a lack of understanding of pressures on other parties. Local authorities need time to inform and get approval from members. There can be some impatience on the part of the private sector partner because delay will cost them income. All this can be resolved by being open and honest about the process early on. Set a realistic timetable and keep in contact. Instructing a legal team very early on is important.
The key things to remember are:
- continually talk to each other
- share information and be honest about your organisation’s motives, capabilities and what you can offer
- plan ahead, get contractors on board early and involve them fully
- make sure contractors can source materials and check whether any obsolete fixtures are involved like boilers and fires
- keep everyone informed.
Source
Housing Today
Postscript
Mark Powell Davies is chief executive of Colne Housing Association
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