Moat

Source: Construction Digital

Date :29/08/2007 16:23:26

Taking a commercial approach to not-for-profit housing development

A leading housing association working in the south east, Moat provides high quality homes and services, including support to people who need financial help to get on the first rung of the housing ladder.. James Hurley spoke to Moat’s Executive Director of Development & New Business Paul Hackett about the association’s crucial work in providing affordable housing and services to meet local needs

Written by James Hurley & Produced by Nick Hargrave

Moat owns and manages almost 17,000 homes throughout Kent, Sussex, Essex, Hertfordshire and south London, and leads the sector in delivering housing solutions for key workers in the south east. It has one of the largest Housing Corporation development programmes in the country and is the government appointed Home Buy Agent for Kent, Sussex and Essex. The association is based in Dartford, in the heart of the Thames Gateway and at the centre of its operating area. A not-for-profit organization, Moat’s financial surpluses are re-invested to provide additional affordable homes and services.

Continued growth

The inflated housing market and general economic climate have generated an economic climate that makes the existence of organisations such as Moat almost a necessity for those priced out of the housing market. Moat is active in three out of four government growth areas and covers 35 active local authority areas across the South East. It has a high level of knowledge and expertise in terms of both low-cost ownership houses and the intermediate housing market in Kent, Essex and Sussex. “There’s a huge amount of opportunity for us,” says Paul Hackett, Executive Director of development and new business.

Moat utilises a number of different methods to take advantage of these opportunities and find homes for its residents. “We’re involved in conventional grant funded rent, shared ownership and intermediate rent, but we’ve also started a scheme in Gravesend which is part funded by the national regeneration agency English Partnerships to provide 211 homes which are a mixture of market sale and affordable houses. The grant funded model is another alternative.” In April, Moat further extended its development repertoire when it signed its first housing PFI contract for 700 new and refurbished homes in Ashford in Kent.

Hackett’s remit involves formulating and delivering Moat’s growth strategy. “This is a combination of affordable housing for rent and for shared ownership, intermediate rent, our market home buy agency role and also delivering Moat’s market sale programme,” he explains. “That’s approximately 700 homes a year for affordable new build, plus our open market home buy, which stands at about 600 homes annually, and then market sale, which at the moment is modest but we’re looking to get that up to 150 homes a year from 2008.

“Continued growth is important for Moat because it allows us to achieve much more for our partners and for our resident customers. The scale of housing needs in London and the South East remains enormous. We exist to respond to those needs. More rapid growth will help us to do that more effectively."

As the challenges of the housing market continue to mount, and more first time buyers are priced out of the market, Hackett aims to ensure that Moat’s growth strategy responds in kind. “We may end up doing more market sale as time goes by and pressure grows to reduce rates,” he says. “We’ll also be required to take a more proactive role on land acquisition, so the pressure may well shift further in favour of market sale.

From our point of view, the starting point is delivering balanced and sustainable communities and creating places where people want to live. This means controlling the development process, controlling land, and controlling design and master planning. By doing that, we can build the kind of communities that are both popular to live in and easy for us to manage.

Building communities

The fact that Moat is a non-profit organisation allows it to leverage certain advantages that a company beholden to share holders would be unable to. We take a much longer term view because we’re not driven by share holders’ needs,” says Paul Hackett. “I think we’re also able to take a slightly different view on margin and return which enables us to recycle more of the benefit back in to underpinning our core business. In certain circumstances, this actually enables us to be more competitive.”

The company’s involvement in PFI contracts and commercial partnerships means that its management must be at least as streamlined and effective as that of its private commercial counterparts. “Our partners want to know that they’re working with an organisation that will be flexible and commercial and has expertise in sales and marketing. With shared ownership agreements, they need to know that we’re professional. That leaves a relationship to be built up over a long period of time.”

In 1990, Section 106 of the 1990 Town and Country Planning Act set out the mechanism for achieving affordable housing through the planning system. As the policy finally begins to reach maturity, Moat has found itself involved in three of the largest section 106 projects in the country; at the Greenwich Millennium Village, the Greenwich Peninsula and Convoys Wharf in Lewisham. These projects alone have been allocated £90 million of social housing grant funded to 2011, with further funding anticipated in the forthcoming bid round.

“One of the key elements to working on these long term projects,” Hackett says, “is looking at the long term mixed tenure (partnership model) management. For example, we’ve played a major role in developing and designing the management arrangements on Greenwich Millennium Village with our partners Taylor Woodrow and Countryside Properties to ensure that we were able to create a new community that works.”

The Greenwich Millennium Village represents a first major step in the government’s Thames Gateway regeneration project. It’s an ambitious mixed-use development comprising of more than 1300 homes as well as commercial space.

Hackett, who has worked for a number of housing associations, says the biggest difference between Moat and his experiences elsewhere is its involvement in more large scale, place making schemes. “We recognise that we have to bring in the softer community building skills as well as the traditional regeneration skills. We have a lot of skills internally. We have a sustainability manager working on our new major developments to ensure we’re bringing in affordable as well as market orientated housing.”

Shared ownership

One unusual aspect of Moat is that it has very high levels of shared ownership – around 43 percent. In Kent, Sussex and Essex, Moat markets all government low cost ownership schemes, including homes built by other housing associations. Moat’s ‘HomeBuy’ schemes allow people on low incomes to purchase an equity share in a property from as low as 25 percent.

As a result of its high levels of shared ownership, Moat has a very high RCGF (Recycled Capital Grant Fund), which enables it to forward fund schemes in advance of getting government funding. RCGF’s consist of grant funding that has been recycled when a housing association property is sold, meaning the initial grant funding being reused rather than paid back to the government. “Proportionally, for a housing association of our size, to have access to such a large amount of money gives us the confidence to go into the market and engage with the private sector, bringing forward opportunities that otherwise might not have been unlocked,” says Hackett..

“The scale of our RCGF pot combined with a streamlined governance structure gives Moat anadvantage over our competitors,” he continues. “We can make very quick decisions in terms of turning round land acquisitions. I meet every Monday morning with the executive team and we’re able to approve projects up to £10 million without referring through to any of our board committees. This means we can move quickly and more commercially to acquire land in advance of grant. Generally, we take a more commercial approach to development.”

To focus its land buying activity, Moat has recently recruited a new land director, John Baker. He has a private sector background and will be leading the development of its market sale programme and acquiring land for mixed tenure development. “Having that RCGF in place will give us the confidence to acquire land bank, work through the planning system and provide the right balance of affordable housing including additional capacity above and beyond what is required by planning gain.”