The Strategic Fit
The transfer of the NHS portfolio is seen as a major boost to English Partnerships’ national housing and regeneration programme and provides a significant contribution to the First Time Buyers’ initiative.
DTZ was commissioned by ODPM to assess the portfolio’s development potential, its anticipated contribution to policy objectives and to provide a framework for implementing the development programme.
The policy framework - driven substantially by ODPM’s Sustainable Communities Plan and supported by the Barker Review of Housing Supply as well as regional and local policies - set an unambiguous mission for those involved in the supply of housing throughout England: increased output of good quality new homes to improve generally the affordability of homes for purchase combined with increased provision of affordable housing.
New housing development was to be promoted in sustainable brownfield locations and delivered at a faster rate than had been achieved in the recent past.
Against this background, there were also geographical areas of priority within the Northern Way and the Growth Areas in the South.
DTZ’s report found the strategic policy fit and overall contribution of the portfolio towards Government objectives to be compelling as well as offering an opportunity to demonstrate best practice in terms of mix of uses, quality of design, density, environmental sustainability and modern construction techniques.
Nick Lambert, who led the DTZ team said: “This deal made sense from the outset, giving an opportunity to bring a consistent and urgent approach to the strategic delivery of so many sites in the context of policy objectives. As well as assessing the financial parameters, we considered the portfolio’s development potential under both a ‘market’ and an ‘English Partnerships’ scenario so that we could measure not just the absolute contribution that the portfolio could make but also to test and measure the additional outputs that EP’s approach might unlock.
“The results were illuminating. The portfolio had the capacity to provide up to 15,000 new homes of which about 5,000 could be affordable. Over 80% of the sites were categorised as having a ‘high’ or a ‘medium high’ policy fit. Depending on the level of its involvement, we estimated that the public sector could enable an additional 34 per cent private and 116 per cent affordable units above the benchmark scenario.
“Through a purposeful public sector approach, we forecast that densities could be lifted above PPS3 levels, profit could be re-profiled to deliver more affordable housing, unviable sites could be packaged with profitable ones and - critically - quality could be improved.”
Having concluded that the NHS Portfolio was well suited to the delivery of wider policy objectives, DTZ were retained to advise on the optimum method of achieving the transfer within phased tranches and realising the development potential.
Having structured the financial aspects of the transfer including agreeing the transfer price and overage mechanisms, DTZ undertook the pre-purchase due diligence and provided practical steps including the critical path of events to be followed by both Departments to complete the complicated transaction and to deliver the first tranche within a tight timetable.
Lambert added “The fact that such a complex deal could happen within the timeframe demonstrates what can happen when two Government Departments work together with their interests aligned.
“ We were able to conclude the whole strategic review of 96 properties within seven weeks. Our track record in advising on complex development projects and our previous deep-rooted experience of working with English Partnerships meant that when it came to structuring the deal, we were comfortable in breaking new ground to help deliver this landmark project.”
