Case study: Gateshead Regeneration Partnership

Gateshead Council, HomeGroup and Galliford formed the Gateshead Regeneration Partnership in 2012 to build homes on the council’s brownfield sites, where private developers were not willing to build.

How many and what sort of homes are being delivered?

The group has a commitment to deliver more than 2,000 homes across 16 allocated sites over a 15-year period with the potential to add more sites to the portfolio. The overall aspiration is 25% affordable, and the first four sites have achieved 20% (well above planning policy).

How did the partnership get started?

The council had brownfield sites, within inner urban areas, where private developers were unwilling to speculatively build new homes. So, the council began a procurement process to appoint a partner to participate in a joint venture, in the form of a Local Asset Backed Vehicle (LABV). Using the LABV model provided the most significant regeneration benefits and the best commercial deal.

This approach makes the council less reliant on central government funding and more able to reinvest profits back into the community, to stimulate wider regeneration. Engaging a private sector partner also unlocked the door to commercial expertise, in order to drive up construction standards across Gateshead.

The partnership in detail

The Gateshead Regeneration Partnership is a joint venture partnership formed in 2012 between the council and the consortium Evolution Gateshead, which is made up of Home Group and Galliford Try.

The Council put forward its land assets to allow the partners to secure private finance with both parties sharing equally in any development profit where a bundle achieves a positive land value. Through the programme, partners were able to support wider regeneration ambitions – achieving a balance of housing tenure along with high quality design and sustainable standards, as well as providing jobs, training and supply-chain opportunities for residents and businesses within Gateshead.

The first bundle of development commenced in 2014 and will finish in 2020 and was made up of regeneration sites in Saltwell and Deckham, which had significant viability challenges. These two were cross-subsidised by a large, high value site in Birtley. This will result in the development of over 360 homes in total involving over £70m of investment.

What have been the greatest benefits and what challenges has the group experienced along the way?

The project has allowed the regeneration of urban brownfield sites. The council consistently relied on government funding to facilitate development of challenging urban brownfield sites for the last thirty years. This new joint venture model removed the need for government subsidy.

There were also socio-economic benefits for the region – 17 local people have moved from being unemployed to having full-time work, and 19 apprentices have completed courses and also started full-time work. Around £15m has been spent in Gateshead on the supply chain.

The initial principles set by the council of bespoke design on each site, no standardised house types and Lifetime Home space standards were commercially challenging, and the council agreed to be flexible with the implementation of these standards to suit site specific issues or constraints.

What would be the group's message to other housing associations and local authorities looking to do something similar?

Be realistic about the value of the land portfolio, when entering an asset backed vehicle. Realism and clarity of resources are fundamental to the delivery of objectives and for communicating with councillors and residents.