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New Housebuilding Project in Camden Faces Target Challenges

Due to financial challenges, the house-building project advocated by the Camden Town Hall could be forced to make deals with private developers if it wants to meet its targets.

The Community Investment Programme (CIP) takes the market value of property owned by the Camden Council and uses it to lever in money for residences and public schools.

Council heads have referred to its property holdings as ‘North Sea oil’, which can be dipped into thanks to London’s skyrocketing property market.

Six years into the scheme, however, an upcoming report warns that an approach change is necessary to overcome certain risk and challenges as well as accomplish the target of completing over 3,000 homes.

According to Councillor Phil Jones, Labour head of regeneration, the programme has encountered problems such as construction delays, rising individual scheme costs, running up against the borrowing limit set by the government, and limited internal resources.

The success of the project relies on the capital receipts resulting from new house sales, but many of these proposed homes have not yet been built.

As a result, concerns have arisen over the ‘significant financial risk’ being assumed by the council as it waits to be paid. The report is also raising the point that potential fluctuations in the property market could have serious repercussions.

Structural Defects Insurance

The report submitted by Cllr Jones stated that to date, rising house prices have surpassed inflation in construction costs, but a fall in prices or levelling off, combined with rising costs, could reduce capital receipts available for reinvestment. The entire programme could even go into deficit.

In addition, the report pointed out that the challenges surrounding the Housing and Planning bill is expected to put more pressure on the council if plans proceed to force the sale of valuable vacant flats to finance the extension of Right to Buy to tenants of housing associations.

The council has always taken the role of CIP developer in projects such as Gospel Oak, Bacton Low Rise, Highgate, and Chester Balmore. It has contracted construction companies to build these developments and put any profits from new house sales directly back into council projects.

At present there are 873 properties awaiting approval, where the council is looking at the option of collaborating with property developers and other external providers.

Agreements with developers will likely require the council to supply land and another partner to provide the expertise and finance to build the homes.

Cllr Jones said that this model is not one that the council prefers, but at present it does not have the necessary financing to accomplish these goals alone. He said that if the council wants to keep doing new schemes it needs to find a means of raising capital. On one hand, the goal is not to enable private profit for developers, but the scheme can’t carry on without access to finance.

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