DD2332 Bridport Road Enfield (North Middlesex Stage 1)

Type of decision: 
Director's decision
Code: 
DD2332
Date signed: 
27 March 2019
Decision by: 
David Lunts, Executive Director Housing and Land and Interim CEO of OPDC

Executive summary

LocatED, the Department of Education agency responsible for school delivery via the Academies programme purchased a portion of the North Middlesex University Hospital site in 2016 for delivery of a new school. This did not proceed. LocatED are now seeking to dispose of the land. The Trust and LocatED jointly approached the GLA asking for assistance to meet their disposal and development objectives through the acquisition of the site for housing. Both LocatED and the Trust are seeking to complete the sale by the end of March 2019.

MD2396 approved receipt of £486m of additional funding from Government’s Small Sites, Accelerated Construction, and Land Funds to assist in the acquisition of land, remediation and infrastructure to support the delivery of 8,000 housing completions in London by 2030, and delegated to the Executive Director of Housing and Land the power to approve allocation of this funding.

This DD seeks approval for expenditure to purchase the site for future disposal via the London Development Panel 2 (LDP).

Decision

That the Executive Director of Housing and Land approves, following the agreement of the Investment Committee and as per the delegation in MD2396, expenditure from the Land Assembly Fund budget for the purchase of the Bridport Road site in Enfield and the costs of subsequent preparatory work to facilitate the disposal of the site via the GLA’s London Development Panel 2, up to the amounts as set out in section 3 of Part 2 of this Directors Decision and agrees receipt of any incomes arising from tenancies or other uses taking place within the site.

Part 1: Non-confidential facts and advice

Introduction and background

The North Middlesex University Hospital (NMUH) is a medium-sized hospital, located in Edmonton within the London Borough of Enfield. It is the local acute hospital for the boroughs of Enfield and Haringey, which have a combined population of approximately 590,000, of whom the hospital serves about 300,000.

During 2015/2016, the Trust entered into discussions with the Education & Skills Funding Authority (ESFA) regarding a plot of land in the southeast corner of the site (Map in Appendix 1 to this report) for redevelopment as a free school. The Trust took the decision that it could meet the accommodation needs of the existing services on the site in a different way and took the decision to sell the land in March 2016.

Following a review, the ESFA (later renamed as LocatED) took the decision that given the proximity to the Accident & Emergency department, with over 100 ambulances attending daily, as well as other traffic and transport challenges, it would not progress with the development of the school on the site. It reached agreement with the Trust to permit the hospital services to remain on site by way of a lease, while it resolved what development would progress.

LocatED are required to dispose of unwanted assets within three years of purchase, which expires on 31st March 2019. Similarly, the Trust, who are the beneficiary of an overage clause, are focused on completing the sale before 31st March 2019 so that they have more freedom over how any such overage can be utilised under the existing healthcare ring-fencing requirements.

The CEO of North Middlesex Hospital approached the GLA with a view to GLAP purchasing the site for residential development.

MD2396 approved receipt of Government funding for small sites and delegated authority to the Executive Director of Housing and Land to agree its allocation.

Site acquisition and disposal

It is proposed the GLAP acquires the site on Bridport Road, contained within the grounds of the North Middlesex University Hospital and owned by the Ministry for Housing, Communities & Local Government through its agent, LocatED (an executive non-departmental public body sponsored by the Department of Education). The acquisition will follow a full Red Book Valuation based on the previous site appraisal conducted by Montagu Evans which determined that 206 residential units would likely be viewed favourably by planning - with cost assumptions taking into account the Mayor’s aspirations laid out in the latest draft of the London Plan for the tenure of 50% of homes built on public land being affordable.

Subject to this approval, all parties have agreed to work in earnest to complete the purchase by 29th March 2019. It was also confirmed that whilst this date is everyone’s preference, providing there is evidenced progress and a draft form of agreement in place, failure to meet this date will not result in the cessation of the purchase.

A meeting between the GLA, the Trust and LocatED in January 2019 confirmed that a two-stage development strategy aligned the objectives of all three parties. The first stage would see GLAP acquire the site from LocatED based on a joint valuation exercise and take over the management of the leaseback arrangement (currently in existence between LocatED and the Trust) to the Trust.

The second stage would see the Trust and the GLA explore options for developing a masterplan for the wider hospital site (Map attached as Appendix 2 to this report), incorporating an increased density of housing alongside replacement and additional hospital facilities. The site would then be taken to the London Development Panel 2 once planning had been obtained, with GLAP receiving a capital receipt proportionate to its interest (to be worked through in more detail with the Trust after the initial purchase of Bridport Road has been completed).

By purchasing the site, the Mayor would be able to help facilitate the delivery of enhanced health facilities with increased capacity alongside a substantial number of genuinely affordable homes in an area of critical need, recycling any uplift or financial gain back to helping achieve the Mayor’s housing objectives.

It is anticipated that the Trust will be channelling resources in to improving existing publicly accessible car parking facilities to result in no net loss of useable spaces at the hospital complex.

GLAP will immediately take over the leaseback arrangements already in place to enable the Trust to continue its day to day activities whilst a comprehensive masterplan is developed. Provisions will be contained within the lease to ensure that the Trust conduct this work expeditiously, with rental payments increasing after a suitable period should no planning application have been made. The leaseback will include the relevant clauses to ensure the site is well maintained and returned with vacant possession.

The GLA will ensure it is heavily involved with, or leads on, the development of the a joint masterplan for the wider site or a standalone development on the site purchased by GLAP. The exact details of the arrangements for the masterplanning exercise will be determined once GLAP has ownership of the initial site. However, provisions will be included in the leaseback arrangement to ensure start on site for the residential units is achieved before the expiration of the current affordable housing grant funding programme in March 2022.

The Trust’s estate development ambitions support the execution of its clinical strategy to help deliver the key enablers for the hospital and respond to the significant challenges ahead. In addition, the Trust would like to see key worker housing built on site to help tackle the recruitment and retention challenges it faces as an outer London NHS employer.

Funding acquisition of the site and its subsequent disposal via the London Development Panel 2

In addition to the necessary budget to acquire the site itself, GLAP will need to bring on board expert legal and other external advice, initially to acquire the site. Upon purchase of the site GLAP will require funds to cover the cost, or contribution towards the cost, of developing a masterplan and the subsequent costs associated with drawing up the necessary documentation, running a procurement exercise through LDP2 and finally disposing of the land.

Funding acquisitions of additional plots within the wider hospital site

Whilst the immediate priority is the acquisition of the Bridport Road site, future approval will be sought to utilise the Land Fund, subject to successful negotiations with the Trust, to purchase additional plots within the North Middlesex Hospital site should it enhance delivery of the GLA’s housing objectives.

Objectives and expected outcomes

LocatED will relinquish ownership of a site they cannot develop. The Trust will deliver enhanced health services with increased capacity. The GLA will deliver a minimum of 50% affordable housing at the optimum level of density. The comprehensive regeneration of a large proportion of the hospital site will bring many benefits to the local communities of Enfield and Haringey and increase much needed housing supply in London.

Equality comments

Under section 149 of the Equality Act 2010 (the “Equality Act”), as a public authority, the GLA must have ‘due regard’ to the need to eliminate unlawful discrimination, harassment and victimisation, and to advance equality of opportunity and foster good relations between people who share a protected characteristic and those who do not. Protected characteristics under the Equality Act comprise age, disability, gender re-assignment, pregnancy and maternity, race, religion or belief, sex, sexual orientation and marriage or civil partnership status.

When considering the needs of the existing community and those that will be affected by the proposed development (both currently and in the future development scheme), any development activity will look to minimise disadvantages to all protected characteristic groups within society. This decision is therefore expected to have positive impacts on persons with a protected characteristic under the Equality Act, as increasing the supply of housing in London will help to address problems such as overcrowding and homelessness, which evidence indicates disproportionately affect specific groups, including Black and Minority Ethnic groups and women.

The delivery of high-quality housing will also promote improved health and wellbeing, given evidence of an association between poor housing conditions and poor health.

Other considerations

Risks and other issues

Potential Risk

Mitigation

Land value may increase or decrease with the wider housing market

Officers will carefully monitor the wider market trends and take professional advice on the appropriate time and market circumstances for disposal of the land to maximise the benefits to the community.

The increased development density may result in concerns and objections from the wider community

Through the development of the masterplan ongoing and detailed input from the wider community will be actively encouraged and sought. Continuous dialogue with the London Boroughs of Haringey and Enfield and the NHS Trust will seek to ensure healthcare and housing priorities are positively addressed through this scheme.

An ambitious affordable housing mix may result in a reduced residual land value

The initial offer will be based on a 50% affordable housing scheme. Detailed modelling will be undertaken of any additional affordable housing mixes proposed as part of the masterplan process to ensure GLAP’s obligations under s333z (c) of the GLA Act to meet Best Consideration on disposals of land are met. This may include the use of Affordable Housing Grant to ensure the viability of the scheme.

Delays in securing consent or construction of the new health facilities means vacant possession of the full site is delayed

The likely scale of the scheme, and wider potential for market absorption means the homes delivered on the scheme will be released in phases, allowing time to achieve full vacant possession in accordance with a pre-agreed sequence with the Trust. Should there still be an issue, GLAP will ensure there are substantive penalties within the proposed lease back arrangements to ensure the Trust remain on target.

A market downturn or other issues cause cashflow issues and result in a halt to development

Whilst the wider housing market is highly sensitive to external factors, the market for affordable housing is much less so, and a scheme with a high level of affordable housing such as this is insulated against market downturns and can be re-phased to accommodate this should it be needed.

 

Six assurances for healthcare sites

The Mayor has stated that in order to gain his support for changes to NHS services in London the Government must provide six key assurances for the relevant sustainability and transformation plan (STP). These are:

  • Patient and public engagement;
  • Clinical Support;
  • Impact on health inequality;
  • Impact on social care;
  • Hospital capacity; and
  • Sufficient investment.

 

​​​​​​​Whilst technically the land is no longer healthcare land (as it was disposed to LocatED as surplus land by the Trust in 2016), the GLA are committed to working with the Trust to deliver improved healthcare facilities alongside additional affordable housing. This will be through a joint masterplanning exercise aiming to optimise healthcare and housing delivery across the land GLAP will acquire and adjacent hospital owned land by considering the land as one developable site.

 

Delivering the Mayors Housing Strategy

 

​​​​​​​The acquisition of this site and a future disposal for residential development for a minimum of 50% affordable housing will help to deliver the ambitions of the Mayors Housing Strategy (adopted 2018).

 

​​​​​​​​​​​​​​Particularly, the delivery of high-quality affordable housing on this site will ensure the continued implement the following key areas of the Strategy:

 

  • Building more homes for Londoners;
  • Delivering genuinely affordable homes;
  • High-quality homes and inclusive neighbourhoods.
Financial comments

The decision is seeking approval for GLAP to purchase the Bridport Road site in Enfield and take over the management of the leaseback arrangement by March 2019 for residential development. The site is contained within the grounds of the North Middlesex University Hospital and owned by MHCLG through its agent, LocatED (an operational agency for the Department of Education).

The purchase will be funded from the Land Assembly Fund Budget and includes the cost of subsequent preparatory work to facilitate future disposal via the GLA’s London Development Panel.

There are further financial comments in Part 2, including tax comments.

Activity table

Activity

Timeline

Director’s Decision to acquire site

February &

March 2019

 

Subject to red book valuation offer made to LocatED

Red book value confirmed

Legal advisors commissioned through TFL to carry out due diligence

Financial advisors commissioned to undertake necessary due diligence

Estate inspections undertaken to carry out due diligence

Dialogue with local authority entered into

Site acquired

Leaseback arrangement entered into with the Trust

Masterplan process commences

April 2019

Start on site

March 2021


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