£300m deal to create 2,000 new Aberdeen homes is financial first for Scotland

A landmark £300m Limited Liability Partnership (LLP) model is the first of its kind to be signed in Scotland and will see homes built across Aberdeen without any government subsidy or grant funding.

Housebuilder Places for People has signed the pioneering partnership with Aberdeen City Council which will create 2,000 new homes in the city with the potential to build a further 1,000 properties.

Aberdeen City Council and Places for People will each take a 50 per cent share in the new development partnership which will build, own and manage a range of homes across eight sites in the city, and split an equal share of any development profits.

Places for People – one of the largest property, leisure management, development and regeneration companies in the UK – has recently been appointed to a number of high-profile schemes including the creation of 1,500 homes on the Queen Elizabeth Olympic Park and the construction of 1,150 new homes at Icknield Port Loop in Birmingham.

However, the partnership with Aberdeen City Council represents Places for People’s largest housebuilding project north of the border.

The terms of the deal will see the council transfer ownership of the development sites to the partnership organisation, receiving payment in the form of land receipts on the completion of each new development.

The deal will deliver 1,000 new affordable homes for rent, 1,000 new homes for private sale and the potential to create 1,000 further properties.

Places for People, which already owns or manages 152,000 properties across Great Britain – including 10,000 in Scotland – will use its experience in the development and management of housing to minimise costs and reduce project timescales.

The not-for-dividend firm, which has assets in excess of £3.3bn, takes a placemaking approach to construction to ensure that key infrastructure and services ­– like shops, schools, leisure facilities, transport links and healthcare facilities – are incorporated into developments.

Its unique business model as a developer means that dividends are then reinvested into the communities in which it operates.

Castle Rock Edinvar is a part of the Places for People Group in Scotland and has experience of delivering innovative business models to create new housing for Scotland.

Last year it delivered funding through the Falkirk Pensions Scheme, the Scottish Government Charitable Bond and private finance to develop 200 new homes in the city – the first investment deal of its type for social housing in Scotland.

Following a commemorative groundbreaking ceremony at one of the council’s earmarked development sites yesterday, the unique partnership deal was signed to help deliver a “step change” in the supply of affordable housing in Aberdeen, and address the shortage of housing across the city.

The deal is the first time a Scottish local authority has created a 50/50 partnership with a developer which creates both affordable housing and homes for private sale where the rental asset is retained in perpetuity by the Limited Liability Partnership.

David Cowans, group chief executive at Places for People, said: “This deal is transformational. Creating 1,000 new affordable homes for rent will help to transform Aberdeen and the lives of key workers such as nurses and teachers.

“This deal is also transformational for how new homes are delivered in Scotland and provides a blueprint to show that new housing can be built without any Government subsidy or cost to the taxpayer.

“In order to tackle the housing shortage in Scotland and the rest of the UK, public and private sector organisations need to explore new models and new ways of working together.

“The fact Places for People has been chosen for this pioneering partnership is a testament to our track record of delivering attractive, aspirational and sustainable new neighbourhoods across the UK.”

The partnership will help Aberdeen City Council to meet the short, medium and long-term housing objectives contained within its Strategic Infrastructure Plan (SIP), which includes a commitment to build 2,030 homes by 2017, and focuses on delivering the infrastructure needed to support the economy of the city.

Aberdeen City Council leader, Councillor Jenny Laing, said: “This project will support and is also in addition to ACC’s own building programme, setting up Registered Social Landlords and low cost home ownership which has already delivered 1,081 affordable properties in the last four years.

“These thousands of new homes will help to address a shortage of housing in Aberdeen, which has become a barrier to the continued economic growth of the region.

“We look forward to the sites being developed and then welcoming residents into their new affordable homes.”

In Aberdeen eight sites are initially committed for the project including at Summerhill, three at Tillydrone, Craighill, East Woodcroft, Kincorth and Bucksburn Farm (Greenferns).

The developments will consist of a housing mix of social rent, mid-market rent, shared equity/low cost home ownership and private sale depending on site location and regeneration objectives.