Exeter City Council is to mothball an unfinished Exeter City Living development in Vaughan Road after completing just 35 flats, leaving the rest of the two acre site and £2.75 million of groundworks for another 56 flats planned in two future phases fenced off.
After years of missed delivery deadlines the development’s first phase, facing Whipton Village across Pinhoe Road, is scheduled for completion by June 2025.
However, rather than continue with its second phase, the council has decided to see a twelve year-old plan to rebuild its remaining pre-war Laing’s Easiform council houses in the Buddle Lane estate through to completion instead.
A Buddle Lane estate Easiform house in St Thomas
The Buddle Lane estate includes 294 semi-detached houses built using the Laing’s Easiform system, a non-traditional approach that replaced brick walls with cast concrete. It was widely adopted by local authorities to enable rapid, low-cost, mass house-building after the first world war.
Around 100,000 houses were built across the UK using similar methods until the 1970s, when it became clear that many required structural attention. They were also poorly-insulated and often contained asbestos and had condensation problems.
Following the Housing Act 1985 the council designated its stock of Easiform houses as defective then embarked on a long-term refurbishment programme.
In the mid-1990’s it began transferring the houses to Sovereign Housing Association as they became vacant, without charge and with a grant, for Sovereign to refurbish inside and out then let to council-nominated tenants at social rent levels.
By June 2006 the council had transferred 92 Easiform houses this way, having sold another 169 to their tenants at a discount under the Right to Buy scheme, leaving 33 in council ownership.
A report on the transfer and refurbishment scheme said that satisfaction among subsequent tenants was “very high, given the quality of property they are allocated at the end of the refurbishment”.
Refurbished Easiform houses in Newman Road
In the three years that followed the council transferred six more Easiform houses to Sovereign. A strategic review found that the “trickle transfer” process was still more cost-effective than the council refurbishing the properties itself, but that “waiting for the properties to become empty has meant the length of the transfer has become protracted”.
Then, in 2012, the Homes and Communities Agency (now Homes England) upset the apple cart by insisting that Sovereign would have to charge “affordable” rents at 80% of open market rates, rather than social rents at 56% of open market rates, for any additional transfers – unless the council covered a resulting funding gap of around £17,500 for each house.
By this time 104 of the Easiform houses, then worth £10.4 million, had been transferred to Sovereign, which was spending an average of £75,000 refurbishing each. Three of the council’s remaining 21 houses – most of which were one half of a semi-detached pair – had been empty for more than a year. The ages of the tenants in the other eighteen meant it was “likely to be several years before some of the remaining homes become vacant”, according to a council scheme options report.
Six options were considered, four of which would have seen the properties transferred or sold. Enthused by government reform of local authority housing stock financing, introduced three months earlier in April 2012, the council decided to keep and refurbish its remaining Easiform houses as each became vacant, at an expected total cost of £1.58 million.
Works began on the three already-empty homes the following summer, each costing £88,000 to refurbish with the help of “Ready for Retrofit” grants.
An empty Easiform house in Merrivale Road
Things didn’t go according to plan. By 2016 the refurbishment budget had risen to £2.8 million and the council had put money aside to begin decanting the remaining tenants.
Then in January 2018, a report by now-council chief executive Bindu Arjoon said that a structural survey had concluded, nearly three years earlier, that the refurbishment of the three empty homes, which had been “seen as a trial for the further refurbishment of the Laing’s properties”, had increased their remaining lifespan by only ten to fifteen years.
It also said that eight of the council’s by-then seventeen remaining Easiform houses were being kept vacant at a £34,000 annual rent loss while “a decision is made about how to proceed”.
This time the council considered five options, three of which were to transfer or sell the increasingly problematic properties. It instead chose to keep, demolish and rebuild all seventeen from scratch.
The report said this was the “most practical and economically viable” option, with the longest resulting life expectancy for each house, but was also the most expensive.
By the time it was published the council had already tendered the delivery contract, eighteen months earlier, but “long-term absence and changes in the procurement team” had delayed the project for so long that the cost of delivering it had risen to £3.25 million.
A Sovereign van parked in front of a demolished Easiform house plot in Merrivale Road
Apparently on course at last, the following spring the council said the remaining refurbishments “should be delivered by autumn 2020”.
It had divided the project into two phases, with ten by-then empty homes (two more had become vacant) first in line for demolition. The tenants of the other seven would be decanted later that year.
By July 2020 the council had put back its expected project completion date to “early 2021”, although it admitted this might be “subject to re-evaluation as a consequence of the coronavirus pandemic”.
In October it said “work is progressing well”. In December it confirmed that the first six houses would be “completed and handed over before Christmas this year, with the next six following in April 2021 and the final six in June/July 2021”.
But things went wrong again. Before the middle six houses were completed the delivery contract had been terminated and a dispute had arisen between the council and the contractor.
It took until June last year to complete these six. By then, however, the budget had run short again.
The council’s executive committee met, in private, to increase it by another £2.5 million. This included £300,000 to buy a privately-owned Easiform house adjoining a council-owned semi to complete the pair.
A demolished Easiform house plot in Newman Road
Still the last few houses were not delivered. In July this year the council said: “The completion of the remaining six Laing’s properties has been significantly delayed due to the increase in inflation making development currently unviable. This position is constantly under review.”
Last month a report to the council’s executive committee confirmed that the purchase of the privately-owned Easiform house was finally complete. It said of the seven it now owns, two have yet to be demolished, two more are still standing as a self-contained pair and another three have been demolished to leave half a semi propped up with scaffolding.
It also said the ongoing security, scaffolding and fencing costs for the scheme was costing the council £40,000 each year.
The £2.5 million budget increase required to complete the scheme had been signed off by the council the previous July and authority to choose the funding mix to finance it had been delegated to the council’s finance and development directors, in consultation with council leader Phil Biaylk.
So why was the project back in front of the executive committee again? Because the council cannot finance the completion of the scheme and continue to build at Vaughan Road too.
A demolished Easiform house plot in Merrivale Road
Defunct council development company Exeter City Living originally said it would complete the 92 flats originally planned at Vaughan Road by November 2020. One third were to be sold privately and the other two-thirds to the council for social housing.
The council allocated £9.2 million to buy 60 of the flats in October 2019, at the same time confirming its purchase of the county council care home that occupied much of the site for an undisclosed sum.
After gaining planning approval early the following year Exeter City Living revised its plans and said it would complete the development by March 2022. But did not finish demolition until April 2022.
By the time building work began in April 2023 the council had committed itself to buying all the flats and had increased the project budget to £27.2 million.
The scheme was then divided into three phases, with one flat removed, and the budget was increased again, to £36.2 million, with Exeter City Living still expected to see it through.
Vaughan Road development site during demolition
The first phase of the scheme, a block of 35 one- and two-bedroom flats beside Pinhoe Road, is currently scheduled for completion by June next year. Its delivery is expected to cost £14.2 million.
The completion of phase two, a pair of smaller blocks beside Hill Lane providing sixteen one- and two-bedroom flats, is currently priced at £4.62 million. Phase three completion is priced at £12.81 million, for 40 one- and two-bedroom flats in two large blocks beside Vaughan Road.
These estimates are on top of groundworks and foundations for phases two and three costing £2.75 million. It emerged that the council had already instructed the first phase contractor to complete these works a month after it decided to all-but dissolve Exeter City Living in October 2023.
It said then that completing these groundworks early would “deliver the overall scheme more efficiently”. It said last month that these works had been approved “as they offered programme advantages and continuity to the overall scheme”.
Vaughan Road development site phase two groundworks
As the report to last month’s executive committee made clear, the council will have to retender the second and third phases of the scheme if it has not instructed the contractor to continue by the time phase one is complete.
It said this is “likely to result in higher overall build costs” and “the remainder of the site will need to be fenced off and mothballed”.
So the choice between completing the long-overdue Easiform refurbishments in St Thomas and beginning Vaughan Road phase two, with which committee members were presented, was really the result of years of undelivered local housing promises finally colliding with reality.
Whichever choice the committee made, it would be spending £1.4 million in capital receipts from council house sales elsewhere in the city – following rule changes that mean it can now use 50% of these receipts for this purpose, instead of 40%, but leaving just £300,000 in the pot.
It would also be borrowing at the current Public Works Loan Board rate of 4.78% – £1.1 million for the Easiform refurbishments or £2.26 million for Vaughan Road phase two – which it is trying to avoid.
Vaughan Road would further depend on a Homes England grant of just under £1 million, although there is uncertainty about the exact amount. The council has been haggling with the agency over the scheme for nearly three years and still doesn’t have a definitive answer.
Vaughan Road development site phase three groundworks
Plenty of uncertainties remain around the Easiform refurbishments too. Design, planning, consultant and contractor tendering and procurement have all yet to take place while project costs – which are currently based on 2023 estimates – may rise again.
And that’s without factoring in the impairment costs that the Easiform refurbishments carry, because each entails the demolition of a house whose value has risen from around £100,000 when the council began pursuing this course of action in 2012 to around £300,000 when it bought one last year.
It is hard to calculate the resulting total delivery costs of the Vaughan Road flats and the Buddle Lane estate houses because of the length of time both projects have taken and council secrecy over many of the decisions it took to finance Exeter City Living at both ends of the business.
The Vaughan Road flats will certainly have cost more than £400,000 each. And the £260,000 or so that each Easiform house has cost to rebuild does not include any impairment costs or other project overheads that have piled up over the past twelve years.
As the council says, apparently without reflecting on the new Exeter Local Plan’s reliance on this form of development: “Due to changes in the economy and in the construction sector the viability of brownfield development has become very challenging”.
Vaughan Road development consented scheme illustrative view. Image: Exeter City Council.
It nevertheless appears that councillors had hoped, at least until this week’s budget, that the council would soon be able to access sufficient funding to move on to Vaughan Road phase two, then three.
Confirmation that local authorities will be able to use 100% of the receipts resulting from Right to Buy sales to cover the capital costs of new council housing development might otherwise have been music to their ears, paving the way to seeing Vaughan Road through.
But the announcement the following day that the maximum Right to Buy discount for which council tenants in the South West are eligible is to be reduced from £102,400 to £30,000 is likely to slow such sales to a trickle, cutting off this capital supply.
And government gilt yields, which set the Public Works Loan Board rates at which the council can borrow, have increased post-budget and look set to stay high for longer than anticipated.
The real kicker in all this is that the council’s primary reason for deciding to keep its remaining Easiform houses back in 2012, to demolish and rebuild them itself, was that it would protect its tenants from being moved from social to “affordable” rents if they were instead transferred to Sovereign.
But the council’s policy has since changed so it now charges “affordable”, not social, rents for all its new housing in any case.
So the one-bed “affordable” flats it is completing at Vaughan Road will cost more to live in than its five-bed houses, all still let at social rent levels.
And the three-bed “affordable” houses which it will now, finally, build in the Buddle Lane estate will cost more than half as much again to rent as the last of the social rent Easiform properties which they will replace.
