A pioneering approach to solving the housing shortage in Cornwall, and beyond
Treveth Holdings LLP
A shortage of housing stock, rising house prices and lower-than-average national wages has left people in the ‘sunshine county’ of Cornwall at the sharp end of the UK’s housing shortage. We helped Cornwall Council deliver an ambitious £650+ million house building and urban regeneration programme, using a business model that capitalises on the council’s tax advantages to make it commercially viable without breaking rules that prevent councils from running profit-making ventures. The result is a pathfinder solution, the first of its kind for local government in the UK, which has subsequently been adopted by a number of other councils faced with mandatory new build targets.
A leader in delivering affordable, sustainable communities
We helped Cornwall Council set up a tax-transparent commercial arm, Treveth Holdings, to deliver its building programme, taking an overriding (general benefit) purpose approach to the law. We interpreted rules preventing councils from running profit-making ventures in the context of the underlying objectives of those rules, rather than relying on their literal wording, to fulfil the broader public benefits of creating much-needed housing.
With a shortage of tier 1 contractors in the South West of England, Treveth needed to cast its net wider to meet the scale of development required to fulfil government targets. We helped the company develop new procurement models to get around this problem, splitting the programmes of works envisaged among smaller contractors, with phased delivery of sections of the works, tied to triggers set and controlled by Treveth. The council also negotiated joint ventures with larger contractors to avoid delays.
Treveth Holdings has become a leader in delivering lower carbon emitting homes in line with Cornwall Council’s 2030 carbon-neutral ambitions, delivering a mixed tenure of affordable and sustainable properties for private sale, private rents, and shared ownership, as well as a range of commercial and city centre regeneration schemes.
Key takeaways
A pathfinder solution for UK councils to meet government-set housing targets
We brought our full-service capabilities in real estate, construction, banking and finance, tax, restructuring and insolvency, corporate governance and public procurement to create a business model that enabled Treveth Holdings to deliver an ambitious programme of housing and commercial developments that meet the needs of local people and the UK government. The model is based on interpreting the underlying objectives of the law governing UK councils in order to fulfil the broader public benefits it seeks to achieve.
A commercially viable and sustainable solution to Cornwall’s housing crisis
Cornwall Council has succeeded in establishing a commercially viable way to increase housing that aligns with its sustainability objectives in a commercially viable way. This has required a broad spectrum of expertise on everything from corporate governance, tax, public procurement and loan and debt structuring to site-specific de-risking, contractor insolvencies and subsidy and state aid considerations.
A pioneering procurement model
An innovative approach to procurement was essential to getting the job done without incurring delays, given the shortage of contactor supply in the South West of England. We helped Treveth rethink its traditional approach by introducing joint venture and collaboration models, and also by attracting a range of smaller contractors and phasing the delivery of sections of development, updating contracts with KPIs to keep the project on track. This has spawned a number of new relationships which have proved successful in delivering new projects.
A benchmark for sustainable community development
Treveth’s new builds incorporate solar energy panels and renewable heating systems in line with the Council’s commitment to moving away from gas as a source of energy to greener alternatives to create lower carbon-emitting new developments. Beyond housing, Treveth has set a benchmark for sustainable community development – for example as master developer for the £900 million Langarth Garden Village project in Cornwall, which will provide up to 4,000 homes, with 35% designated as affordable housing, accommodating up to 10,000 residents.
Key facts
£650+
million
Cornwall Council’s housing development fund
£39
billion
UK government’s main affordable housing programme
2030
target date for Cornwall Council to be carbon neutral
Penningtons’ full-service capabilities have helped us overcome the significant challenges involved in delivering an ambitious programme of housing and community development that both serves the needs of local people and meets the targets set by government.
