£90m major regeneration scheme

Rachael Hobbis, Head of Construction and Engineering at Higgs advised a residential housing developer client in relation to a £90m major regeneration scheme for the design and construction of 355 build to rent (BTR) and 228 affordable homes.

The contracts in respect of each block varied with differing end user stakeholders having competing objectives. Meanwhile the landowner maintained ownership of the communal parts, having an interest in the leaseback of commercial units, consisting part of the various blocks. 

The legal teams were required to work closely in circumstances where there were many intricacies involved in the site and the requirements of the stakeholders. It was also essential that elements of the transaction were completed at key financial milestones.

The form of construction contract for the BTR units consisted of a bespoke form of construction contract.  Three contracts were entered into, novated at land completion to a group SPV.

The contracts entered into for the affordable units consisted of a heavily amended JCT Design and Build Contract 2016; one contract providing for sectional completion. The contracts were entered into by a group company and novated either on completion of sale of the land or the achievement of golden brick.

Due to the particular nature of the scheme, the following unusual requirements of the parties had to be overcome:

• One of the social housing units together with a store room sat on the ground floor of a block to be in the ownership of the BTR operator and therefore formed part of the works to be carried out for the BTR operator. This led to a number of complications regarding duplication of obligations in respect of the works, issues with access and insurance, sign off of completion and occupation and defects management;
• Neither of the 3 substations on site served a particular block and were either master or slave substations to potentially all of the blocks.  This meant that in order to ensure conclusion of the works of any blocks, the developer had to be able to complete all of the blocks. 
• Although the same consultants were to be appointed across the site, it was necessary to have individual contracts for each block and the communal works.  Neither of the stakeholders was prepared to relinquish priority of step rights leading to complicated circumstances for the exercise of step in rights;
• This led to convoluted step in rights under the supply chain contracts so that each stakeholder had priority of step in where appropriate but so that other stakeholders in that part of the site may also have required the right to step into those contracts as part of the works although outside of their demise affected the works within their demise. Likewise other services equipment was located on the roof of one particular block; 
• Further, due to some elements of the social housing works sitting within the BTR blocks, there was the requirement for more detailed and convoluted completion sign off provisions where there was more than one interested party;
• The contracts with the housing association included obligations in respect of fire safety and the proposed building safety bill not in force at the time;
• The works to carried out under the construction contracts included general communal works including roads footpath and green spaces which remained in with the landowner and would be in time passed to the management company. It was necessary for the developer to have an obligation to carry out these works for the landowner to ensure that sign off of the construction contracts was possible for each of the blocks by way of reference to the associated works. 

Higgs also assisted in preparing and agreeing the form of agreement with the landowner for such works with obtaining sign off from the funder for the landowner.