Flexible structures for joint developments

Derek Beer explains how to provide a flexible legal structure for joint developments by partner authorities in an extended series of site-specific projects.

The partners in the Housing and Public Sector Land Project (the county, unitary and district councils of Essex and the associated emergency and health services) are addressing various problems in the provision of housing in Essex.

First, there is significant need for additional houses of sufficient quantity or at the right price to match the demand of would-be owner-occupiers in Essex. Second, there is also a massive shortfall in the availability of housing suitable for extra-care and learning-disability provision, which will only get worse as the population ages.

The Project partners have therefore decided work together to bring forward surplus public sector land to provide additional housing and take a more active role in addressing some of these supply issues. The partners will retain sufficient control of the process of development and disposal to ensure that these problems are properly addressed whilst still using private sector skills to secure the provision of good quality and reasonably priced housing which meet the needs of Essex residents.

This means that the partners have to decide on an appropriate vehicle or set of vehicles for their activities.

The partners will be providing separately-owned assets and separately-employed staff used in conjunction with private sector services called-off for each project from a framework agreement procured for the purposes of the overall project.

The intended solution therefore uses the following options:

1. Simply building and selling the required units.
2. A trading company for the ongoing aspects of the activity, such as the employment of the staff engaged whole-time on the activity.
3. Single-purpose development/disposal companies set up for each individual project.
4. Single-purpose property management companies set up for the operation of any rental properties retained by a partner in a development.

These options will be implemented as required on a scheme by scheme basis and will be owned by different partners and possibly in different proportions.

The trading company will be owned by those providing the funds for its staff, whilst each single-purpose company will be owned by the partners providing the land or properties which it holds.

The group structure will therefore be closer to a constellation than to a family tree.

What, then, is the overall controlling mechanism?

The partners acknowledge that their interests, and those of potential partners, are fluid. One partner may have a number of sites to develop, will have been interested from the start and is in it for the long haul. Another (potential) partner may have only one site at the moment, have more of a wait-and-see attitude and may wish to try the process once before further commitment.

The overall controlling mechanism therefore is, by design, a loosely-structured, easy-in easy-out body without separate corporate personality. It is intended to use a format the partners are familiar and comfortable with, viz. the “partnership”. That is to say, not a legal partnership but an agreement between participants that they will meet, discuss, seek to form a common approach, and bear the limited administrative expenses of the partnership. The agreement will provide for the easy admission and departure of existing and new partners but there will be no ongoing commitment.

The first step in getting a project under way is to start talking and this format will, it is hoped, make that easy for any potential partner. When projects are in place, the specific options mentioned above can be implemented as necessary.

As part of the “start-talking” process, the earliest steps will be undertaken by the provision of project-development services between partners under the Local Authorities (Goods and Services) Act 1970, as the partners begin to gain a clear vision of their way forward.

If your authority becomes involved in the Housing and Public Land Project (or is thinking about it), I will be pleased to provide any further detail required.

Derek Beer is Principal Solicitor in the Projects Team at Essex Legal Services. He can be contacted on 033301 39686 or This email address is being protected from spambots. You need JavaScript enabled to view it..