Oldham Council in the north west of England has successfully closed the country's largest sheltered housing PFI for older people worth £435 million over the next 30 years

The local authority and Oldham Retirement Housing Partnership (OHRP) - Housing 21 - closed the deal that will see around 1,500 sheltered homes undergo major building and refurbishment work. ORHP an SPV with charitable status set up to own and manage stock in Oldham and is a wholly owned subsidiary of Housing 21

The contract involves the transformation of around half of the borough's sheltered homes with the first phase of building work to begin within the next five months.

Work includes significant improvements to the structure of the buildings as well as safety and security, lifts, state-of-the-art call entry and warden call systems. There will also be general improvements to properties such as better heating systems, doors and windows, and external environmental schemes.

In addition there will be improvements to specific schemes to make them suitable for extra care sheltered housing with catering kitchens and office accommodation for care staff.

Following the improvement works there will be a total of 1,457 sheltered properties which include:

• 854 bungalows
• 483 one-bedroom flats
• 120 two bedroom flats

Part of this will include eight extra care housing schemes where older people can receive 24-hour care and support on site. One of these schemes is a new build development.

Work on the first phase of development is expected to be completed by April 2008. The construction will be undertaken by Bullock Construction Ltd.

'An enormous amount of time and effort has gone into getting the project to this stage,' said Veronica Jackson, executive director for adult and community services at the local authority.

'We are delighted that the legal and financial complexities have been completed so that we can begin work on the properties themselves. There is no doubt that this scheme will provide better housing and better neighbourhoods for the people living in them.'

Residents will remain tenants of the council but the properties will be managed and maintained by Housing 21 - a national provider of housing, care and support services for older people.

'Housing 21 is now looking forward to the next stage of this project to provide new and improved housing and care choices which meet modern standards and improve the quality of life for the older people of Oldham,' said Kath Miller, Housing 21 director of neighbourhood services.

Councillor Phil Harrison, executive member for adult and community services, said: 'It has been a lengthy process but the scheme will ensure that we are able to offer high quality accommodation and care services to our older population now and in the future, supporting them to live independently in their own homes for longer.'

Financing

The £435m Oldham sheltered housing PFI deal was led by Allied Irish Bank (AIB) providing £104.7 million of senior debt.

Gordon Shearer, Director, KPMG Corporate Finance, says: 'This represents a significant project for Housing 21 and Oldham particularly as the transaction utilised the charitable status of the sponsor, within a traditional PFI structure, to extract greater value for the Authority.'

Legal Issues

DLA Piper UK acted for the construction firm - Bullock - while Devonshires acted for the sponsor and Eversheds acted for the AIB.

Alex Guy, the partner to lead the DLA Piper team, said: 'The most impressive thing about this deal was the length of time it took and the introduction of different sets of guidance during the period of procurement.

'This involved the introduction of SOPC3, the introduction of the housing guidance and then effectively re-writing elements of the contract which mean reopening issues that had already been agreed.'

Jonathan Cripps, head of projects at Eversheds, said: 'This unique project has utilised the charitable status of the sponsor, Housing 21, within a traditional PFI framework to create greater value for the awarding authority.'

Conclusion

As the UK's largest social housing PFI to have closed to date, the Oldham deal stands out with a pipeline of deals - though there will not be many to compare with this deal for value.

The team had its work cut out for it to implement changes to the system and did well to close so soon after both SOPC3 and government housing guidance.

This deal acts as a guiding light for deals to follow and will do the advisers involved no dis-service when it comes to pitching for projects that are going through the tender process right now.

The project at a glance