Estates Gazette
19/04/2008

Home sweet home LPC Living is targeting first-time buyers and families in Salford with a scheme that offers affordable housing and a shared ownership plan. David Quinn reports

As residential development goes, nothing sums up the gritty romance of the north like a row of terraced houses under glowering skies and no row of terraced houses sums up the gritty romance of Manchester like Coronation Street.

The soap, based in the fictional suburb of Weatherfield, has been a fixture on television screens since 1960 and some say it was the real Coronation Street, in the Ordsall area of Salford, that inspired the drama.

For any residential developer, working in an area that is so rich in history is sure to require a sensitive approach. Luckily for all concerned, LPC Living is leaving the architecture of Coronation Street well alone in its £150m plan to transform Ordsall with a mix of family-orientated, private-sector housing.

LPC – owned by investor Pervaiz Naviede (see box, below) – signed a development agreement with Salford city council to regenerate the whole of Ordsall in May 2006. The deal covers a 180-acre site from the eastern edge of Salford Quays, heading west towards Manchester city centre.

In need of a transformation

Ordsall has missed out on the razzmatazz residential development seen less than a mile away in Manchester. It remains a deprived area thanks to rapid de-industrialisation and consequent high unemployment and social unrest following the closure of Salford docks in the late 20th century.

But despite initial appearances, its edge-of-city-centre location should have proved attractive to developers.

However, LPC faced no rivals in its attempt to work up an agreement with the council and its chairman, 60-year-old Warren Smith, was spurred on to get involved partly through conversations with local residents.

“Old ladies came up to me and asked why we were investing here. They said ‘it’s a wasteland’,” says Smith, who clearly has great personal affection for the area. “But they also said they liked it in Ordsall and wanted to live here. My view is that if they wanted to live here, then why wouldn’t anyone else?”

He adds: “This site is ideal. It’s right between Salford and Manchester, which are two of the biggest economic generators in the North of England.”

As a result of the agreement between LPC Living and Salford council, Ordsall will get £150m of investment, almost all of it coming from LPC in exchange for exclusive development rights.

Community facilities

Some 800 new homes are proposed, as well as new retail facilities and public amenities. The company has also put £2.3m into the construction of a new primary school.

Since signing the deal, LPC has been boosted by Peel Holdings’ MediaCity:UK development at neighbouring Salford Quays, which is expected to bring thousands of new creative sector workers into the area, including 1,500 with BBC.

LPC has completed residential schemes at Gresham Mill and Quay 5, which pre-dated the agreement with Salford. Since then, it has developed Radclyffe Mews, a development of 34 houses all sold off-plan in November 2006, and has begun work on the 260-unit Hulton Square.

Wandering around Ordsall, it becomes clear that the area is an architectural mish-mash. The Henry Lord-designed New Barracks estate is filled with the kind of tall, red-brick terraces that once dominated the area.

Built between 1900 and 1904 on the site of a former infantry barracks, the estate includes Coronation Street and Salford Lads Club, made famous thanks to an iconic photo on the sleeve of the Smiths’ 1986 album, The Queen is Dead.

But much of Ordsall was razed to the ground in clearance programmes during the 1960s. Grand old terraces were replaced with a mixture of cheap, low-density council houses and a small number of tower blocks. In some places the cleared buildings were not replaced at all, leaving conspicuous open spaces.

Much of Ordsall is dominated by social rented housing. LPC’s masterplan is focused on bringing back more of a mix of tenures by providing housing for owner-occupiers.

“We are in Ordsall for the long-term. We want the houses to be occupied rather than vast swathes left empty,” says LPC’s development and development director Simon Ashdown. “We want the streets to be active and we want Ordsall to benefit.”

As this statement indicates, LPC has a more touchy-feely approach to development than many of housebuilders. The company talks proudly about its commitment to young families and first-time buyers and attracted headlines for its policy of turning away buy-to-let investors at Quay 5. It also offers local people the chance to buy at its schemes some six weeks before the general public.

LPC has pioneered its shared equity scheme called Launchpad, which covers 20% of the units at Hulton Square. This involves LPC offering buyers an interest-free loan on 25% of the value of the property. Buyers secure a standard mortgage on the rest.

Ease for new buyers

Unlike a shared ownership scheme, it means occupiers are not left paying rent on part of their home and no distinction is made between the homes offered within the scheme and the development as a whole, which means Launchpad buyers are spread throughout the development.

Ashdown says take-up for has been good and that making the offer to buyers remains at the company’s discretion.

“We want the right people taking up the offer,” he says. “We want graduates, first-time buyers, local key workers and young families from the M5 postcode.”

Of course, there are sound business reasons for targeting owner-occupiers, especially first-time buyers, as Smith explains. “We’ve always preferred to stay in this market because the buy-to-let market has never been as sustainable, in bulk sales especially,” he says.

“There’s a need to equate house prices with average earnings. First-time buyers have been paying five or six times their annual earnings and that isn’t sustainable. But if there is a downturn, we know there will still be first-time buyers in the market.”

So far, the strategy of appealing to younger, local buyers seems to be working. Of the first phase of Hulton Square, which was launched off-plan last August, 68 of the 73 units have been sold. Of these, 33 went to first-time buyers, while 42 were bought by people under the age of 29. A total of 23 were sold to people already living in Ordsall.

Valuable goodwill

LPC is also closely focused on community initiatives and is taking a lead on a £1m fundraising for the aforementioned Lads club, which has since been renamed Salford Lads’ and Girls’ Club.

Its engagement with the local community extends to environmental and anti-litter campaigns, although again, the purpose is not entirely altruistic. Marketing director Jonathan Drake says such programmes provide valuable goodwill.

They lessen the chances of anti-social behaviour around new developments and promote respect for the company’s schemes among local young people.

It is clear that LPC’s thinking, with its focus on the social aspects of development, is a little outside the ordinary. The company’s emotionally potent formula for success is decidedly more romantic than it is gritty, but remains northern all the same.

And while that might be met with scepticism in some quarters, there’s no doubt that Smith and his team are creating a product that is carefully and cleverly geared towards its unique geography.

Side panels

LPC Living

LPC Living is owned by investor Pervaiz Naviede and his family trust, which is active in the UK, Germany, Switzerland and Dubai. While Naviede – who is ranked 158 in the 2007 EG Rich List with an estimated fortune of £150m – is sometimes involved with the company, the day-to-day running is handled by chairman Warren Smith and his team.

The company was formed in 2003, although Naviede and Smith had been investing in residential property since the mid-1980s through their Legendary Property Company vehicle. Its focus had been on acquiring and refurbishing rundown tower blocks and by 2002 more than a dozen had been completed in the North West.

The move into new-build property came at the start of the decade when four tower blocks were bought in Kirkby on Merseyside. Realising that there was little immediate call for 300 refurbished flats, Smith and Naviede decided two of the blocks should be demolished and replaced with new family homes.

By this time, LPC was already negotiating with Salford council over Ordsall. It secured an exclusivity agreement with Salford for Ordsall’s regeneration in spring 2006. Future plans include Hulton Square in Ordsall, where work is under way on a scheme with 103 townhouses and 157 flats, priced from £80,000 for a one-bed flat to £165,000 for a three-bed house with garage.

Sizing up against new housing targets

Much has been made recently about the size of new housing, particularly schemes aimed at families. English Partnerships drew up new guidelines last year – including a 549 sq ft minimum for one-bed flats and 1,001 sq ft minimum for three-bed units – which many new developments are still failing to meet. LPC stresses that its larger three-bed units exceed these targets, although some other types of units fall a little short. In its defence, Ashdown says LPC’s schemes are “15-20% larger” than those of rival developers, while EP is actually providing funding for part of Hulton Square through its first-time buyers initiative.