KEY LEARNING POINTS
- There is significant demand for no-frills, low cost ‘self refurb’ opportunities. The 500 homes in this development were all sold in just two years
- Communities can team up with private sector partners to fund projects like this. On the DeFlat project a large contractor forward funded the €30m work to the fabric of the building, and has recovered this (with a healthy profit) from the sale of the apartments
- ‘Guerrilla’ marketing can be very effective on large-scale projects. A range of parties and functions, an on site ‘bar’ and excellent social media and PR campaigns attracted large numbers of people to visit the development. There was also an excellent website
- Organise experts to be on hand to meet the potential purchasers. Two banks provided staff at weekends to meet with potential purchasers to help them secure funding; and a permanent onsite technical coach provided lots of practical construction advice
This is one of the largest affordable ‘self refurb’ schemes in Europe, providing some 500 homes in a 1970s social housing complex that had been condemned for demolition.
The housing association that owned the complex had rehoused the residents because of the poor state of the building, and the presence of asbestos. It estimated it would cost it €17m to do the essential remediation work or €4m just to demolish it.
A local community group then stepped in and offered to take the complex off their hands. It proposed re-using the flats, and came up with a scheme to provide low cost ‘shells’ that people could then fit out and complete themselves. The housing association liked the proposals so it sold the complex to the group for €1.
The group teamed up with a local building contractor, a finance expert, an architect and others and it has now improved the lifts and layout, removed the asbestos, installed new windows and doors, better insulation, and a new roof, and it has provided utility service connections to all the ‘shells’.
There are eight shell sizes – ranging from about 59 to 142 sq m - and they are available on a 40 year lease at prices starting from £47,000. The project was originally expected to take four years, but demand has been so strong that the whole development has been completed in about half this time.
SUMMARYThis is one of the largest affordable ‘self refurb’ schemes in Europe, providing some 500 homes in a 1970s social housing complex that had been condemned for demolition. Private homebuilders can buy one of eight different size ‘shells’– ranging from about 59 to 142 sq m - available on a 40 year lease at prices starting from £47,000. The project was originally expected to take four years, but demand has been so strong that the whole development has been completed in about half this time
‘De Flat’ is located in the K block at the corner Karspeldreef / 's-Gravendijkdreef in the Bijlmermeer neighbourhood of Amsterdam, postcode 1104 EA.
NUMBER AND TYPE OF HOMES
The four main phases provide around 500 apartments and workspaces.
All four phases are now fully sold (autumn 2015) and about half the purchasers have fitted out their shells and moved in.
- Phase 1 (completed and occupied): 109 properties
- Phase 2 (residents have now moved in or are currently finishing off the fitting out their shells): 120 homes
- Phase 3 (fitting out): 121 homes
- Phase 4 (contractor will complete his work at end of 2015, when the residents will then begin the fitting out): 152 properties
The units are all based on the original layout of the homes in the block. Most of them are double aspect and around 10m wide, with a private balcony on one side and an access walkway on the other. They range in width from 6.8m to 9.5m. It is possible to merge apartments horizontally or vertically, but nobody has taken up the vertical option. All of the apartments have a separate storage space (near the lifts), and there are communal bike stores on the ground level.
The smallest homes are around 59 sq m; the largest 142 sq m (there are also some office/workshop/studio spaces – from 25 to 100 sq m)
For the purposes of this Toolkit we have made the following definitions:
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The original blocks were constructed in the 1970s. In 1992 there was a major fatal air accident at the site, and many local people wanted to keep the blocks as a tribute to those that had died. The original owner of the flats (a housing association called Rochdale) had evaluated various options, but all of them were very expensive. The location was also seen as one of the most challenging and deprived parts of the city. Asbestos had also been discovered, so all the flats had been vacated, and the residents had been rehoused. Renovation work would have cost tens of millions of pounds, and demolition (costing many millions of pounds) seemed like the only solution.
In 2011 Rochdale decided to put the blocks up for sale for €1. The only stipulation was that any new owner had to ensure that the homes it provided would be available for at least 25 years.
Between June and December 2012 a new community organisation was formed to bid for the blocks. It prepared a detailed business plan and recruited the expert advisers and financial partners it needed to get the project off the ground.
It was selected in early 2013, and marketing began almost immediately. Its original business plan envisaged the sale of the home in four phases over four years, with completion in 2017. By the middle of 2015 all the homes had been sold and they should all be fitted out and occupied in 2016.
Original blocks constructed
Bijlmer air disaster
Housing association that owns De Flat decides to sell it for €1
New community organisation formed; group prepares detailed business plan and recruits expert advisers and financial partners
Community group selected to develop the project; anticipates completion in 2017
All homes sold ahead of schedule
All homes expected to be fitted out and occupied
Several local community activists came together to form a consortium that undertook the project: -
- KondorWessels Realty (www.kwvastgoed.nl). KWR is a large Dutch building contractor. Its development arm became the lead player in the team, it secured the finance to undertake the essential remediation and improvement works to the fabric of the building (which its contracting arm then delivered), and it formally signed most of the contracts
- Vireo Realty (http://www.vireovastgoed.nl/) - run by a former architect this small property consultancy specialises in helping to realise finance for collective or community projects
- Hendriks CPO ( http://www.hendrikscpo.nl/ ) - a one person consultancy that specialises in the marketing and sales of development projects
- Dutch Light (www.hollandslicht.com) - a firm of architects that design collective projects
The team realised it needed to form a really credible consortium if the housing association was going to take its proposal seriously. All four had worked together before, and between them they provided a mix of commercial and financial skills and strong community connections.
All four members of the consortium had an equal say in the way the design and overall development of the project was handled. The arrangement worked well and all the partners are happy with the result.
MARKETING AND SALES
The team has been very good at the marketing – using social media, an excellent website, and lots of on-site ‘guerrilla’ marketing techniques. As a result it secured masses of media exposure for minimal cost. Here are a few examples of the techniques it employed.
Demand for low cost opportunities
The original expectation was that the 500 apartments would take at least four years to sell; but because they were so affordable, and provided people on modest incomes with an opportunity to personalise their homes, all of them were sold in two years
The overall marketing budget was roughly €1m across the whole development.
About half of this was spent on awareness-raising activities and events on site – the blocks were open for viewings most Saturdays, and big crowds turned up. On peak days the team had 40 staff there to show potential purchasers around, provide information or give advice on mortgages.
The other half was spent on the website and social media activities, PR and exhibition/show homes.
The team appointed a small specialist estate agent to deal with day-to-day enquiries. This worked well – he quickly ‘got’ what the whole project was about, became very knowledgeable of all the issues, and was 100 per cent committed to the project’s success. The team negotiated a flat fee per home for his services, with a bonus arrangement when the project was completed.
One of the marketing slogans used was - “What you see is what you get”. This helped when it came to managing people’s expectations.
However some of the early buyers conveniently forget about this, and expected more to be done by the contractor (for example one expected the external doors and windows to be painted inside, when this was never part of the specification). A key learning point was that you have to be very clear about what is included, and what isn’t.
The many activities that took place on site in early 2013 built up excitement and demonstrated to the potential purchasers that the team behind it was credible, so when the first wave of apartments were released they were snapped up quickly.
Two thirds of the buyers are from the local area, or wider Amsterdam; the rest from further afield. There is a wide range of ages. Many are freelance workers or self-employed, and most or the purchasers are well educated. The majority have modest incomes (and would be eligible for intermediate housing).
At weekends many of the buyers that are fitting out their homes meet up informally at the temporary bar that has been set up in one of the empty flats, and this has resulted in lots of good communication and mutual support.
One group of seven families has collectively bought eight apartments, called ‘The Cloisters’. It plans to make the eighth home available from time to time to homeless people, or to provide an occasional ‘artists in residence’ facility.
How do they do the ‘self refurb’ work?
About half of the buyers have opted for a ‘self refurb’ package deal from a list of approved fit-out contractors. For around €20-25,000 the contractor will finish the unit to a standard spec (including kitchen and bathroom, tiling and all electrics/plumbing/heating etc). About a quarter of the buyers do their own DIY refurbishment work; the rest hire in and manage sub-contractors to fit out their units.
The consortium employed a full time ‘technical coach’ on the project. He provides practical advice and tips, ensures work is done to the right health and safety standards, and that the various contractors don't get in the way of each other. He also monitors the quality of the work. See our Briefing Note on Professional Support for Private Homebuilders, which has a section on the role of ‘building coaches’.
Alternative marketing techniques can be very effective
The team responsible for the marketing of DeFlat exploited the building itself to great effect – with parties, an onsite ‘bar’ and open days. It also developed an excellent website and delivered excellent levels of press and media coverage
The buyers are allowed a year to complete the work on their units and they cannot occupy their new homes unless the technical coach is happy that it is habitable. The council’s building control team also needs to inspect the units and sign off the work before anyone can move in.
The contract with the purchaser has stiff penalties for anyone that does not complete the work by the agreed deadline. If there is a good reason, they are reasonable and may allow extra time (for example, illness); if not they get an official warning and one month to complete. If they fail to comply they have to pay a €10,000 penalty, and €100 per day until they are able to move in.
On a large project like this a permanent on site technical coach is a good investment. They can provide practical advice, ensure the work is done to the right standard, and can co-ordinate deliveries or sub-contractors
The essential remediation work – stripping out the asbestos, installing all new windows and doors, a new roof, lifts, internal insulation and utility connections to each apartment has cost around €30million.
The main building work was pre-funded by the building contractor. In return the contractor will benefit most from the profit the project makes.
One of the apartments is going to be gifted to the residents association and will become a communal bar/community space.
The homes have been sold at around €1,100 per sq m (the current going rate in Amsterdam is nearer €4,000 per sq m). Typical fit out/self refurb costs for the residents are €400 to €500 per sq m, so the homes have been sold well below most equivalent accommodation in the city.
Allowing for currency variations a one bed 59 sq m home cost about £47,000. On top of this there will be a service charge of roughly £45 per month. The apartments are all connected to a district heating system. All the properties are now well insulated so heating costs are expected to be a few hundred pounds a year.
A generous three bedroom apartment (142 sq m) costs the equivalent of £85,000.
The consortium lined up two mortgage providers to help potential purchasers – Triodos and ABN Ambro. Both banks arranged for their mortgage advisors to be on site on Saturdays to talk to prospective purchasers. Because they understood the ‘self refurb’ concept of the development, they were able to assemble a bespoke solution for many of the buyers involving two elements: -
- An straight forward mortgage to cover the initial cost of the bare shell
- An agreed loan, drawn down in stages, to cover the refurbishment costs. Once the fit out work was completed this loan was then incorporated into the main mortgage
About 85 per cent of the mortgages were arranged via these providers, through some people set up their own deals with others. The consortium praised both banks and said the partnership it established with them was a key to the success of the project, as it made finance ‘simple and easy’ for the buyers.
The purchasers own the leasehold of their flats; the site itself is owned by the municipality of Amsterdam. The municipality only provides land on a leasehold basis. In this case the initial purchase price covers the lease payments on the land until 2053.
The communal spaces are collectively owned, with everyone having a share that relates to the size of their apartment. Residents pay a monthly service cost to maintain the communal spaces and to allow for repainting once every ten years.
Provide onsite financial advice
Link up with mortgage providers to provide someone in site to help potential purchasers work out what they can afford. Its important to make the whole process ‘simple and easy’ for the buyers
The NaCSBA Research & Development Programme is funded by the Nationwide Foundation and aims to promote the self-build and custom build sector as an affordable route into housing for a greater number of people in the UK.
For further information, please visit:www.nacsba.org.uk or www.selfbuildportal.org.uk