Developer ‘can’t afford’ to build affordable housing

A Bristol developer is trying to exploit a loophole in the law regarding the provision of affordable housing.

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Rollo Homes claim they can’t afford to include affordable or social housing in a major development – because they won’t make their ‘standard’ 20% profit on the deal.

It is asking for permission to build 217 homes, in two large apartment blocks, on an area of land between Malago Road and Bedminster Station that is known as the Pring and St. Hill site.

But the developers have concluded that none of the 217 flats should be either allocated for social or council housing, or sold as part of an ‘affordable homes’ arrangement.

The developers hired property consultants Bilfinger GVA to produce a viability report into the deal, and it concluded it was not viable to build the homes and not then sell them on the open market for the full market value.

While Bilfinger’s figures and calculations have not yet been published, they admitted they had factored in the ‘industry standard’ profit margin of 20% for the developers as a ‘cost’ of the development – anything else they make above that 20% profit would be an even bigger bonus.

“The viability report provides two appraisals taking into account predicted revenues (predicted sales from open market and affordable housing) and associated land, build and professional costs associated with the submitted scheme factoring in a requirement for 20% profit (open market elements and six per cent profit (affordable elements).

“The first appraisal is for a policy compliant scheme delivery 30% affordable housing and CIL costs. The second appraisal delivers nil affordable housing and the full CIL requirement.

“The appraisals clearly demonstrate that when a policy level of affordable housing is provided on site, development is made unviable as a competitive return to the land owner cannot be provided,” the report added.

The development of the site between Malago Road and Bedminster station forms part of a bigger urban regeneration scheme called ‘Bedminster Green’, which has sparked controversy because it contains plans for a 16-storey tower block which residents of Windmill Hill, overlooking the area, say will ruin views.

The local action group WHaM, set up to lobby on the plans, said Bristol City Council must adhere to their own policies on affordable housing.

“WHaM strongly supports the provision of affordable homes and therefore requires new housing development in the area to fully comply with Bristol City Council’s Affordable Housing Standards,” a statement from WHaM said.

“Affordable housing provision will be expected across the range of housing type and size and integrated and pepper potted throughout new developments,” it added.

Bristol City Council’s policy is that any development of more than a handful of homes has to include 30% affordable housing, in a bid to help solve the housing crisis engulfing the city.

But under the government’s planning rules, developers can be given permission without that 30% if they convince council planners the scheme is not financially viable with the cheaper housing included.

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