Profitability raises questions over affordable homes

10
1834

A total of 88 homes off Ferry Road forming part of Rye’s biggest proposed housing development could be sold for £34 million, according to a property consultant’s report.

A “financial viability assessment” drawn up by Bidwells as part of developer Plutus (Rye) Ltd’s full planning application for the 1.4-hectare site reveals the prices that could be charged for the homes, while arguing at some length that it would be “unviable” to include affordable homes in the mix.

The proposed housing estate would be built on the former Thomas Peacocke School site.

The 46 private houses and flats are jointly valued at £20.45 million, while the 42 private retirement flats could bring in £14.18 million. The three and four-bedroom houses would likely sell between £475,000 and £600,000 each and the retirement units between £300,000 and £400,000 each.

The consultant’s report assumes that if five of the private houses and 21 private flats are treated as affordable housing (30%) as part of its appraisal, the “gross development value” of the scheme would be £29.5 million.

However, as certain key figures in the Bidwell’s report have been redacted by Rother District Council, or not included, the purchase price of the site and the construction cost are hidden, which makes it impossible to know the developer’s net profit. The report does reveal a “benchmark land value” of £1.2 million for the site based on a 2014 Rother council viability study, but this amount does not include the value of the land for development purposes.

Counterintuitively, the proponents have assumed a £1 fixed land cost to “understand the return … for the developer”, when it is presumed that the council’s sale price for the land must have far exceeded this amount.

Assessing the project’s viability is made more complex by the fact that the developer is also the landowner.

Rother District Council would receive an estimated £984,095 as community infrastructure levy (CIL) if the project goes ahead.

The high building density of the project may also prove a sticking point for planners, given the planning authority’s previous ruling that only 63 homes would be allowed. Land reserved for screening by trees may become another hot issue.

Members of the public are able to lodge comments on the new project (RR/2024/1/P) until February 23 via Rother District Council’s website.

The major difference with the previous planning application is the inclusion of 42 residential care home flats, which allows Plutus to assert that it is providing much-needed accommodation for elderly people, while also — arguably — boosting its profit.

Documents reveal that the 46 homes for open market sale will include: nine four-bedroom and six three-bedroom “custom build” houses; 21 two-bed apartments, seven three-bed units, two one-bed apartments and one four-bed unit. There will also be 29 one-bedroom and 13 two-bedroom retirement home units.

An archaeological report suggested that a “programme of geoarchaeological evaluation” take place prior to development of the site.

Image Credits: Edward Evans .

Previous articleMayoral update
Next articleHoliday homes set to pay double council tax

10 COMMENTS

  1. As a former Rye Secondary School pupil from the late 1960’s, I’m rather confused; the proposed building site is described as being on the former Thomas Peacocke grounds? We were relocated to Thomas Peacocke Comprehensive, formerly the Grammar School, now Rye College. Have I missed something?!

  2. For us older pupils and as a fellow Secondary School pupil, I think they are referring to what used to be the primary school buildings behind The Adelaide pub.

  3. As the article says, it seems hard for any lay person locally to properly assess this proposal without understanding what the landowner/developer deems “viable” in terms of desperately needed affordable housing. So that makes a bit of a nonsense of consultation. Community need is not assessed in the same way that commercial ‘needs’ are calculated, and yet big developers are inevitably the arbiters. LibDems are proposing to give local authorities powers to build social and affordable houses on criteria based more on local need, for this reason. The other thing I’d say is, the “publicly accessible open space” sold as a community asset just seems to be the fringes around the closely-packed units – unless I’m missing smthg? In reality, that doesn’t feel like a viable open space for Ryers, does it? I can’t actually see the development under the given reference on Rother’s site, but the developer’s drawing is as below. (LibDem’s pre-manifesto policy is below that.)

    https://ferryroadrye.co.uk/proposals/
    https://www.libdems.org.uk/news/article/tackling-housing-crisis

  4. The site was previously the Thomas Peacocke Lower School. It’s now referred to as the 23 Ferry Road site. This planning application is very different from the previous one (which expired on 23 Dec) lodged by the same London based developers, Plutus (Rye) Ltd. I see that the current application proposes a much higher density of housing, 88 homes instead of 63, including a very large three-storey private retirement home where 42 units will be sold from between £300,000 and £400,000 each. According to the article, no affordable housing will be offered because the developers claim it would be financially unviable. Personally, I disagree with this claim.
    I feel that affordable housing should be included, as it seems to me that unless construction costs exceed two thirds of home sale prices (highly unlikely), the developers will make a whacking profit on this project. I’d like to see the height of the retirement block reduced to two storeys, less housing density elsewhere on the site and better screening at the edges of the site. Apart from that, I’ve no objection that this site be used for housing — in fact I welcome it. It’s really just a question of what housing density should be allowed in what is a relatively restricted site. The retirement units and other homes should be prioritised for local people to live in.
    I would urge as many local people as possible to lodge comments with RDC on this major planning application for Rye, as we should all have a say in the appearance of our town going forward. Developers should not be given carte blanche to do anything they wish, squeezing too many homes in, and to refuse affordable housing. This planning application is not a fait accompli, by any means.

  5. You’re wrong. There is such a thing as affordable housing. Just look on the http://www.gov.uk website and search for ‘affordable homes’ or ‘affordable housing’ and you will find detailed information about the subject, which is a government policy. The fact that housing provision predominantly functions on supply and demand does not make this government policy disappear, nor does it remove housing associations or subsidised council housing from the equation. With regard to the old school site housing estate proposal — specifically the argument over the number of homes permitted and developer’s profit — may I suggest that Plutus instructs its builder to inform RDC how much is spent on building the estate. This amount can simply be added to the land price paid and the total subtracted from the predicted homes’ sale price to give a figure for developer’s profit. If the profit exceeds the key 17-20% level, the developer should be obliged to include an affordable home component in the estate, to the extent that he can retain that profit level. It’s not rocket science.

LEAVE A REPLY

Please enter your comment!
Please enter your name here