The Eye reacted favourably to the news that the North Street Development, as did many other bodies, but closer inspection reveals some serious concerns.
There have now been two schemes for the site that came to nothing. Now there is to be a third. The campaign group Phoenix Rising calculated that the last proposal, by Santons/Mas Rei, was not financially viable even if there were no social housing. The big problem was the flood defences, which were never properly costed.
Now the company Human Nature is going to have another go. They are committed to a more environmentally sound approach, which probably means extra costs. How are they going to make the scheme stack up? Will it be by some revolutionary approach to flooding? Or will it be by excluding as much socially rented housing as they can?
The Eye understands that local investors are involved but we don’t know who the local investors are and what they want from this development. Do they want the usual profit level of 20%? If they will settle for a lower percentage this might make the development more viable. Where is the £300 million or so for the development to come from? Human Nature Lewes has not yet filed any accounts at Companies House. It seems to have capital of £1.
What happens if they find out they can’t make it work? A look that the Human Nature web site reveals a lot of interesting projects, but none of any size, as far as the Eye can see, that have achieved planning permission and actually been built by them. North Street is a large, challenging and difficult project.
THE SALE OF THE LAND
In the last two failed schemes Lewes District council kept control of the part of the site that it owns, so was able to exert some control. Not so this time it seems. A press release from the developers says that they expect to complete the purchase of the whole of the site by February 2021. Councillor Zoe Nicholson, a cabinet member strongly involved in negotiations, confirms that this will include the council’s land. The Eye understands that the council’s portion, which is about 35% of the site, would fetch about £9 million.
Zoe Nicholson says that there are protections built into the sale agreement, including the following :
- The council will agree a minimum price for its land prior to development which means it is not exposed to development risk and will not have to wait until the development is completed in order to realise any value from its land in the North Street area.
- Human Nature will pay the Council an overage if there is any uplift in the value of the scheme as a result of the new planning permission.
- Sale is subject to new planning application
Now this may plug the £4million coronavirus hole in the council’s finances, but it does mean that the District Council loses all control over the development. It will not be the landowner. It is not the planning authority.
Tony Rowell, a former Lewes council member and former member of the planning committee, has said “’The privatisation by Lewes District Council of its land at the North Street Quarter means there will be no Council Housing built on the site. It is shocking that the Council is giving up long term capital appreciation and a regular income stream decades into the future, for short term gain. There is no guarantee that there will ever be council or low cost housing on the site at truly affordable rents.”
In fact the council could try to buy some of the housing on the site when it is finished, but this will be up to Human Nature and the council would have to pay the developer’s profit.
Even if things go well it will be up to the South Downs National Park and Human Nature to decide what gets built, whatever people in the town want. And it is worth remembering that the National Park approved the Santon/Mas Rei scheme which included almost no level access small dwelling units, even though the District Council’s own surveys have shown that this is what the town desperately needs. The “affordable” housing included care-home style units that would probably have had rents of £200 per week plus.
Nor is there any commitment to a decent amount of social housing at rents that people can actually afford. The National Park claims to want 50% “affordable” housing but rarely achieves this. Such housing as is provided is often a much lower percentage of the total.
“Affordable” can often be 80% of the market rent. The Lewes neighbourhood plan points out that this is not actually affordable to the people in the town that need affordable housing.
By contrast Shelter reckons that traditional social rents are typically 50% of market rents. In 2019 East Sussex Council released figures that showed that market rents in the county in 2018 averaged £220 per week, council rents averaged £85 per week and housing association rents averaged £90 per week. These figures imply that social rents in this area are around 40% of market rents. This is what you might expect in an area where to demand for property is high.
The planners will have to take account of the Lewes neighbourhood plan which calls for really affordable housing based on average local incomes, but they are not bound by it.
Unfortunately, although the neighbourhood plan says that homes should be affordable for people on the average Lewes income of £23,000 or house-hold income of less than £30,000 (see here, page 60) It does not say what rent that implies. This may make it difficult to enforce.
Shelter suggests that people should be paying no more than 35% of their take home pay on housing.
The national park can specify how much affordable housing there must be and what maximum rents should be.
After that it will be up to Human Nature to decide whether to manage the “affordable” rented housing itself, or sell it to a housing association or the council. Within any limits set by the National Park the manager of the rented housing can set whatever rent they think reasonable without any further discussion.
AND IF IT ALL GOES BELLY UP?
If Lewes Council has sold the land and Human Nature cannot make the scheme work, we are up the creek. The company would be forced to sell the land to anyone who would buy it, who would do whatever they convince the National Park to let them do.
Would it be wiser for Lewes District Council to hang on to its land and co-develop the site? They Eye understands that the whole development will cost around £300 million. The council would therefore probably have to raise £100 million but councils are currently borrowing larger sums at the moment.
The scheme seems to involve a lot of risks.