So the biggest development that Seaford is likely to see for some time (183 dwellings on the Newlands school site) has been agreed with just 8 one bedroomed flats and 15 two bedroomed flats available at affordable rents.
This represents a tiny proportion of the development, especially given that most of the dwellings will be 3 and 4 bedroomed houses.
The rest of the properties on the development will be sold at market value.
There is a desperate need for housing in Seaford that ordinary people can afford. A glance at Rightmove shows that a private one bedroom flat typically rents at £160 per week. Two bed flats go for around £190 per week and larger places start at £200 and go up from there.
SO WHAT HAPPENED AT THE NEWLANDS DEVELOPMENT?
As a previous Eye article has pointed out the previous owners of the site had obtained planning permission for a development on the site with 40% affordable housing. They then sold the site to Bellway Homes for over £18 million. This price was increased because there was planning permission for development.
Bellway then applied to reduce the affordable housing to 8% of the total. This looks like an opening gambit. Everyone predictably threw up their hands in horror. Bellway then came back with 25% affordable housing, including the shared ownership units, providing that they were able to demolish the old school and make other amendments to the scheme and that everything was agreed by the end of 2019. Obviously 25% looks better when compared with 8% than it does when compared with 40%. Seaford Town Council and Lewes District Council agreed to this.
So how did Bellway get their way?
- The government sets councils targets for the number of new homes that must be created in their area. Although Lewes has recently won a battle over this, the overall requirement is still there. This places large developers in a very powerful position since they are the only bodies with the money to deliver large numbers of houses. If they refuse to develop councils will not meet their targets.
- A developer can appeal against the refusal of planning permission. A large developer can absorb the cost of this, but local councils find it difficult to find the money to contest the appeal.
- Lewes District Council has a general policy that any substantial development must include 40% affordable housing. But government rules say that if a developer can show that this would make the scheme financially unviable for them this figure can be reduced. You might think that once a scheme had been put forward and agreed at 40% then that was the end of it. But this is not the case. The developer can come back to the council with revised figures which say that the scheme is not now viable. This is what Bellway did.
- Seaford Town Council, quite rightly, wanted the “affordable” housing to be actually affordable for local people. So called affordable housing can include places with rents of up to 80% of the private rents described above. The people most in need of housing in the area could not afford this sort of price. So the town council asked for and got a commitment that the rented affordable housing should be at rents similar to council rents in the area. This makes it easier for developers to say that fewer affordable homes should be provided for the scheme to remain viable.
- There are rules which allow the developer to come back and ask for a reduction in affordable housing if house prices crash, but the Eye is not clear about whether councils can require an increase if house prices go up.
When a developer wants to argue that a scheme is not viable with the amount of affordable housing proposed they have to submit a financial analysis. The council then checks this. In the past the government used to say that councils had to allow the developer a thumping great 20% profit and that the actual price paid for the site by the developer had to be used. This meant that large developers could outbid others for the site, secure in the knowledge that they would get their overpayment back by being able to reduce the number of affordable homes.
In 2018 the government stopped this practice. They said that it was no longer compulsory to use a 20% profit margin, although they suggested that 15-20% would be a reasonable margin. They also said that the actual price that the developer paid for the land should be ignored. It should be independently assessed. A financial analysis was submitted to justify the reduction but none of the councillors has seen it. Instead it was looked at by officers. It is not clear how much expertise these officers have in analysing this sort of document. Lewes Council has built very few homes in recent years and the expertise to look at costs may not be there.
Key question are:
- What value was included for the cost of the land?
- What developer’s profit margin was assumed?
Your editor has made a freedom of information request to see the analysis and will keep you updated.
WHAT DOES THIS MEAN FOR OTHER SCHEMES IN LEWES DISTRICT?
This article shows how government rules allow developers to force councils to accept fewer and fewer affordable rented homes. Councils can and should scrutinise proposals to cut the number of affordable rented homes more closely than they currently do, but the odds are stacked against them. We need new rules which will make the system fairer.
Currently a figure of around 30% affordable homes has been set for the North Street Development in Lewes. The site has recently been up for sale and the Eye understands that, at the time of writing, some bids have been received. These are currently being evaluated. There is little to stop a developer arguing that no affordable housing is possible.
A new development is also planned for Newhaven Marina. The same thing could happen here.
Article date 10/11/19