A housing development in Ripley was set to feature 36 affordable homes, but that figure is set to fall to zero – because the developer says it would make the project unviable.
More than a decade after gaining planning consent for more than a hundred houses in Ripley, Langridge Homes says it cannot afford to build any affordable homes or pay out £185,678 for agreed improvements in the area.
The family-run Nottingham firm applied to Amber Valley Borough Council to build houses at land near Church Farm in Ripley in 2005.
It agreed to the set level of 30 per cent affordable housing, asked of all developers aiming to build 15 homes or more.
It also agreed to pay £79,814 for public open space improvements; a further £53,000 to maintain that open space; and £52,864 for education to ensure that schools in the area have enough space to accommodate pupils.
These agreements lay alongside plans to build 122 houses, ranging from two-bed up to five-bed.
But now, 12 years later, it has applied to the authority to ask that these legal agreements are dropped, an issue which will be decided by borough council officers, not councillors.
Langridge has submitted a “viability assessment”, compiled on its behalf by estate agent Savills, to find out whether the scheme would bring in enough money to be able to supply 36 cut-price houses and contribute thousands of pounds to the community.
Its report, referring to “Amber Valley District Council”, reads: “Our policy compliant appraisals assume 30 per cent on-site affordable housing.
“These fail to generate a sufficient developer’s profit to incentivise a developer to build out.
“These profit margins are 8.1 per cent for phase four (43 of the proposed houses) and 9.97 per cent for phase five (79 of the houses).
“Our variant appraisals deliver an all-private scheme and no Section 106 contributions.
“Our appraisal results generate a profit margin for phase four of 17.3 per cent and 18.88 per cent for phase five.
“These are slightly below a target profit of 20 per cent but are considered at a sufficient level to ensure that the applicant would develop out the scheme.
“We are therefore of the view that both phases are only financially viable if they are private-only schemes without Section 106 obligations.”
The loophole of viability assessments for affordable housing schemes was introduced in 2012.
It states that if a developer is set to make less than 20 per cent profit on a new housing development, they do not have to provide affordable or social housing – even if they were granted outline permission on this proviso.
A report by the Independent newspaper found that 79 per cent of developers manage to dodge affordable housing commitments due to this loophole.
In June, house-building goliath St Modwen applied to South Derbyshire District Council to reduce the amount of affordable housing in its 486-home scheme at former Ministry of Defence depot in Hilton down to a fifth of the agreed amount.
It been granted approval to build the houses but supply 30 per cent affordable homes – 149 in total – but it eventually applied to reduce this to 10 per cent, 49 houses.
This was then reduced further to just six per cent, 29 homes.
A district councillor said that the issue was plunging the area into a “massive affordable housing crisis”.
Also in June, Derbyshire Dales District Council, a scheme for nearly 500 houses in the disused Cawdor Quarry near Matlock was granted permission after almost two decades.
However, this was achieved at the expense of affordable housing, which had started at 30 per cent but was entirely omitted in the final revision of the project.
This was due to the cost to the developer, Groveholt Ltd, of making the site suitable for houses, which it said made the project “at best cost neutral”.
A district councillor called that the authority had missed a “huge opportunity” as a result of this.