In a heated debate, Dorset Council nearly threw out the request from property developers to remove the requirement for affordable housing from a proposed development in Swanage but settled on deferring the decision to give everyone time to get round the table and talk.
Planning permission was granted in April 2019 for the old St Mary’s School site, next door to the Purbeck House Hotel in the High Street, with the condition that 11 of the 30 homes were allocated as affordable housing and the rest were not allowed to be sold as second homes.
In December 2020 the house builder, Bracken Developments successfully argued to remove the condition that they could only be sold as a first or principal home.
Now it says that the development isn’t financially viable if it has to include affordable homes, which provide less profit than those sold on the open market.
Location and plans for the site off the High Street in Swanage
The developer is calculated to make about £830,000
At the Dorset Council Eastern Area planning committee on Wednesday 5th January 2022, councillors heard that when the costs of developing the site were deducted from the projected income from the sale of the open market properties and the affordable homes, the developer stood to make about £830,000 – a nine and a half percent profit margin.
The government advises that a realistic profit margin for property developers should be between 15 and 20 percent.
On that basis, an independent valuer, the District Valuation Service agreed that the development wasn’t financially viable to support the provision of affordable housing.
Dorset Council’s planning department, in turn, recommended councillors to remove the condition for affordable housing.
The old buildings currently have planning permission to be converted into affordable housing
“The current scheme is found to be unviable“
In a written submission on behalf of the Bracken Developments, Jo Tasker from Ken Clarke Planning Consultants said:
“After very careful consideration, we found that unfortunately this application was needed because the current scheme is found to be unviable. We submitted this application in May 2020.
“The applicants took specialist advice from engineers, quantity surveyors and a valuation consultant. Expert advice underpins a detailed economic viability assessment…”
Some of the old classrooms will need to be removed incurring additional costs compared to building on a greenfield site
Not a straightforward matter to rubber stamp
However scrutiny by the committee revealed that the recommendation by the council officers wasn’t a straightforward matter to rubber stamp.
The councillors heard a selection of views from local residents who all strongly opposed the removal of affordable housing, alongside the opinion of Swanage Town Council:
“The Town Council would wish to express its complete disappointment and frustration that the developer has submitted an application to remove the requirement for affordable housing so soon after obtaining planning approval for this development, the decision on which could have a material adverse impact on local housing needs/requirements.”
“We must support affordable housing”
Both of the councillors who represent Swanage on Dorset Council, spoke passionately for the need to retain affordable housing in the town in this location. Councillor Gary Suttle said:
“We cannot maintain a vibrant community with second home owners and high end value properties. Community is about diversity and we must support affordable housing to ensure that everyone has the opportunity to live here.”
The site is on a slope and has many levels
“Opportunist and cynical“
Councillor Bill Trite added:
“What is carefully overlooked is the extent to which house values in Swanage have risen since 2018 – such that a well managed development and business would be able to gain considerably more from sale price inflation than it loses by its increased costs…
“I don’t think it’s been conclusively demonstrated that the proposed development is unviable if affordable housing were mandatory. The District Valuation Service states its remarks are based on details provided to it, but I gather that means mainly provided by the applicant.
“The developer has been chipping away at all planning conditional and restrictive clauses since the earliest days of this saga…
“There is scope for manoeuvre which can provide an outcome in the public interest, otherwise I’m sorry to say, we are caving into an application which is opportunist and cynical.”
The water tower has now been removed so that the access road can be widened. The estimated cost of the work is £25,000
Additional costs of developing the brownfield site
In the presentation by the council planning officer, Peter Walters, it was explained that the main reasons why the development of the site was not economically viable with a proportion of affordable housing, was the additional costs of developing the brownfield site.
A number of old school buildings needed to be removed, including the water tower and it was harder to build on the sloping site. The developer listed the additional costs as:
- Demolition of Water Tower £25,000
- Clearance (slab and structures) £50,000
- Off Site Heritage Conservation £45,000
- Underbuild £38,700
- Retaining walls 1.5m £168,000
- Attenuation and Hydrobreak (drainage) £20,000
Attention was also drawn to the high Community Infrastructure Levy (CIL) cost of £576,044 when including affordable housing. This is the amount that the developer has to pay to Dorset Council to provide extra local resources to support an increase in the number of people living in the town.
Also it was pointed out that the land cost was higher than normal due to its desirable location close to the centre of Swanage and secondly because it was in a conservation area, build costs would be higher due to using better quality materials.
The table presented to councillors with the estimated value that the properties will be able to be sold at
The planning officer told councillors that the projected house values had been updated to reflect 2021 house price inflation, but the table of figures presented to the committee was exactly the same as the house prices in the viability report dated November 2019.
The property valuations in the table were calculated in 2019 by comparing it to other developments in Swanage including Compass Point in Northbrook Road, Prospect Farm near the industrial estate off Victoria Avenue and the development in Townsend Road to the west of Swanage.
There was no evidence in the report that any price adjustment had been made for the additional desirability of this development due to its close proximity to the town centre, the conservation area location or the panoramic sea and countryside views to the south end of the site.
The views from the south area of the site
Challenged by councillors
Councillors including Shane Bartlett, Alex Brenton and David Tooke on the planning committee challenged the evidence presented.
Questioning by Alex Brenton revealed that the developer didn’t yet own the land, so had the option not to purchase it, if building on it didn’t provide the profit margin it required.
Councillor David Tooke said that the developer would still be making a significant amount of profit and proposed a vote against the application to remove affordable housing from the development.
Chair of the committee, councillor Toni Coombs proposed an alternative, suggesting that the matter be deferred for further discussions as she was not confident that the councillors’ reasons for rejecting the proposal were legally robust enough.
The site is adjacent to the Purbeck House Hotel and its facilities
Voted to defer decision
The vote to reject the developer’s proposal was defeated by five votes to four with one abstention. However the chair’s suggestion was consequently voted for unanimously.
Now it’s expected that the matter will go back to the council officers to re-examine the 2019 cost and income figures and the developers will be invited to engage in further discussions.