A row over whether proposed new housing on the former St Mary’s School site in Swanage should include affordable homes, is expected to blow up again at the next Dorset Council planning meeting.
At the last Dorset Council eastern planning meeting, a decision was deferred by councillors on whether the developer Bracken Developments could scrap the legal commitment for it to provide 11 affordable properties.
Location and plans for the site off the High Street in Swanage
30 home development next to Purbeck House Hotel
The social housing is proposed to be part of the 30 home development next to Purbeck House Hotel off the High Street.
Bracken Developments, despite including provision for affordable housing in its original planning application, now argues that the development would be economically unviable if it’s included and the Dorset Council planning officers are in agreement.
The deferral was to allow more talks between the developers and the council to find a solution that addresses the housing crisis in Swanage, while still allowing the property developer to make a profit.
“Scheme would not be viable if affordable housing is to be provided“
Reporting back to councillors the planning officer concludes:
“Following the deferral of the item by the Eastern Planning Committee on 5th January 2022 to discuss viability further, officers have met with the applicant.
“…the applicant has reiterated that due to the costs of delivering the site, alongside the Community Infrastructure Levy rates, the scheme would not be viable if affordable housing is to be provided.
“…the site is in the ownership of the applicant, which does not afford further opportunities for negotiation with the landowner, as suggested by the planning committee.
“Officers therefore consider that permission should be granted for the removal of the Section 106 legal agreement (the provision of affordable housing).”
The views from the south area of the site
The issue hinges on the costs of building or refurbishing the new open market and affordable homes and how much they can be sold for once completed, and whether this creates a sufficient profit for the developer.
In order to determine this, the council requested an economic viability report from a chartered surveyor, paid for by the developer, and this was completed in November 2019.
From the sale of the open market properties and the affordable homes, it was concluded that the developer stood to make about £830,000 – a nine and a half percent profit margin.
Developers should expect profits between 15 and 20 percent
The government advises that a realistic profit margin for property developers should be between 15 and 20 percent.
On that basis, the independent valuer, the District Valuation Service in its report in June 2021 agreed that the development wasn’t financially viable to support the provision of affordable housing.
Following the recent discussions, Bracken Developments has reiterated its position and has also pointed out that it would have difficulty in getting a bank loan with estimated profit margins of less than 15 percent.
It also asks councillors to “accept the professional recommendation provided by their own expert and independent consultant that the conclusion of the appraisal is sound.”
The old buildings currently have planning permission to be converted into affordable housing
The need to retain affordable housing in the town
At the Dorset Council eastern planning meeting on Wednesday 5th January 2022, 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.”
“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 site is on a slope and has many levels
Time lag between reports and decisions
Responding to the question of whether councillors should be making decisions based on figures from November 2019 and June 2021, which don’t take into account the recent boom in house prices, a spokesperson for Dorset Council said:
“The District Valuer Service undertook an assessment in June 2021 which forms the basis of the officer recommendation.
“While we accept there can be a ‘lag’ between valuations and when committee decisions are made, in this report the DVS consider all the evidence provided by the applicant and adjust it where they consider it appropriate.”
The site is adjacent to the Purbeck House Hotel and its facilities
Swanage Community Housing offer
In a last minute twist, the Swanage Community Housing group which has been formed to provide social housing for the town, has offered to develop the affordable element of the scheme, leaving the developer to build just the open market homes.
Councillors Nicola Rogers and Debby Monkhouse, who are part of the group, have written in a letter to Bracken Developments:
“We ask you to put Swanage ‘people before profit’ and allow us a little time to negotiate with you and the diocese with a view to exploring the purchase of the old school building and constructing these 11 dwellings ourselves for the Swanage families and key workers who so desperately need them.
“This surely will leave you with a smaller, but more profitable development of the 20 houses you envisage on the rest of the site. We can also discuss making good a proportion of the development costs you have already incurred.”
Now it will be up to councillors at the Dorset Council eastern planning at 10 am on Wednesday 9th February to decide whether to release the developer from the obligation to provide the affordable element of the scheme.