Affordable homes 'unviable’ at former hospital site in Lancaster

A plan for 59 new homes on part of the former Royal Albert Hospital site in Lancaster has no affordable housing because the commercial profit from the sloped site will be lower than usual, city councillors are being told.
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The plan includes split-level home designs because of the steeply sloping land.

Applicant Wrenman Homes, working with WVC Lancaster, is seeking permission for an amended plan of 59 new homes on the site off Ashton Road, rather than 64 in an earlier application.

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Lancaster City Council is suggesting the provision of affordable homes could be reviewed in future, if circumstances change, such as building material costs or financial lending costs faced by developers.

The former Royal Albert Hospital.The former Royal Albert Hospital.
The former Royal Albert Hospital.

The application has raised a number of questions on costs and commercial viability of building different types of housing at the site. A series of experts have investigated the estimated costs, home design and size options and commercial forecasts surrounding the plan.

Planning officers are recommending approval, with various conditions. Councillors on Lancaster City Council’s planning committee will look at the proposals at their latest meeting on Monday, February 28.

A planning committee report states the Ashton Road plot is currently green field land, used for animal grazing with hedgerows and trees. It rise steeply to the west and north.

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Under the amended plan, all houses would be two-storey and 22 are split-level to deal with the sloping land. One semi-detached house is split into lower ground and ground floors in one half and ground and first floor in the other half.

The houses wil have natural slate roofs and mixed materials such as natural coursed stone, timber or resin cladding and white render with black fascias, windows and doors. The materials are similar to the Wrenman Homes site at Forest Heights in Halton, the report suggests.

Some objections to the Aston Road plan have been sent to the city council. These include unhappiness with alleged similarities to homes elsewhere, an alleged lack of space or small interior spaces, traffic congestion and HGV worries. Aldcliffe with Stodday Parish Council is among the objectors.

Under so-called section 106 planning conditions, a contribution of £138,000 from the developer has been suggested by the city council towards costs for extra secondary school places at Central Lancaster High or Lancaster Royal Grammar. But this is subject to future review amid building costs and economic changes.

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Regarding the lack of affordable homes, the planning report states: “Policy usually expects affordable homes to be 30 per cent of the total development, unless compelling and detailed evidence demonstrates this would have a disproportionate and unwarranted negative impact on viability. Evidence must be provided through an open book financial viability appraisal.

“The application has a financial viability appraisal demonstrating that no affordable housing can be provided. The appraisal illustrates the significant abnormal costs to deal with the site’s slope, due to a cut and fill (ground levelling) exercise and, particularly, the need for retaining structures and split-level houses.

“Independent viability experts were appointed to review the appraisal. Their initial conclusion was that the scheme could deliver 30 per cent affordable homes as well as the relevant section 106 contributions (cash paid by the developer). This was based on costs calculated by the independent experts using data and their experience.

“The applicant argued that costs specific to the site’s constraints were more relevant and submitted a cost plan as an accurate indicator. Given the significant difference in the respective positions, an independent quantity surveyor was commissioned to review the cost plan and determine the appropriate costs.

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“Following the cost analysis, the viability experts have updated their appraisal. As a result, their conclusion agrees with the applicant that with nil affordable housing but section 106 contributions of around £500,000, the scheme returns a lower-than-viable level of developer profit.

“The applicant’s appraisal returns a two per cent developer profit whereas the independent appraisal shows a 14 per cent profit, albeit assuming a nil land value (which is unrealistic). With a land value included, the scheme is unviable even with no affordable housing provided. Minimum viable profit levels are normally accepted as 17.5 per cent on revenue. Therefore, it is agreed by the independent expert that the scheme is unable to viably support affordable housing.”

The report also adds: “This lack of viability raises the question on how/whether the developer can deliver the scheme, in light of the potential inability to raise finance. However, this is a commercial decision for the developer who would have to accept a lower overall profit.

“Given the sales revenue is projected and that costs may reduce, if supply and manufacturing conditions improve, it is appropriate to include a review mechanism in the section 106 to enable affordable housing to be recovered, if the development performs better than anticipated. This is in accordance with government planning guidance on viability.”

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Planning officers are recommending approval with conditions, including the developer paying £138,00 for six secondary school places; £95,000 for changing facilities at Royal Albert playing fields, cash for road or sustainable travel work, an on-site play area and long-term maintenance of landscaping, drainage, highways and street lighting at the plot which is not the responsibility of local councils.