Agenda item

(The Director of Communities) To consider the attached report (CHB-016-2013/14).

(1)     That the Cabinet Committee approves the development feasibility for the Burton Road Site, Loughton consisting of a 56-home scheme to progress to detailed planning stage, and if planning permission is received the invitation of tenders as Phase Two of the Council’s Housebuilding Programme;

(2)       That it be noted that the estimated capital investment required to deliver a scheme consisting of 56 new affordable rented Council properties in Phase Two, is around £8.9m including fees and works;

(3)       That an estimated subsidy of £1.512m  for a 56-home scheme be set aside for Phase Two in order to achieve a pay-back of 30 years with a positive Net Present Value (NPV) as required by the Council’s Development Strategy;

(4)       That a financial contribution of £18,400 to the NHS to fund healthcare should be included as part of the resultant planning permission by way of a Unilateral Undertaking, subject to the money being specifically spent on services in the Loughton area; and

(5)       That the Housing Portfolio Holder be authorised to submit a detailed planning application for the Burton Road development site.

The Assistant Director (Housing Property and Development) presented a revised report and feasibility studies regarding the Burton Road site in Loughton. Members were reminded that at the last meeting of the Cabinet Committee they had requested that the density of the site be increased and a new site design and feasibility study be brought to this meeting for approval. Officers presented the Cabinet Committee with two designs for the site:

(a)           a 42-home development; and

(b)           a 56-home development.

The Head of Development, East Thames Group stated that the Financial Appraisal models for both the Burton Road options had been formulated in line with the Council’s approved:

(i)         Development Strategy;

(ii)        Economic Assumptions Framework; and

(iii)       Affordable Rent Policy.

The costs used to formulate the appraisal had been taken from the cost build-up provided by Pellings LLP’s Quantity Surveyor.

The Head of Development, East Thames Group advised comparative information had been provided in the report to enable Members to decide between the two schemes. He stated that the information was broadly divided into two areas; financial and non-financial.

Financial

For both schemes:

(a)        Revenue first exceeds cost in Year 1;

(b)        The loan repayment was Year 30;

(c)        They each had positive Nett Present Values (NPV) of £2,196,159 (Option 1) and £3,182,344 (Option 2) respectively; and

(d)        They each had an Internal Rate or Return (IRR) of 5.34% (Option 1) and 5.46% (Option 2) respectively.

Whilst Option 2 had a higher level of capital investment it also produced a greater return (better NPV and IRR).

Option 1 had an NPV per person of £14,739 whilst Option 2 was £25,664.

Option 1 had an NPV per unit of £52,308 whilst Option 2 was £56,828.

Option 1 had a debt per unit of £130,308 whilst Option 2 was £132,558.

Option 2 had a lower build cost per square metre of £1,894 (gross floor area) as opposed to Option 1 which had a build cost per square metre of £1,685 (gross floor area). This was partly due to the fact that the level of enabling works remained broadly similar, as was the allowance for risk in the ground.

Non-Financial

Option 1 accommodates 149 people whilst Option 2 accommodates 212 people; 63 more people in Option 2.

Option 1 produces 30 family homes (2 bed homes and above) whilst Option 2 produces 42; 12 more family homes in Option 2.

Option 1 delivers 9 houses compared to 18 in Option 2; 9 more in Option 2.

The second option would therefore provide more family accommodation and hence a significantly greater child density, which was a decision making factor.

The Head of Development, East Thames Group also confirmed that Secure by Design certification would be sought as per the Council’s approved Development Strategy.

It was noted that Secretary of State consent would be required to appropriate the land for planning purposes, in order to facilitate the development.

Recommended:

(1)       That, subject to Secretary of State consent, the former garage site and associated amenity land at Burton Road, identified for the development of Council Housebuilding, be appropriated for planning purposes under provisions laid out in the Local Government Act 1972 and Town and Country Planning Act 1990 on the grounds that the land was no longer required for the purposes for which it was currently held in the Housing Revenue Account.

Decisions:

(1)     That the development feasibility for the Burton Road Site, Loughton consisting of a 56-home scheme be approved and progressed to detailed planning stage, and if planning permission is received, for the invitation of tenders as Phase Two of the Council’s Housebuilding Programme;

(2)       That the estimated capital investment required to deliver a scheme consisting of 56 new affordable rented Council properties as Phase Two of around £8.9m, including fees and works, be noted;

(3)       That an estimated subsidy of £1.512m for a 56-home scheme be set aside for Phase Two in order to achieve a pay-back of 30 years with a positive Net Present Value (NPV) as required by the Council’s Development Strategy;

(4)       That a financial contribution of £18,400 to the NHS to fund healthcare be included as part of the planning permission by way of a Unilateral Undertaking, subject to the money being specifically spent on services in the Loughton area; and

(5)       That the Housing Portfolio Holder be authorised to submit a detailed planning application for the Burton Road development site.

Reasons for the Decision:

At its last meeting, the Cabinet Committee considered a feasibility study for a 31-home scheme at Burton Road, Loughton as Phase Two of the Council’s Council Housebuilding Programme. However, it was resolved that an alternative scheme be developed for the site, which increased the density of the housing and reduced the parking allocation by taking advantage of the site’s town centre location, good local shopping facilities and public transport infrastructure. Appropriating the land would override any third party access claims which may frustrate the Council’s objectives for redevelopment.

Other Options Considered and Rejected:

1.    Not to progress with either of the schemes presented in the report and revert to the 31-home scheme considered by the Cabinet Committee in February 2014.

2.    To develop the site with a different number of homes, or with an alternative mix of property types or parking allocation.

3.    Not to progress with any of the three schemes for this site and consider alternative sites to make up Phase Two.

4.    Not to appropriate the land and take the risk that a third party will not try to prevent the development by laying claim to a long established right of access across the land.