Agenda item

Modification of legal agreement dated 15 January 2016  on application 3/13/0674/OUT to remove obligation relating to affordable housing.

The Lead Project Officer presented the application seeking modification of the Section 106 agreement to remove the affordable housing obligation associated with the development. It was noted that the application had been referred to Committee in accordance with the Dorset Council Constitution due to the proposed reduction in community benefit.

The site location and surrounding context were shown on a map, with the application site outlined in red. Members were reminded of the planning history of the site and in particular an outline application for 29 homes (LPA reference 3/13/0674/OUT), which had been refused by East Dorset District Council in 2015 before being allowed on appeal in 2016. A reserved matters application (3/19/0019/RM ) was subsequently approved by Committee in 2019.

Plans were displayed identifying the affordable housing units currently secured through the legal agreement, together with examples of the approved dwellings. Members were advised that the existing agreement required the delivery of 11 affordable housing units, but the applicant was seeking to remove this requirement in its entirety on viability grounds.

It was reported that one objection had been received from neighbouring residents. Objections had also been submitted by the Town Council and the Ward Member. Although the Housing Officer had initially objected to the proposal, they had subsequently acknowledged that the provision of affordable housing was not viable based on the evidence submitted.

The applicant had identified a number of abnormal and increased costs associated with the development, including the diversion of a water drain over a distance of approximately 50 metres, non-standard drainage requirements across the site, the construction of a sacrificial road to protect retained trees during development, the provision of heat pumps, and increases in construction and labour costs.

The key findings of the independent viability review undertaken by the District Valuer Service were outlined to members. The District Valuer had adopted a higher gross development value than that suggested by the applicant, while also applying lower construction, external works and abnormal cost assumptions. The District Valuer’s assessment of policy requirements was approximately £200,000 lower than that advanced by the applicant. It was also noted that the development was not liable for Community Infrastructure Levy payments.

A viability matrix had been used to test the conclusions and was found to support the District Valuer Service assessment. The Lead Project Officer advised that viability would only improve sufficiently to support affordable housing provision if sales values increased by approximately 10 per cent and construction costs reduced by approximately 10 per cent. Reference was also made to the Planning Inspector's observations on another appeal scheme at 184 Ringwood Road, noting that the viability information supporting the Christchurch and East Dorset Local Plan was considered to be out of date.

It was further noted that the Section 106 agreement was more than five years old, meaning that the Council was obliged to consider whether the affordable housing requirement continued to serve a useful purpose. It was concluded that the viability evidence submitted and independently reviewed demonstrated that the affordable housing obligation rendered the development unviable. It was therefore recommended that the affordable housing requirement be removed as the benefits of delivering housing in general outweighed the loss of the affordable housing.

Public representation was received from the ward member, Cllr Flower. He raised concern about the removal of affordable housing provision from the development and considered that the developer should have known about the costs involved earlier in the process.

In response to questions from members officers and the District Valuer provided the following responses:

·       Building costs were increasing faster than house prices, which was contributing to the lack of viability of the scheme.

·       Some foundations for the dwellings had been started, but no houses had been delivered at this point.

·       A quantity surveyor had reviewed the costs for the development, using several different tools and databases to inform their conclusion.

·       The details of why the development hadn’t yet been built were not known.

·       Members were being asked to determine whether the modification to the s106 agreement was acceptable or not and no other aspect of the development was being considered.

·       There was no opportunity to apply a viability review clause.

·       The NPPF set out the methodology for conducting a viability review and the benchmark land value was considered in that rather than the purchase price of the land.

·       There was a 5 step process that was followed to determine the benchmark land value.

·       The cost database used for determining costs was a tool regulated by the RICS and was not the only tool used by the quantity surveyors.

·       Then assessment carried out by the District Valuer Service was based on 100% of homes being sold as open market housing. This returned approximately 10% profit level, which was below the target level set out on national policy.

Having had the opportunity to discuss the merits of the application and an understanding of all this entailed; having considered the officer’s report and presentation; the written representatives; and what they had heard at the meeting, it was proposed by Cllr Sowry-House and seconded by Cllr Robinson that the application be refused, on the basis that provision of affordable housing would still serve a useful purpose and on balance it was not outweighed by the wider public benefit of the provision of open market housing, given the wider need of affordable housing in Dorset, as demonstrated by the waiting list for affordable housing.

Decision: That the application be refused for the reason set out in the appendix to these minutes.