Affordable homes cut from Broughton development - because of the price of wood
A developer has been told that it can ditch a pledge to provide affordable housing on a new estate on the outskirts of Preston. - after claiming building costs have skyrocketed since the onset of the pandemic.
Pillars Construction began work on the plot off Garstang Road in Broughton just weeks before the first lockdown last March.
The firm was granted permission back in 2019 to build 38 properties - eight of which were to be affordable apartments created from the conversion of an existing detached dwelling on the site.
However, the company applied to Preston City Council to remove that requirement and instead turn the residence - known as Park House - into two two semi-detached properties for sale on the open market.
Pillars also wanted to be excused a previously-agreed payment of almost £275,000 to fund the development of five affordable homes elsewhere in the city, along with a £94,000 contribution to the creation of six primary school places deemed necessary as result of the development.
The company argued that even without any such obligations, the scheme would still fall £1.4m short of the 17.5 percent profit margin that would make it financially viable.
However, Preston City Council planners disagreed with Pillars’ assessment and, after what the committee was told were “detailed discussions” between the authority and the firm, it was agreed that it would fund the equivalent of 3.5 affordable units at another location and pay £80,000 towards additional school places.
Pillars Construction chief operating officer Munir Patel told committee members that viability was already “very tight” on the development even before the pandemic struck. But he said that the soaring cost of materials had left the company with “no alternative” but to seek to amend the original agreement.
“[Normally] in the industry you would be dealing with price rises of two to five percent a year. It’s not abnormal for me to be getting letters at the moment [advising of a] 20 percent month-on-month [rise] in material prices - with regular material like wood increasing [by] over 150 percent over an annual period,” said Mr. Patel, who added that the way viability figures were calculated masked the fact that the company actually expected to make a loss on the development.
Committee member David Borrow said he was “surprised” by the claim that it would be difficult to turn a profit from the out-of-town site, where one propertyy has so far beenm completed.
“All I hear as a layman is that the housing market is booming - [house] prices are going up, people are wanting to move out of the cities into rural areas...and there isn't a sign of a housing slump in Preston.
“Everything [indicates] that Covid is actually driving the housing market in places outside the major cities,” said Cllr Borrow, who suggested material price rises caused by increased transportation costs during the pandemic would be likely to “disappear” in the next 12 months.
However, Mr. Patel said the picture was “generally getting worse”, especially for a development like the one on Garstang Road, where the properties are based on timberframe construction.
Cllr Sue Whittam said she had “every sympathy” with the developer, but questioned whether there was a way of the council recouping the waived contributions should the financial situation improve.
The committee heard that a so-called “review mechanism” was possible, but that the authority had decided not to make use of it in this case.
Members approved the revised agreement by a majority, with eight votes in favour and one abstention.
Park House is known locally for being the former home of judge William Openshaw, who was murdered in the detached garage of the property in 1981 by a man he had sent to borstal 13 years earlier.
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