Another profit issue for homes

Another property developer is claiming there’s not enough profit to provide affordable homes on a new development in South Holland.

A report sent to South Holland District Council says D&R Homes cannot offer the required seven homes from a development of 38 in Gosberton.
A similar report, created by the same specialist company based in Exeter, was sent to the council and reported in The Voice last week relating to a development for Stinders Homes (SPV2 Ltd) in Long Sutton.
Both of the financial viability reports claim there is not enough profit to provide any affordable homes in either case.
The report for the Gosberton site says the target profit of 17.5 per cent was not going to be met and in fact, it would be 2.88 per cent.
The Long Sutton development, which already has permission off Lime Walk, would return a profit of 6.5 per cent, given as the reason the applicant cannot provide any affordable home.
There is also already outline planning permission from the district council for the development of the greenfield site in Gosberton.
According to the South East Lincolnshire Local Plan, South Holland needs to provide around 282 affordable homes a year.
Any development with more than 11 homes should provide ‘about 25 per cent’ of affordable housing.
But both reports relating to both developments claim that rising costs in both materials and labour means profit margins are cut.
They also say: “Particular justification for this site-specific viability assessment is that significant economic changes have occurred since the plan was brought into force.”
The Gosberton development includes one or two- bedroom semi detached homes and two or three-bedroom detached homes.
It also says that consultation with local agents suggested asking prices are unlikely to be achieved, with five to ten per cent discount in the current market.
The Gosberton site would return more than £7m in sales if predicted prices are achieved.
But the actual profit on that is put at £204,018 – ‘significantly’ lower than the target figure.
“Unprecedented sets of circumstances are highlighted, including for example COVID-19, the Ukraine War and energy crisis.
“In many cases due to the lifecycle of the local plan it has often been many years since the last area-wide study was completed, meaning that the data underlying the adopted policy may require updating,” says the report.