Potential £6.35m error in Broadbridge Heath development’s viability

Although an 80/20 per cent split of market to affordable housing was initially agreed on the site on a square foot and unit basis, Horsham District Council appears to have granted planning permission purely on a 80/20 unit basis.

Because affordable homes are mostly smaller than market properties, this could have led to the viability appraisal understating the development’s Gross Development Value by £6.35m, according to research by Rudgwick resident Paul Kornycky based on HDC’s own figures.

Speaking at last Wednesday’s Full Council meeting he said: “Allowing 20 per cent developer profit still means that the viability margin was some £5m understated; money which potentially could have been secured towards the infrastructure shortfall.”

Mr Kornycky, who is also chairman of the Broadbridge Heath Leisure Centre Joint User Group (JUG), asked how this had happened, and called on the council to ensure mistakes were not made on viability work on the proposed North Horsham development.

He explained that to meet housing need a greater proportion of affordable homes are smaller, but the initial affordable homes schedule was taken as 20 per cent of the overall mix of properties, creating a ‘huge discrepancy between the viability appraisal and the actual development’.

He added: “Hence even though 20 per cent by unit count of this development is affordable, clearly significantly less than 20 per cent of the built square footage at this site will be affordable.”

Claire Vickers (Con, Southwater), HDC’s cabinet member for planning and development, said: “As they are quite complex, and the facts need checking, I’ve decided to respond to you in writing as soon as possible, and I will copy in all members.”

Mr Kornycky suggested that in order to show residents they are striking a good deal on strategic housing developments HDC should adopt an ‘open book policy’ on future viability work.

This week David Skipp (LDem, Horsham Park), leader of the Lib Dem group at HDC, said: “It is a serious concern because Mr Kornycky was intimating we had lost some five to six million pounds of money which could have been well used for projects within the district.

“We have not as yet seen a reply from the cabinet member but in view of the gravity of the situation I would hope the answer to when, how and why this occurred are described openly in the spirit of transparency.”

The revelations come as questions have been raised over the transparency of decision making and the role of advisory groups at HDC.

The decision to hold Planning Policy Advisory Groups in private caused significant controversy back in 2013.

Before then Strategic Planning Advisory Groups, which met in public, had been discussing strategic housing sites.

Last year the County Times launched its STop Secret campaign in response to claims that the ruling Tory group at HDC whip votes, make key decisions in secret group meetings, and vet letters and articles sent to the paper.

The campaign saw the launch of the Free Speech Charter, which was signed by a number of county and district councillors from across the political spectrum, including a number of candidates before May’s district council elections.

UPDATE

Chris Lyons, HDC’s director of planning, economic development and property, has since answered Mr Kornycky’s questions.

Question 1 – Why has this happened?

“The planning policy requirement as set out in Policy CP12 of the Core Strategy (2007) confirms that ‘residential developments of 15 dwellings or more (or on sites of 0.5 hectare and above) will be expected to include an appropriate proportion of affordable homes…’ This relates to unit numbers and not floor space.

“The original Outline application on the site (DC/09/2101) secures 20% affordable units on site, a financial contribution of £7,730,000 (Index Linked) to be used for affordable housing provision within the District and a Review Mechanism which could secure additional affordable housing contributions depending on the increased viability of the scheme with regard to the terms of the Legal Agreement. The scheme was agreed at a lower level than 40% through the submission of a viability report. The site was split into parcels, and the subsequent reserved matters applications must be in accordance with the outline consent. The subsequent “Reserved Matters applications ensured that the correct number of affordable units were provided. The size of the units provided were directly assessed during each application to ensure that they met the current local housing need.

“As such, the number of affordable units that have been provided is consistent with the legal agreement. Whilst the size of the units may now be smaller, the fact remains that the developer has met their requirements as set out in the original Outline application.

“The Viability Assessment as submitted with the Outline application sets out the developers’ intentions, costs, profit, etc. at that moment in time and is used to assess whether the reduction in affordable housing was justified. That was independently checked and the Council took the view that, on balance, planning permission should be granted with a reduced amount of affordable housing. Clearly things change and develop over time and therefore future Reserved Matters applications must be in accordance with the Legal Agreement that was secured on the outline permission. The fact we foresaw that things would change and the market was likely to recover is exactly why the Review Mechanism was included in the outline application to ensure any agreed uplift in value would be covered and additional money paid towards affordable housing.

“Therefore, I do not agree that it is correct to say the viability margin was £5m understated.”

Question 2 – The Viability Appraisal submitted for North Horsham at the November 2014 Hearings made this same error. Will you learn from this mistake and put it right?

“As stated above, there was not a mistake on the first viability report. Likewise, the viability appraisal for North Horsham was to demonstrate to the Inspector that the site was deliverable and viable, which is a requirement to be allocated. This is initially a high level assessment and then as time goes on, costs will become more detailed and the viability appraisal refined. The Inspector agreed with the approach to the North Horsham site in his report and states “…I find nothing inappropriate in the likely funding mechanisms, including the probable exclusion of this site from the proposed CIL regime, given the extensive provision and costs of on-site infrastructure, including particularly the new schools and highway works” (paragraph 69 of HDPF Final Report).

“There was no mistake and we have assessed the North Horsham site appropriately as well.”

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