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Manchester Resi: Affordable Housing Crunch Time?

Manchester Resi: Affordable Housing Crunch Time?
The High Street Manchester block proposed by CEG

Tensions are rising as members of Manchester City Council's ruling Labour group begin to lose patience over the provision of affordable housing in the city centre.
CEG's £79M plans for a new 22-storey, 361-unit residential development on a site at Church Street/High Street, on the edge of the Northern Quarter, have provoked the latest outburst of anxiety (from developers) and impatience (from politicians).

But a sense that the council's approach to affordable housing requirements has become much less flexible is growing.

The Church Street/High Street row has been rumbling on since a first committee hearing in June. At that time CEG insisted that viability assessments made it impossible for it to contriburte cash toward affordable housing in Manchester whilst making a profit of 18%, as the rules allow. However, at a planning committee meeting on 17 October, it conceded a payment of £1M.

"The benchmark land value of £8,656,257 together with build costs of (including abnormal costs and contingency) £78,450,639 are within the range expected based on comparable evidence," a report to councillors said. "The total costs would be £96,207,625 with a GDV of 18%. On this basis the scheme could not support a contribution towards offsite affordable housing and ensure that the scheme is viable and can be delivered to the quality proposed."

The offer attracted a derisory response from a Labour councillor representing the city centre Piccadilly ward, an area which has seen massive growth in luxury housing but no matching growing in affordable provision, the Manchester Evening News reported.

Councillor Sam Wheeler said the offer was "three months late and £4M short". The payment, which Wheeler said was equivalent to the potential sale price of just two of the 361 flats, is intended to offsite the required 20% affordable housing which every scheme is expected to provide.

The about-turn in the developer contribution calls into question the reliability of viability assessments. The controversy comes as developers and their advisors grow anxious about a change of mood at the town hall.

"Until today both Salford and Manchester have been relatively flexible with developers on the affordable housing issue, but there is now a real political focus on this," Lambert Smith Hampton's Manchester-based National Head of Build To Rent and PRS Ian Scott told Bisnow.

"There are louder voices saying the council should not permit off-site contributors, and that there should be affordable housing developed on city centre sites. A wise developer looking at this would be part of the solution, not part of the problem.

"Developers really should look at affordable housing, this is climbing up the political agenda and if they are not careful, it will become a hurdle."

However, developers should take heart. As well as concerns on affordable housing the CEG proposal also faced serious heritage objections from Heritage England, and from neighbours who complained the 22-storey block cast deep shadows on neighbouring buildings in breach of usual guidelines. Council officials nonetheless recommended approval of the plans, and despite concerns about affordable housing, councillors agreed.