Greater Manchester's New Land Value Capture Plan
The effort to get an unviable Rochdale apartment scheme out of the ground has given birth to a new funding model that could kick-start residential and commercial development across Greater Manchester.
Greater Manchester Combined Authority's decision to provide up to £4M to help fund Rochdale's 228 unit Rochdale Riverside Phase 2 scheme will open the way to other developments in Stockport and across the city region, council leaders have been told.
Rochdale Riverside Phase 2 will provide high quality apartments at an affordable market rent. However, a report from Salford City Mayor Paul Dennett, who is responsible for GMCA housing policy, revealed the £8M cost of construction is more than the value of the scheme on completion. As a result the GMCA and Rochdale Council will each contribute £4M to the costs, and then share the uplift in values that the scheme (and the wider Rochdale Riverside) produces in a form of land value capture.
“If the GMCA and Rochdale Metropolitan Borough Council hold an investment in the scheme over a longer term, then both GMCA and RMBC can capture the value increases generated by the regeneration of the town centre,” the report said. “This proposal is an innovative approach to regeneration with the GMCA and a Greater Manchester Council sharing risk. A similar approach is being finalised for Stockport Interchange, and could be further replicated elsewhere within Greater Manchester.”
The total investment required in Rochdale has been calculated as the difference between the current day one market valuation and the build cost.
“Based on the value increases which have been witnessed in other council areas as a result of regeneration activities, it is anticipated that the value of the scheme could increase by more than £4M by 2028, enabling the full repayment of the investment at that time. RMBC will retain their investment for a longer period to benefit from further value increases,” the report said.
The Rochdale scheme is expected to start on site in June.