There is a large, potentially very large, Manchester city centre residential development brewing, and if it goes ahead it could change the way the UK city living market works.

Manchester City Council has approved work on a feasibility study into a city centre development to provide affordable housing.

Until now the city council has resisted calls to build affordable housing in the prime city-centre market. Instead it has allowed developers to make payments in lieu which it says it then uses to fund development elsewhere in the city in districts with lower land prices.

Now, in the face of political opposition to a policy which appeared to exclude low-income residents from the city centre, the council is preparing a retreat.

Two sites, one near Piccadilly and the other near Deansgate, have been identified. One of the sites will be a larger mixed-use scheme and the other will be a smaller infill site. Talks are underway with potential development partners to deliver sites on the schemes.

The study, which will report before Christmas, will look at the subsidy required to ensure apartment development goes ahead.

The plan, which is found deep inside a council report which has attracted little attention, is being touted as a potential solution to growing political concern about the lack of affordable or accessible housing in the booming central Manchester apartment scene.

As Bisnow has reported, developers are preparing themselves for a stricter interpretation of rules which require 20% of apartments to be made available at so-called affordable rents or sale prices.

The plan is part of a wider strategy to deliver an additional 1,400 affordable homes between April 2015 and March 2025. This implies a total over this period of 6,400 affordable homes.

Labour members of Manchester City Council representing the city centre are pressing for the plan to be progressed.

“Manchester City Council could, with developer buy-in, find a site near the urban core making use of developer contributions for an eight or nine storey medium-density development, perhaps of 500 units, and I think that is the direction the council is moving,” Manchester City Councillor Sam Wheeler told Bisnow.

A statement from Manchester City Council said work on the feasability study is proceeding.

"The basic premise is that we have huge and growing demand in Manchester," the statement said. "Population growth is one of the largest in Europe and to meet housing demand we need 32,000 homes up to 2025. We have committed to ensuring at least 6,400 of these are affordable, with a significant number social rent.

"The city centre will always be a challenge for Manchester Council to building directly or partnering a housing association because of the initial land values and the fact that to build affordable or social, you have to accept that rents cannot be higher than 60 to 80% that of market. In some parts of the city centre even 60% of market might be considered unaffordable to some people and may also be higher than the local housing allowance."