Property developers threaten to stop building in York over new affordable housing rules

Today, house-builders Persimmon, Nixon Homes, Hogg The Builder and Yorvik Homes, and developer The Helmsley Group, said a council policy to demand that half of any development over 15 homes must be affordable housing - as opposed to the previous 25 per cent - could have disastrous effects for the city.

They warned that since the introduction of the policy last year, no big developer had major plans for the city and that it would lead to spiralling house prices, preventing even more people getting on the property ladder. Even estate agents today said the move was bad for York.

Ian Hessay, director of Persimmon Homes, said: "It will mean not enough homes get built and will lead to over-inflated prices."

Developers in threat to stop building in city over changes to affordable housing threshold

MAJOR housebuilders are being driven out of York - because of the council's "crippling" new policy on affordable homes.

The city's biggest housing developers revealed that the property building boom would grind to a halt unless planning chiefs had a radical rethink.

Under a new threshold recently set by City of York Council planners, developments of more than 15 homes are now required to include 50 per cent affordable housing. Its previous threshold was 25 per cent.

Ian Hessay, director of York's biggest housebuilder Persimmon Homes, which has built more than 1,000 homes in York in the last ten years, said that achieving 50 per cent was not "viable".

He revealed that as far as they knew, no new schemes had been submitted incorporating the new threshold and smaller developers were deserting the city to look for more lucrative sites elsewhere in the region.

Developers also fear house prices will soar as new properties failed to get built in the light of the policy.

"All we've got left to build in York is 170 flats in Heworth Green - there is the problem," Mr Hessay said.

"Typically, we've had planning for 200 or 300 homes a year.

"It will mean that not enough houses get built and lead to over-inflated house prices.

"In our opinion, the net effect will be that less affordable units will come forward as sites will be rendered financially non viable from a developer's point of view.

"The problem is simply that the revenue achieved for an affordable housing unit is significantly less than the cost of building the unit and acquiring the land. This means the affordable housing land has a negative value which has to be cross subsidised by the private residential sale unit. At a 25 per cent level this was workable and York had a good record of bringing sites forward however at 50 per cent most projects become marginal to say the least.

"While the increase in affordable housing would not put Persimmon off from bidding for land I do seriously doubt whether or not we will be able to offer the land owner enough money to make it worthwhile him selling and thus potentially sterilising development."

Mr Hessay said they had voiced their concerns to the council "umpteen times" and called on them to adopt a "flexible approach".

Ian McAndrew, pictured left, associate director of the Helmsley Group, said the new policy was having "massive implications" for the housing market.

He said that it was "just a fact of life" that buyers who were thinking of forking out £250,000 for a new flat did not want to live next door to people paying £40 a week in rent for an affordable house.

"I don't know anyone in the private sector that believes this will result in an increase in the number of affordable homes," he said.

Ian Nixon, managing director of Nixon Homes Limited, which is currently developing a 61 home site in Tadcaster Road, said: "It is unlikely we would buy a piece of land in the York area now if we had to supply 50 per cent affordable housing.

"It simply would not make the scheme viable and I'd be concerned that we wouldn't see a return on our investment.

"This policy takes developers like us out of the equation and means we simply build in other areas ."

Peter Hill, technical director of York-based Hogg The Builder, said the policy had meant a "damping effect on overall build levels" while landowners adjust to the idea of less profit for their land.

"Some of this change may become permanent; as profit from redevelopment is reduced, and landowners become unwilling to abandon existing uses," he said.

"Certainly, no landowners or house builders will be encouraged to develop in consequence of the policy."

Coun Ann Reid, executive member for planning and transport, said: "This has been subject to consultation and many developers I don't believe even responded.

"Fifty per cent is not unusual and I know some authorities are demanding more than that.

"The kind of points they are making are similar to those made when we set the 25 per cent threshold.

"That has proved more than achievable."

Coun Reid said: "It's clear that where developers can demonstrate that there are abnormal development costs then that would be taken into consideration," she added.

Coun Reid said abnormal costs could be for such things as unexplained contaminated land, but not road improvements.

A City of York Council spokeswoman, said: "If there is evidence to suggest that the increased target for affordable housing is having a detrimental impact on housing land supply this will be addressed through the emerging Local Development Framework."

'Problems brewing for some time'

Kevin Hollinrake, partner at Hunters estate agents, in Coilliergate, said the council's policy was "actually contributing to the root cause of the housing problem".

He said problems had been brewing over the council's affordable housing quota for some time.

"It's a nice idea to have all these affordable houses, but in reality, what it does is devalue the land that is potentially going to be built on, because developers can't make as much money on their projects," he said.

"This means landowners choose not to sell land, and hold on to it instead, until the quota is changed.

"Far from easing the problems over lack of supply, it exacerbates them."

He said the root cause of affordability problems in the housing market was the lack of properties being built.

"We have the lowest number of houses being built at anytime since the war," he added.

Builders to cast their eyes elsewhere

CITY of York Council's decision to raise the affordable housing threshold to 50 per cent for schemes above 15 homes came into force last year.

Ian McAndrew, associate director of the Helmsley Group, said levels elsewhere in the region were at 35 per cent in Ryedale and 25 per cent in both Selby district and Hambleton. These could be raised to 40 per cent in the near future.

Ian Nixon, managing director of Tadcaster Road-based Nixon Homes, said York developers could now concentrate their efforts in areas like Wakefield where levels were at the 20 per cent mark.

The affordable housing threshold in Harrogate was set at 50 per cent in recent years.

NINA SWIFT asked people in York if they thought the threshold for affordable housing was too high

Beth Elliot, 19, a student, of Hull Road, York, said: "I don't think it's excessive. It's pretty expensive at the moment. For a young person to get on the ladder is a good thing. I don't think it's good if it puts people off building but do we really need more houses? I don't really know if there is enough."

Rachel Earnshaw, 30, a conservation charity worker, of Sutton-on-Derwent, said: "I don't think it's excessive at all. We have just bought a house in Sutton on Derwent. To buy a house in York would have cost us an awful lot more. It has taken years to afford to buy a house so affordable housing is important. We were renting in York for about five years before we could afford to buy. To get on the housing ladder is extremely difficult."

Katy Turner, 18, a student, of Hull Road, York, said: "I think houses should be more affordable, especially in York because it is so expensive to live here.

"I don't think it would be bad if they stopped building in York. It is such a built-up area anyway.

"It is so busy it wouldn't do any harm to be a bit quieter in the city. If there are more houses, it is going to be packed."

Philip Gamlin, 21, unemployed, of Lawrence Street, York, said: "I think 50 per cent is a bit excessive because most people who live in York have got quite a lot of money and there is no need to have affordable housing in York, really.

"York is meant to be a small historical city and by building lots of housing you are taking away from that. So I suppose it is a good thing if they don't want to build here."