Huge windfall profit for Gilston developers by scrapping affordable housing

CPRE Hertfordshire joins local campaigners in calling for East Herts District Councillors to stand up for the needs of local people and hold developers to their original promise of 40% affordable housing.

Developers Taylor Wimpey and Places for People claim that their so-called Gilston Garden Villages development will not be financially viable if they are held to their earlier promise of 40% affordable housing, or 4,000 dwellings. They have applied to East Herts District Council to reduce this to 23% affordable housing, based on their viability assessments.

If the Council proceeds on this basis, it would mean 1,700 fewer affordable dwellings that the District badly needs. But new evidence shows that it would also mean the developers making a huge windfall profit of £130 million pounds by not providing those 1,700 affordable homes.

But it’s not a done deal, and the Council could yet hold the developers to account for their original promise of 40% affordable housing.

What is the viability loophole?

Since 2012, national planning policy has enabled the use (and abuse) of viability assessments. Developers are allowed to use viability assessments to argue that building affordable homes could reduce their profits below competitive levels. This gives them a negotiating tool, or loophole, to cut the amount of affordable housing that they would otherwise be obligated to provide as part of their development.

This means that developers could over-pay for land, or allow their costs to run out of control, safe in the knowledge that they can recoup these higher costs later on by squeezing out affordable housing.

What is happening at Gilston?

The largest release of Green Belt in a Local Plan in England took place in October 2018 with the adoption of the East Hertfordshire District Local Plan. This included the allocation of open countryside for 10,000 houses and associated facilities and infrastructure (covering approximately 1,000 hectares) at Gilston, between Hunsdon in Hertfordshire and Harlow in Essex.

In 2019, Taylor Wimpey and Places for People, the developers, submitted outline planning applications 3/19/2124/OUT and 3/19/1045/OUT for the development, including provision of 40% affordable housing. This equates to 4,000 new affordable homes for local people.

In 2020, 2021 and 2022 the developers submitted revisions to their planning applications, which continued to provide for 40% affordable housing.

But then the developers presented their viability assessments showing increased costs, and they proposed reducing the amount of affordable housing to 23%, or 2,300 such dwellings, a loss of 1,700 badly-needed affordable homes.

It was on this revised basis of 23% affordable housing provision that the East Herts District Council’s Development Management Committee, at its meetings on 28 February and 23 March 2023, resolved to grant permission for outline planning applications 3/19/1045/OUT and 3/19/2124/OUT subject to conditions and subject to a Section 106 legal agreement being first entered into.

In response to this, local campaigners commissioned an independent planning consultancy, Continuum, to review the viability assessments prepared by the developers. Continuum’s experts found discrepancies and errors in the developers’ cost calculations, and concluded that the £411 million pounds of increased costs claimed by the developers is unjustified.

Continuum’s analysis also shows that by reducing the number of affordable houses from 4,000 to 2,300 the developers will pocket an extra £130 million pounds in profit.

Continuum said “We accept that there will have been a rise in cost due to annual inflation but this in no way explains a 76% increase. A report produced for the Council by HDH in May 2022 (which was not, we understand, made publicly available or seen by the Development Management Committee) noted that the Gilston Garden Town with 40% affordable housing was actually more viable / profitable in 2022 than when the planning applications were made in 2019 (as value growth had outstripped cost inflation in the intervening period).”

Read more about Continuum’s analysis on their website.

What can be done about this?

Based on these findings, we are calling on East Herts District Councillors to urgently bring the outline planning applications back to the Council’s Development Management Committee, so that Councillors can properly scrutinise all available information related to viability and affordable housing provision on the Gilston site.

Further, the Council should not issue any final decision notices on these applications until the matter of affordable homes is concluded.

If precious Green Belt land is to be lost to housing, it is surely in the public interest that East Herts District Council does everything possible to ensure the number of affordable homes is maximised.

We urge all East Hertfordshire residents to contact their District Councillor and share these messages!