The site currently accommodates a large commercial premises which has been let to various business types in recent years. The existing building is set over 4-storeys and has a total GIA of 965.3m2.
The development proposes to convert and extend the existing premises, creating 20 x 1 and 2 bed residential apartments. In total the project will provide 1,032m2 of residential accommodation.
Birmingham City Council seeks an Affordable Housing contribution in accordance with Policy TP31 of the Birmingham Development Plan (adopted January 2017). This seeks 35% affordable housing on all developments over 15 dwellings.
The S106M viability report for this scheme demonstrated non-viability; however the council's surveyor contested the information provided on existing leases and rental payments, as well as taking an ambitious view on sales values and build costs given the current inflationary environment.
Subsequently, through extensive negotiations and submission of additional information supporting the existing use value of the property, the concerns with the benchmark land value were resolved. The costs were also agreed to be higher than the council's surveyor had originally estimated, as were the finance costs, given the Bank of England's recent increases in base rate. Sales were also agreed to be ambiguous given the location of the property in a lower value area but with limited direct comparables, and a more conservative approach taken.
Following the NPPF's para 065, it was agreed that a minimum 10% onsite delivery would be appropriate in this case. However, as it was agreed to be unlikely that a registered provider would be interested in only 2 units in this particular location; and given the viability findings, it was agreed that the higher value First Homes/discounted market ownership tenures could be adopted.
This reduced the relative discount applied to the sales values of these units from c.50-60% down to 20-30%. It also allowed the applicants to dispose of the units themselves rather than needing to involve a registered provider in further negotiations and discussions.