College scheme ‘exaggerates costs to maximise profits’
St John's College could do more to provide affordable homes
11 December 2019
Oxford Civic Society (OCS) in association with Summertown St Margaret’s Neighbourhood Forum and Wolvercote Neighbourhood Forum, welcomes the decision to review the recent approval of St John’s College’s Oxford North development project. The project was approved in November despite failing to meet planning requirements for affordable housing.
Ian Green, OCS’s Chairman, explains: “This is a technical argument about how much profit it’s reasonable for a developer to make and how it’s calculated. We are basically saying that St John’s, who have owned this land for centuries, are exaggerating the cost of the land and the risks to themselves as developers. They then use those figures to ‘prove’ that they can’t afford to provide the 50% affordable housing required by the City.” He went on to say that a Planning Review ”only happens when enough councillors are unhappy with the Planning Committee’s decision, which suggests that OCS’s concerns are shared by others.”
“St John’s is one of the wealthiest colleges in Oxford with a long and proud history. With this major development on their land in North Oxford they have the opportunity to help tackle the critical problem of the lack of affordable housing and to create a lasting legacy for the community of which they are part. It is disappointing that they are choosing instead to further their own narrow interests. If they are successful it could have a knock-on effect on provision of affordable housing throughout the city.”
The development is being carried out by TWO (Thomas White Oxford), the development company of St John’s College, Oxford. OCS is delighted that councillors have now agreed to scrutinize the application and the decision again. The Review meeting will take place on December 16th.
Oxford Civic Society and its partners argue that:
- The Benchmark Land Value, which assesses the level at which a landowner might sell land for development, has been calculated using out-of-date methodology and figures, making the subsequent conclusion that social housing is not viable on the site untenable.
- The Developer’s Profit, which takes account of cost and the risk associated with a project’s development, has been set at 20%, an unrealistically high level. The figure is based on industry standards that are misleading in this market where demand for housing is high and thus development risk is low.
- The Oxford North project is due to be built over a long time period, meaning that values will rise through the development phase. The application fails to recognize this and so undervalues the scheme, which in turn reduces profitability estimates and allows the developers to overstate the cost of providing affordable housing.
Finally, the application fails to provide a sufficiently rigorous or legally binding review mechanism over the life of the project. This may allow the developer to veto future affordable housing provision if its own profit targets are not met. A binding review mechanism is essential to protect the public interest through regular reassessment of project viability using up-to-date prices, rents, yields and other indicators to monitor costs.
The full technical case supported by OCS, Summertown St Margaret’s Neighbourhood Forum and Wolvercote Neighbourhood Forum is set out in this original document which was submitted as a comment on the Planning Application.