A South Holland developer building 81 homes in Holbeach is claiming the scheme is not viable if social housing and finance for infrastructure is included.
Ashwood Homes has permission to build on land to the east of Chaffinch Way.
It had previously requested that both the social housing and lump sum required should be removed.
But South Holland District Council’s own experts disagreed and the move was blocked.
Now the developer has submitted a new application to remove the section 106 provision, saying a stagnant market has hit profits.
“The stagnant and/or declining market conditions, combined with slow sales rates, increasing costs and higher than anticipated abnormal costs have further squeezed viability from an already compromised position,” says a report submitted to the council.
It says Ashwood Homes would lose almost £2.4m if the company was forced to adhere to the original deal.
“A further appraisal is also contained within the report, removing the affordable housing and all financial contributions. This appraisal also falls below the requisite criteria to be considered viable, but a lesser deficit of £1,507,140,” the report says.
Ward council member Nanette Chapman said the financial contributions were ‘an integral’ part of the application being passed.
“The financial contributions are an important part of all new developments, they help towards services that arrive from the increase in residents in the town, so to remove that would remove an important asset or service,” she said.
The current application, submitted last week, says the gross value of the scheme is £17,315,000.
“Giving consideration to the level of abnormal site development costs, the lower end of the range has been used for this 9.07 acre site (providing a benchmark land value of £907,000) which is consistent with the Monks House Lane application where a circa 11x uplift was considered acceptable.”
In August, developer Seagate Homes applied to provide no social housing and just 25 per cent of the original Section 106 money for building on he former Ivanda Nursery site.
The council’s own plan says a new development should offer 25 per cent of new homes for social housing allocation.
