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£18MILLION PLANNING FEE AVOIDANCE IN SALFORD STATES SHEFFIELD UNIVERSITY REPORT
 

Star date: 26th February 2018

SALFORD COUNCIL DEVELOPER FRIENDLY POLICIES LED TO £18MILLION FEE AVOIDANCE AND LOSS OF OVER 2,000 AFFORDABLE PROPERTIES

A new report by Dr Jonathan Silver at Sheffield University has echoed Salford Star research that developers are avoiding millions of pounds in planning fees, while the city is losing thousands of affordable properties.

This research looked at 26 sites in the city that had planning permission, and concluded that over £18million had been avoided in Section 106 payments plus the provision of over 2,000 affordable properties. Salford Star research has shown that, over all Salford sites, the figure is around £50million.

Full details here...


New research by Dr Jonathan Silver at Sheffield University has shown that £18,103,201 has been avoided by developers over 26 sites studied in Salford, and that Salford City Council's developer friendly policies has also led to the loss of 2,194 affordable properties.

This echoes and supports Salford Star research over the last few years that shows, over all sites in Salford, around £50million has been lost to the city through planning fee avoidance, plus thousands of affordable properties.*

Silver's report, titled From Homes to Assets: Housing financialisation in Greater Manchester, looks at the overall context of development in the area, and how housing is now treated as a 'commodity for accumulating wealth' by both global and local developers.

He writes about a "developer-friendly approach" that "has involved allowing planning permission for most new buildings overriding concerns about heritage, neighbourhood impact, affordable housing, design and other gentrification"...a "supportive context for housing developers" that is "most noticeable through reducing financial contributions from developers through Section 106 contributions and affordable housing requirements."

The Salford sites investigated include Middlewoood Locks, the ECf's Stanley Street and Slate Yard, Adelphi Street, loads of developments on the Quays, and Fred Done's Blackfriars blocks.

While £18,103,201 was avoided by developers "through manipulating 'viability assessments'", only £4,875,373 was collected in Salford. And, while an estimated 2,194 affordable housing units were lost via the same process, across the sites studied, only five affordable properties were provided.

Manchester fared even worse, with only £834,000 collected in contributions and no affordable housing gained across the 53 sites studied.

The report also looks at how state aid from the likes of the Government, Greater Manchester Combined Authority and Salford City Council has directly subsidised many of these private developments. It's been done by either allocating and providing public land, or through cheap loans totalling £265million, with average financial support at £29,719 per unit, "none of which are designated for affordable or social housing".

Middlewood Locks, for instance, is cited in the report, with £35million in subsidy, while Fred Done's Blackfriars development had £17million, although the Star showed how this figure was subsequently increased to £22.5million (see here).

Across the Salford sites studied, the report shows how 86% are being marketed abroad, as the developments become part of a huge network of worldwide investment, "including large institutional investors involved in development finance, companies based in 'secrecy jurisdictions' and smaller investors purchasing one or two units, as part of savings and pension schemes for the growing, global middle class...

"...It means new housing units being built in Greater Manchester are already sold
'off-plan' before they even become available for local residents" the report shows. However, it adds, with the average cost of an apartment in one of the Salford sites £167,046, on top of other housing related bills a local person would have to be earning £3,000 a month to be able to afford one.

As well as the financial exclusion involved in actual buying one of the properties, renting one is also out of reach of the local community, with rent increases averaging 22.4% in Greater Manchester between 2014 and 2015.

Particularly galling is the growth of the Private Rental Sector, or PRS – "This sector can be understood as housing developments that are built for rental purposes by institutional investors" the report explains...

"This can include developers holding onto the housing units or selling them on to various financial institutions and actors, aimed at the rental sector and importantly as tradable assets that can be sold on to other institutional investors" it adds "This new financial 'product' is the key means through which housing financialisation has taken place and allows institutional investors to purchase apartments, often at scale (so for instance a whole building or urban development site), creating both ongoing rental income and a traceable asset.

"Encouraged by new national guidance and favourable fiscal conditions, thousands of PRS apartments are in development, intended to capitalise on the rising rents in the housing market" it states "The opportunities to profit from the PRS have therefore differed considerably from the past because it is now straight-forward for large financial actors to invest in housing in Greater Manchester."

While international investors and local developers are cashing in, where does this leave the community?

As Salford City Council might argue, and the report estimates, in the very long term, as much as £13million per year in Council Tax from the new properties might be collected. But increased population leads to strains on services like schools, doctors, refuse collection, transport and more, which haven't been addressed because of the huge losses on Section 106 fee collection.

Other impacts include "important parts of the historic built environment being destroyed in the name of developer profit and the privatisation of public space" (as can be seen in Chapel Street and Salford Quays), the report concludes.

It also concludes that "Local Authorities are failing to create balanced communities. The result is that there is increasing economic segregation within Greater Manchester city-regional centre and surrounding areas, creating ghettos of rich and poor".

The report begins with the truism that "Amongst the cranes and construction workers, new towers and luxury accommodation, the numbers of homeless both hidden and on the streets continues to grow. It has become perhaps the city-region's most pressing political and social issue as hundreds of rough sleepers struggle for survival everyday in Manchester and Salford."

This most pressing and shameful political and social issue is nowhere near to being resolved...


From Homes to Assets: Housing financialisation in Greater Manchester
The Salford Star recommends that readers check out either the full report or its 'executive summary' – click here for the link on Greater Manchester Housing Action website with an intro by Jonathan Silver

*See also previous related Salford Star articles...

Salford Housing Crisis – The Causes – click here

£42million Planning Scandal Mushrooms as Salford Mayor Asks What's Going On – click here

Only Two Affordable Properties For Over 4,000 Flats and Houses Built in Greengate and Chapel Street - click here

Salford In UK Top 10 Greedy Property Speculator Hotspots - click here

9 Year Waiting List For One Bed Affordable Flat in Salford - click here

Salford Star print issue 10 has a huge article detailing the background and ruses behind the planning scandal – click here for electronic version

John Smith wrote
at 13:57:47 on 01 March 2018
Lemmings! When will Salford wake up?
 
Phil wrote
at 00:15:13 on 01 March 2018
Bob, why all of this vitriol against the Mayor? You seem to have a pathological hatred for the guy. Okay, so the tenants at Albion Towers will see their rent NOT go up. Guess what, I live in a Salix Tower block and my rent doesn't appear to have gone up either. I don't get people like you, and Mary and Joe. All that you ever do is complain. And Steve from the Star, he's a good journalist, but he reminds me of Tom Courtney in The Loneliness of The Long Distance Runner. Crossed with James Deane in Rebel Without A Cause. It's laughable. We live in the real world where hard decisions have to be made. Not in some Fantasy Socialist Utopia. If the money isn't there, then it isn't there. That's just how it is. Now either accept it and get on with it, or maybe we should all pay a bit more Council Tax and then there would be more money in the pot to pay for nurseries and meals on wheels etc. Just stop complaining all of the time and being so negative. It smacks of bitterness. For my opinion the Council and Mayor Dennett are doing a good job.
 
Bob the regular wrote
at 18:56:58 on 28 February 2018
Well ,re Bob and Kevin below, can we also add, the mayors rent is not going up this year on his block,Albion Towers.This is the well managed tmo block run by Dennets mates . I think Dennet was on the board there before he was made mayor. Its a nice little click for Dennets lefty pals. It works out well for the residents. I also would like to live on a block like this, but they wouldn,t have dissident types like me in there. (or Mary or Joe)
 
Salford Star wrote
at 18:25:57 on 28 February 2018
See Kevin's comment below...Correction: Paul Dennett wasn't yet Mayor when he got the property, just a councillor.
 
Kevin wrote
at 18:24:03 on 28 February 2018
Wow it would seem that Dennett is ripping off Salford citizens good and proper. Maybe he can move into one of these expensive flats on his salary instead of hogging social housing he wouldn't have got if he hadn't been mayor.
 
bob wrote
at 17:31:11 on 27 February 2018
I keep seeing the Phrase "Affordable Housing". It seems different councils have different meanings. What do Salford call affordable because some of their properties run by City west and Salix are almost and in some case in excess of £100.00
 
Gareth L wrote
at 07:02:04 on 27 February 2018
Is this the Salford Star being proved correct again? Great work
 
Felsey wrote
at 07:01:18 on 27 February 2018
Exactly why we need to implement a Mayor directive to claw back Section106 lost levy from an auditor past seven years by a directive examining where any properties were financially viable as shown in the developers' accounts. On top of this we do need to implement a Waterways Mooring Levy, based on fixed fees for every 20 yards stretch. Claw back at seven years can see the biggest waterfront land owners in Salford facing a levy of up to £400million. Enough cash to ensure Salford Council Services are fit for purpose. I would not hesitate to fully implement.
 
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