“Knowle developer will only pay for affordable housing if profits exceed expectations” – yeah, right!
Over 100 flats selling at around £400,000 or more with massive service charges. Will they make a profit? Of course not – developers never do in these circumstances!
“PegasusLife had argued its proposals should be classed under ‘residential institutions’ – branded ‘C2’ in planning terms – meaning it would not need to make a contribution.
Landowner East Devon District Council (EDDC) had contested it should be classed as C3 for housing, meaning there would normally be a payment towards off-site affordable housing.
An agreement between the parties, revealed last week, shows there is an ‘overage’ clause, so PegasusLife would only pay out if the scheme exceeds its forecasts.
An EDDC spokeswoman said: “PegasusLife has submitted viability evidence to demonstrate that the scheme would not be viable if it were to provide affordable housing, which the council has accepted.
“The council has had this information independently assessed by specialists in development viability who have confirmed that the development cannot afford to meet the council’s policy requirements for affordable housing.
“Accordingly, the council has required an overage clause to be included within the section 106 agreement, which will seek to obtain a contribution towards affordable housing in the event that the scheme is more profitable than currently envisaged.
“This approach has been used before and supported by planning inspectors at appeal. If the development is found to be C2 by the inspector then there would be no affordable housing required to be provided.
“However, the Knowle inquiry is still ongoing and is timetabled to conclude today (Tuesday).
“We anticipate receiving a final decision from the inspector in January.”
The section 106 agreement shows that the land is valued at £5.8million.
The deal with PegasusLife is worth £7.5million to EDDC, which will put the cash towards its £10million relocation to Exmouth and Honiton.
The dispute about whether the development should be classed as C2 or C3, as well as concerns about overdevelopment and the impact on the site’s listed summerhouse, led councillors to refuse planning permission last December.
The developer took its appeal to the Planning Inspectorate.
The inspector, Michael Boniface, is set to make a site visit this afternoon to inform his decision.”
It is interesting to compare the Millbrook development in Exeter with PegasusLife’s at the Knowle, Sidmouth.
At Millbrook [the retirement complex in Exeter, Exeter City Council being the planning authority] the development was considered to be C3 (dwelling houses) and therefore attracted affordable housing provision which consisted of a payment to the Council of £5.65 million plus the transfer of land at no cost to enable the Council to construct a public extra care facility on the site. In addition the developer contributed almost £300,000 towards sports facilities and £35,000 towards archeological recording.
And what are PegasusLife, who are backed by Oaktree, a billion-dollar equity giant with offshore tax-haven connnections, contributing?
Answer: nothing, whether the development is adjudged to be C2 (residential institution) or C3. Unless of course, you include an information board to tell you where the elegant lawn terraces in the public gardens used to be.
So how many “affordable” houses (or other provision) is East Devon losing out on?
The recently-leaked ‘Paradise Papers’ on tax havens seem to have revealed an interesting side to the activities of the billion-dollar US equity giant behind Pegasus Life the developer currently appealing EDDC’s refusal to give it planning permission to build 113 luxury flats for old people at Knowle in Sidmouth.
As the Pegasus Life website proudly proclaims, Oaktree Capital Management founded the company in 2012:
The Paradise Papers suggest that, at about the same time, Oaktree was setting up a joint venture with Australian and Chinese billionaires to fund a 3.2 billion dollar casino in Macau through the offices of legal firm Appleby in the the British Virgin Islands tax haven:
Appleby became alarmed about the refusal of Oaktree and its partners to allow identity checks on its shareholders – the cornerstone of global efforts to stop money laundering and the financing of terrorism.
Oaktree and the others allegedly threatened to take their business elsewhere if Appleby insisted on the checks. Appleby didn’t, and the joint venture was duly incorporated in the British Virgin Isles with the shareholders remaining secret! The Casino opened in 2015.
All this is literally thousands of miles from the fond hope expressed by Philip Hammond in this week’s budget speech that local homes should be provided by small local companies with a real stake in their community.
Howard Phillips, current CEO of PegasusLife, was, until 31/08/2012, CEO of McCarthy & Stone. He led the restructuring of McCarthy & Stone’s £900M debt and under his watch the company is alleged to have engaged in the dubious practices exposed by Ch 4 Dispatches that year.
On 24 September 2012 a Channel 4 Dispatches programme on retirement leasehold was a brilliant example of television journalism that was extremely damaging to both McCarthy and Stone, and to Peverel, including their effect on this site:
A Sidmouth resident writes:
“The Prime Minister has said it is her a personal mission to mend our broken housing market and provide much-needed “affordable” housing, even though much of this is, for many, unaffordable.
We hope therefore that she will immediately address loopholes in the planning system that are regularly exploited by developers who avoid making a fair contribution to affordable housing, for example by claiming, after they have obtained planning permission, that such housing is financially unviable.
Developers who build retirement flats often claim these are “care Homes”, even though they provide no care themselves. In Sidmouth, for instance, PegasusLife is currently appealing a decision to refuse a multi-million pound development of 113 expensive retirement flats and exploiting an ambiguity in planning law as well as using a viability test to avoid paying an estimated £3 million towards affordable housing, housing money that cash-strapped Councils can ill afford to lose.
It is a myth that the country needs more houses: it doesn’t need more expensive houses, investment properties and second homes. What it needs are low-cost houses, houses for social rent and houses to buy within the reach of lower and average income earners.
Will Mrs May tighten up planning law to stamp out such abuses or are we to conclude that the private sector, as hitherto, cannot be trusted to provide low-cost and “affordable” homes?”
EDDC must be feeling VERY positive about the outcome of the PegasusLife Planning appeal as the sale of Knowle land, at around £7.1 million, is meant to contribute to the £10,361,000 cost (at last years costing – who knows what it is this year).
And does it include the £1m plus cost of Exmouth town hall?
Next year’s council tax deliberations will be interesting!