Work scheduled to start on second phase of former Vauxhall Motors site regeneration in Luton
and live on Freeview channel 276
The second phase of a regeneration project for a former Vauxhall Motors site in Luton is set to proceed, having been put on hold by town planners.
Rising costs and a diminishing profit margin forced applicant SSRE Investment 2 Limited to ask for a legal condition to be varied on its December 2021 planning permission for a mixed-use redevelopment on the 56-acre Kimpton Road site.
The Napier Gateway project, including apartments, retail and leisure, a hotel, and a medical wellbeing centre, was deferred by the borough council’s development management committee in April.
Planning team leader Clive Inwards said: “The only material issue relates to the applicant’s submitted viability assessment. This concluded phase two isn’t viable, which puts the council in a difficult situation.
“Possible outcomes could be the applicant walking away from a half built out site, or the local authority having to defend its position (on appeal) when an independent assessor has agreed it’s not viable.
“This would provide an extra 592 new homes with an improved housing mix. The Napier Gateway site is an important regeneration project, as well as a strategic allocation in the Local Plan.
“There are specific benefits to the economy with construction jobs and consumer spending by residents locally. There would be a further opportunity to assess profitability through a viability review mechanism.
“Since the last meeting, the applicant has provided details of the Luton local marketing plan, with an exclusive launch period of six months captured through the Section 106 legal agreement.
“The financial viability assessment has been robustly tested by an independent assessor. The result is disappointing. It’s a significant compromise for the council, but the alternatives are considered worse options.”
Head of development consultancy at Newsteer real estate advisers and registered valuer Richard Garside for the applicant explained: “The initial build cost was £180 a foot in 2018, with (return) values expected to be £450 a foot, which could viably deliver affordable housing.
“In this particular case, those build costs have increased because it’s a high density residential scheme. Values haven’t risen and there’s been a very slow rate of sales.
“Phase one costs increased from £180 to £200 a foot. Values remained at £450 a foot.
“Build costs have continued to rise with a fixed price contract in place of £250 a foot. It’s a 38 per cent increase or nearly £32m of extra cost. The values have dropped recently.
“My client will only make a small profit that’s insufficient to cover the cost to date, but will reduce the overall losses on the site.
“A review clause will be agreed to ensure the council benefits if there’s any extra value from the scheme,” he added.
“The developer is committing to a start date this summer. It would include the completion of the central boulevard between phases one and two, and an urban local park opposite Luton DART.
“It would also hopefully lead to phases three and four coming forward.”
Liberal Democrat Barnfield councillor David Franks said: “We don’t have much choice than to accept the assessment. The local marketing scheme should be part of a revised legal agreement.”
Councillors unanimously approved the plans.