August 29, 2012 12:02 am

Kent’s 22,600-home scheme gets go ahead

Plans for 22,600 new homes in a disused quarry in Kent will get the go-ahead on Wednesday after the government intervened to reduce the requirement for its developer to pay for transport schemes around the site.

The project at Eastern Quarry, Ebbsfleet, will be hailed by ministers as an example of how stalled projects can be revived through the renegotiation of deals between developers and councils.

These agreements, called “Section 106 requirements”, mean companies have to pay for infrastructure around their schemes, whether new primary schools, roundabouts or parks.

But many were struck in the halcyon days before the credit crunch, leaving developers struggling to afford the contributions during the recession.

In the case of Ebbsfleet, developer Land Securities had invested £100m in developing the site but had put the plans on ice amid concerns over the cost of the project. The company wants to build 22,600 homes over the next 20 years on the brownfield site in the so-called “Thames Gateway”.

But the first phase, a 1,500 home development, will get the go-ahead on Wednesday morning.

The deal was renegotiated between three local councils – Kent, Dartford and Gravesham – and developers, and was brokered by Grant Shapps, housing minister, and Mike Penning, transport minister.

It will mean Land Securities will see its contribution towards road improvements fall from £40m to £25m.

The renegotiated agreement will also mean payments to the local authorities will be staggered as the project is built, reducing Land Securities development risk.

Under the terms of the original deal, struck in 2006, the UK’s largest property company by market value would have made its entire Section 106 contribution before the development started.

The Department for Transport will pick up the bill for some big junction improvements, with the local councils paying some of the other costs.

Mr Shapps said that the opportunity for “tens of thousands of new homes” had been “stuck on the drawing board” for a decade.

Adrian Montague, chairman of 3i, suggested in a report for the government last week that the relaxation of Section 106 requirements could help unlock private money to build private homes for rent.

This idea is being closely examined by ministers as part of a wider housebuilding package, due to be announced next month, which is also likely to include government guarantees on the bonds issued by social landlords.

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